Why Should Nonprofits & Tax Exempt Organizations File Schedule A with Form 990/990-EZ?

Schedule A is generally used by Nonprofits & tax-exempt organizations that file Form 990 or Form 990-EZ to provide information about the public charity status and public support of the Organization.

Information provided on this Form will become available for the public to access and ensure the Organization's volunteers, members, contributors, and potential board members. And there is a standard to qualify as a public charity.

Let's have a look about the Schedule A in detail.

Who needs to attach Schedule A with Form 990/990-EZ?

  • Organizations that are categorized under section 501(c)(3) and are public charities
  • Organizations that are described under sections 501(e), 501(f), 501(j), 501(k), or 501(n);
  • Nonexempt charitable trusts described under section 4947(a)(1) that aren't treated as private foundations.

Qualifying for Public Charity Status

A public charity organization that has public support actively functions to support another public charity or devoted exclusively to testing for public safety.

A public charity, identified by the IRS, normally receives a major part of its income, from the general public or from the government directly or indirectly.

There are three ways in which an organization may qualify as a public charity

  • Nature of Activities - Certain organizations - limited to churches, hospitals, medical research organizations, agricultural activities and schools
  • Public Support Test - Most public charities qualify under one of three public support tests, often referred to as the "one third" test, the "one third/one third" test, and the "facts and circumstances" test
  • Supporting Organization - Some organizations are classified as public charities by virtue of being a "supporting organization" of another public charity or charities

Public Support Test

You need to meet the public support to qualify as a public charity.

Public support test

One-third Test for 509(a)(1): The total support from government agencies, general public contributions, and the contributions or grants from other public charities must exceed 331/3%.

To calculate an organization's public support percentage

Public Support / Total Support = Public Support %

* Total Support - Gifts and Grants, Membership Fees, Unrelated Business Income, Gross Investment Income, Governmental Services

Facts and Circumstances Test: 10% or more of its total support must come from government agencies, general public contributions, and contributions or grants from other public charities and also the facts and circumstances must indicate that it is a publicly supported organization.

If your organization matches these percentages for the prior year and even If the organization’s first, second, third, fourth, or fifth tax year as a section 501(c)(3). Then your Organization is qualified for the Public charity Status.

The “One Third/One Third” Test - Section 509(a)(2)

If you pass this requirement you need to attach the Schedule A with 990/990-EZ.

Under this test, the organization determines by:

  • Percentage of public support, which must exceed 33 1/3 % of total support; and
  • Percentage of investment income, which may not exceed 33 1/3 percent of the total.

Public Support / Total Support = ⅓ or greater

Investment Income / Total Support = Less than ⅓

What if an Organization Fails the Public Support Tests?

If you do not pass the Public Support test, your Organization will be considered as Private Foundations and you need to file 990-PF.

Filing Schedule A with your Form 990/990-EZ

ExpressTaxExempt one of the leading IRS authorized efile providers for nonprofits offers e-filing solution for 990 or 990-EZ Forms. Based on the information that is provided while preparing the Form 990/990-EZ, your Schedule A will get generated automatically. The inputs of contributions provided by the public would be easily added through our Interview Style Process. The other necessary inputs for assessing an organization could be done easily with our help texts in the application that would guide throughout the process of filing.

The Form 990/990-EZ and Schedule A could be made available for review and approval for the members of the governing body of the organization. Once reviewed and approved, the Form 990/990-EZ can be securely e-filed with the IRS.

Even if your Form gets rejected by the IRS, we will help you to correct it & retransmit for FREE. If you failed to get the Public support & your organization is considered as a Private Foundation, then you can file 990-PF with our Software.

Our US Based support team helps you at any time if you are facing any difficulties during the filing process.