IRS Form 990-W

Understanding IRS Form 990-W

Navigating the world of taxes can often be a complex endeavor, especially when it comes to nonprofit organizations. Among the many forms the Internal Revenue Service (IRS) requires is Form 990-W, a document designed for tax-exempt organizations.

Purpose of form 990-W

IRS Form 990-W plays a pivotal role for tax-exempt organizations, as it helps them to calculate the estimated tax on unrelated business taxable income. This form essentially assists in determining the amount of taxes that a nonprofit must pay on income that is not related to its exempt function. 

Who should utilize form 990-W?

Determining who should file Form 990 W is straightforward. Form 990-W is designed for tax-exempt organizations that are subject to tax on unrelated business income (UBI). These organizations include charities, educational institutions, religious groups, and other nonprofits that operate businesses or income-producing activities unrelated to their tax-exempt purpose. 

If these activities result in a tax liability of 0 or more for the year, then the organization must make estimated tax payments using Form 990-W to avoid potential penalties. It is important for treasurers, accountants, or financial officers of these organizations to understand when this form is applicable to ensure compliance with IRS regulations.

How to Fill Out Form 990 W

For those seeking guidance on completing the 990 W form, the process doesn't need to be overwhelming. Here are the key steps to complete this IRS template:

1. For the first part concerning the computation of installments based on annualized income:
   • Enter your estimated tax for the year at the top of the form.
   • Fill in the amounts of expected tax-exempt interest and deduction for dividends in the respective lines.
   • Itemize the estimates of income, adjustments, and deductions for each period, ensuring that you follow the annualized method.
   • Calculate tax using the annualized income for each period and input the tax amounts.
2. Only proceed to the next part if your income for any 6 consecutive months represents at least 70% of your annual total. For the this part centered on the installment method tailored to organizations with seasonal income:
   • Identify the base period percentage for each month and fill in the respective lines to determine if you qualify.
   • Compute your expected income for each seasonally adjusted period and enter the figures.
   • Determine the seasonal adjusted tax due on that income and provide the amounts.
3. In the section where you calculate the actual installment payments:
   • Use the previous calculations to determine the smaller of either the annualized income installment or the adjusted seasonal installment for each period.
   • Enter these amounts in the column for required installments.
   • Input any refundable credits you're eligible for in the designated line.
   • Subtract any refundable credits from the total of all installments to find the next installment due.
   • Finally, input the dates and amounts of each installment payment you've made.

Relevant to Form 990-W Documents

• Fillable Form 990
• Fillable Form 990-BL
• Fillable Form 990 Schedule B