When it comes to filing Form 990-PF, preparation is key. Whether you’re handling the form yourself or hiring a professional, having the necessary documents organized and accessible is essential. This guide will help you categorize your expenses, organize your files, and provide general tips to ensure a smooth filing process.
Categorizing Expenses
To simplify the filing process, it’s helpful to categorize expenses throughout the year. Here are the main categories to consider:
- Administration and Management: This includes costs like office supplies, rent, staff salaries, and benefits.
- Expenses Incurred to Produce Income: Examples include investment fees, and the portion of board meeting expenses related to discussing investments.
- Grants and Charitable Programs: Document all grants and charitable program expenses.
Organizing Your Files
Maintaining organized files throughout the year will make the Form 990-PF filing process much more manageable. Here’s a breakdown of the essential documents you should have on hand:
Banking and Investments
- Bank Statements: Keep all monthly bank statements for the current tax year, as well as the final statement from the previous year.
- Investment Schedules: Include custodial statements with details like interest income, dividend income, realized gains and losses, ending costs, and market values.
- Investment Statements: Retain all monthly investment statements for the current tax year and the final statement from the prior year.
Expenditures
- Professional Fees: Prepare a schedule detailing legal, accounting, and other professional fees.
- Grant Details: List all grants paid during the current tax year, including grantee details (name, address and status—e.g., public charity, private operating foundation) and the purpose and amount of each grant. Note any relationships to foundation managers or substantial contributors if the recipient is an individual.
- Unpaid Grants: Include a list of approved but unpaid grants as of the last day of the tax year, with the same details as for paid grants.
Taxes
- Excise Tax Schedule: Document the amount of excise tax paid during the current tax year, any credits from the previous year, and whether you want any overpayment refunded or credited to the next year.
- Unrelated Business Income: Include details of any unrelated business income, such as activity type, gross receipts, directly related (offsetting) expenses, and copies of K-1 reports.
Trustees, Staff, and Substantial Contributors
- Trustees Information: List the names, titles, and weekly hours of all trustees. Note any compensated trustees and provide details on compensation, contributions to benefit plans and deferred compensation, and expense accounts and allowances.
- Staff Compensation: List employees (excluding trustees) compensated over $50,000, including their names, addresses, amount of compensation, contributions to employee benefit plans and deferred compensation, and expense accounts and allowances.
- Independent Contractors: Include names, addresses, total compensation, and type of service for contractors paid over $50,000 during the year.
- Major Contributors: Identify all individuals and entities contributing more than 2% of the total contributions received by the foundation or note that no contributions were made.
Grants Program Information
- Application Process: Provide details on how grantseekers can apply for funding, including contact information for sending proposals, the application form, submission requirements and deadlines.
- Restrictions: Note any restrictions or limitations on awards such as geographical or charitable fields, or state that the foundation does not accept unsolicited proposals.
Organizational Documents
- Foundational Documents: Keep copies of organizing documents like articles of incorporation and bylaws.
- Board Meeting Minutes: Retain minutes from board meetings held during the current tax year and any subsequent meetings.
Miscellaneous
- State Registrations: List all states where the foundation is registered or required to report.
- Web and Contact Information: Provide the foundation’s website address if it has one and contact information for the bookkeeper.
- General Ledger: Include a copy of the foundation’s detailed general ledger and trial balance at the end of the prior tax year.
While we intend for this list to be as comprehensive as possible, it does not necessarily include every item that you may need to complete the Form 990-PF.
General Tips Before Filing
Before diving into Form 990-PF, consider the following tips:
- Order of Completion: The IRS recommends completing the form in a nonsequential order, as outlined in the IRS instructions.
- Stay Updated: Always review the “What’s New” section in the IRS instructions to stay current on any changes.
- Complete All Sections: Ensure that all applicable line items are filled out. Enter “None” or “N/A” where appropriate, and make entries on all total lines, even if the value is zero.
- Include Supplementary Documents: Don’t forget to include all required supplementary statements and Schedule B, if necessary.
- Board Review: Depending on your foundation’s structure, consider having all board members review the draft Form 990-PF before submission.
By following this guide and staying organized throughout the year, you can simplify the process of completing Form 990-PF and ensure your foundation stays compliant with IRS requirements.