Why Doesn’t My Organization’s Financial Statement Match IRS Form 990?
Published on by Lynn Meiser in Not-for-Profit, Tax Services
With a team dedicated exclusively to non-profit tax and Form 990s, we get a lot of questions from our not-for-profit clients – and perhaps one of the questions that we get most often is why a non-profit organization’s Generally Accepted Accounting Principles (GAAP) financial statements not match the IRS Form 990?
It’s a great question – and the reason is that the IRS has different reporting requirements than GAAP.
Reconciling the differences
To help you get a handle on what the differences are and how to reconcile them, we’ve created this chart showing the most common reporting differences.
An organization can present the reconciliation between audited financial statements to the tax return in Schedule D of Form 990. This schedule is required for those non-profit organizations that obtain an independent audit in the same year as the tax return.
| GAAP | Form 990 | |
|---|---|---|
| Investments | Netted presentation (includes interest/dividends, realized and unrealized gain/loss and investment expenses) | Amounts are broken out on part VIII Statement of Revenue, as Investment income (dividends/interest) and sales of securities assets (realized gains). Investment expenses are typically reclassified to Part IX, Statement of Functional Expenses |
| Unrealized gain/losses | Included in investment income | Not included in Form 990 |
| Fundraising events | Presented gross or net with expenses | Presented in Part VIII, as fundraising event contributions, event income and netted with fundraising direct expenses. |
| Rent income/expense | Presented gross or net with expenses | Presented as a net amount in Part VIII |
| Donated Services & Facilities | Presented as in-kind income and in-kind expenses | Not included in 990 income or expenses |
| Miscellaneous income | Reported as such | Any miscellaneous income over $1,000 might be a red flag for the IRS. Miscellaneous income should be reviewed and considered for contribution or program income |
Have a question about non-profit tax forms and how your organization can use your Form 990 to share its mission and accomplishments with donors, grantors, and prospective donors and grantors? Contact us for a free consultation with one of our top non-profit tax pros. We’re here to help.
