Schedule G (Form 990) Instructions: A Comprehensive Plan
Schedule G, filed with Form 990 or 990-EZ, details fundraising activities like professional services, events, and gaming, ensuring financial transparency for nonprofits.
Schedule G (Form 990) serves as a crucial supplemental form for tax-exempt organizations, providing detailed insights into their fundraising and gaming activities. It’s required when an organization utilizes professional fundraising services, conducts fundraising events, or engages in gaming activities. This schedule ensures the IRS receives a comprehensive overview beyond the standard financial reporting on Form 990 or Form 990-EZ.
Essentially, Schedule G clarifies how nonprofits solicit contributions and manage related revenue and expenses. The IRS utilizes this information to assess compliance with regulations governing charitable organizations. Understanding Schedule G is vital for accurate financial reporting and avoiding potential penalties. Recent updates, including those from December 2024, necessitate careful review of the latest instructions to ensure proper completion and filing.
II. Who Must File Schedule G?
Organizations filing Form 990 or Form 990-EZ are potentially required to file Schedule G. Specifically, filing is triggered by engaging in certain fundraising activities. This includes utilizing professional fundraising services – where a third party solicits donations on your behalf. Additionally, conducting fundraising events, even if seemingly small, can necessitate Schedule G filing.
Gaming activities, such as raffles or bingo, also mandate the use of this supplemental schedule. Crucially, the requirement isn’t solely based on having these activities, but often on exceeding specific gross receipt thresholds. For example, events generating over $5,000 in gross receipts require reporting. Therefore, careful assessment of fundraising revenue is essential to determine filing obligations.
III. Form 990 and Schedule G Relationship
Schedule G serves as a crucial supplement to Form 990 (or Form 990-EZ), providing detailed information about an organization’s fundraising and gaming activities. Form 990 gathers broad financial data, while Schedule G dives deeper into the specifics of how funds are raised. It’s not a standalone form; it must be filed alongside the core 990 return if the organization meets the filing requirements outlined for Schedule G.
The information reported on Schedule G directly impacts several sections of Form 990. Specifically, responses to questions on lines 17, 18, and 19 of Form 990 trigger the need to complete Schedule G. Essentially, Schedule G expands upon the fundraising information initially indicated on the main Form 990, offering a comprehensive overview to the IRS.
IV. Overview of Fundraising Activities Reported on Schedule G
Schedule G meticulously details three primary fundraising avenues: professional fundraising services, fundraising events, and gaming activities. For professional fundraising services, organizations report compensation paid to firms hired to solicit contributions. Fundraising events require reporting gross receipts and expenses, categorized by event, if exceeding specified thresholds ($5,000 or $15,000).
Gaming activities, such as raffles and bingo, necessitate reporting gross receipts and net income. The schedule seeks a comprehensive overview of revenue, expenses, and resulting income from each activity. Understanding these categories is vital for accurate reporting. Schedule G ensures transparency regarding how nonprofits generate revenue, allowing the IRS to assess compliance and financial health.
A. Professional Fundraising Services
Reporting professional fundraising services on Schedule G requires detailing any compensation paid to individuals or firms engaged to solicit contributions on your organization’s behalf. This includes fees, commissions, and other forms of remuneration. Organizations must disclose the name and address of each professional fundraiser utilized during the reporting period.
Accurate reporting is crucial, as the IRS scrutinizes these expenses to ensure reasonable compensation and compliance with solicitation regulations. Schedule G demands a clear breakdown of costs associated with these services, providing transparency into fundraising expenditures. Proper documentation of contracts and payment records is essential for audit purposes.
B. Fundraising Events
Schedule G requires detailed reporting of fundraising events, categorized by gross receipts. Events generating over $5,000 necessitate listing, including revenue details. Those exceeding $15,000 demand more comprehensive information, potentially triggering additional reporting requirements on Form 990 itself.
Organizations must report gross income and expenses for each qualifying event, even if resulting in a loss. This section clarifies whether events are primarily conducted to raise funds or serve other purposes. Accurate record-keeping of event-related income and expenditures is vital for Schedule G compliance, ensuring transparency and accountability in fundraising efforts.
C. Gaming Activities
Schedule G necessitates reporting of all gaming activities conducted by the organization, including raffles, bingo, and similar events. Detailed information regarding gross receipts and net income from these activities must be provided. This reporting ensures compliance with IRS regulations concerning unrelated business income and potential tax implications.
Organizations must clearly delineate gaming income and expenses, even if losses occur. Proper categorization of gaming revenue is crucial for accurate financial reporting. Schedule G helps the IRS assess the scope and financial impact of gaming operations, ensuring nonprofits adhere to legal and ethical standards in their fundraising practices.
V. Key Definitions for Schedule G Reporting
Understanding key definitions is vital for accurate Schedule G completion. Gross receipts represent the total amount of money received from fundraising activities before any deductions, while net income is the amount remaining after expenses are subtracted. This distinction is critical, as reporting thresholds are based on gross receipts, not profitability.
A professional fundraiser is an individual or firm hired to solicit contributions on behalf of the organization. Identifying and reporting payments to these fundraisers is essential. Accurate definitions ensure consistent reporting and allow the IRS to effectively monitor fundraising practices, preventing potential compliance issues and maintaining nonprofit accountability.
A. Gross Receipts vs. Net Income
Distinguishing between gross receipts and net income is fundamental for Schedule G reporting. Gross receipts encompass the total funds received from fundraising – the headline number before any costs are deducted. Conversely, net income represents the profit remaining after subtracting all related expenses, offering a picture of actual gain.
The IRS focuses on gross receipts when determining reporting requirements; exceeding specific gross receipt thresholds triggers Schedule G filing obligations, regardless of profitability. A fundraising event might show a net loss, yet still necessitate reporting if gross receipts surpass $5,000 or $15,000. Understanding this distinction prevents errors and ensures compliance.
B. Professional Fundraisers
Schedule G requires detailed reporting when utilizing professional fundraisers – individuals or firms hired to solicit contributions on an organization’s behalf. This includes disclosing their names, addresses, and the compensation they receive. Organizations must report the total gross amounts received from these fundraisers, alongside any fees paid for their services.
Transparency is key; the IRS scrutinizes these arrangements to ensure fair practices and prevent excessive compensation. Reporting must differentiate between amounts received from the fundraiser and amounts paid to them. Accurate documentation of contracts and payment records is crucial for Schedule G compliance when engaging professional fundraising assistance.
VI. Part I: Professional Fundraising Services
Part I of Schedule G focuses specifically on detailing any professional fundraising services utilized by the organization. This section demands a comprehensive listing of each professional fundraiser engaged, including their name, address, and the nature of their services. Crucially, organizations must report the total gross amount of contributions received through these services.
Furthermore, Part I requires disclosure of all fees paid to the professional fundraisers. Accurate reporting necessitates meticulous record-keeping of contracts and payment documentation. The IRS uses this information to assess the efficiency and appropriateness of fundraising expenditures, ensuring funds are used responsibly and in alignment with the organization’s mission.
VII. Part II: Fundraising Events
Part II of Schedule G is dedicated to reporting details of fundraising events conducted by the organization. Reporting thresholds are critical: events generating gross receipts exceeding $5,000 require listing, while those surpassing $15,000 necessitate more detailed information. This includes a breakdown of gross revenue, expenses directly related to the event, and net income.
Organizations must clearly identify each event and provide a concise description. Accurate accounting of both revenue and expenses is paramount. Even if an event results in a financial loss, it must still be reported. The IRS scrutinizes this section to evaluate fundraising effectiveness and ensure compliance with regulations regarding unrelated business income.
A. Reporting Requirements for Events with Gross Receipts Over $5,000
When fundraising events generate gross receipts exceeding $5,000, Schedule G demands specific reporting. Organizations must list each qualifying event, providing a brief description of its nature. Crucially, the reporting focuses on gross receipts – the total amount collected before any deductions for expenses. This initial listing establishes a baseline for IRS review.
While detailed expense reporting isn’t required at this threshold, maintaining accurate records is vital. The IRS may request supporting documentation to verify reported gross receipts. Proper documentation demonstrates transparency and facilitates a smoother review process. Accurate reporting at this level is foundational for compliance, especially if receipts later exceed $15,000.
B. Reporting Requirements for Events with Gross Receipts Over $15,000
Fundraising events surpassing $15,000 in gross receipts trigger more detailed Schedule G reporting. Beyond listing the event and gross income, organizations must now disclose related revenue and expenses. This includes a breakdown of contributions, membership dues, and any other income directly attributable to the event. Accurate categorization is essential for proper financial accounting.
Furthermore, organizations must report the net income or loss from the event. Even if the event resulted in a loss, this must be clearly indicated on Schedule G. Detailed expense reporting is now mandatory, providing the IRS with a comprehensive view of event costs. Maintaining meticulous records is crucial for substantiating these figures during an audit.
VIII. Part III: Gaming Activities
Part III of Schedule G focuses on reporting gaming activities, encompassing raffles, bingo, and similar events. Organizations must detail gross receipts and expenses specifically from these gaming endeavors. This section requires a clear distinction between revenue generated from gaming versus other fundraising sources. Accurate reporting is vital for compliance.
The IRS scrutinizes gaming activities due to potential legal and tax implications. Organizations must disclose the type of gaming activity, the number of events held, and the total revenue generated. Expenses directly related to gaming, such as prizes and advertising, must also be reported. Proper documentation of gaming income and expenses is essential for a smooth audit process.
IX. Schedule G and Form 990-EZ
Organizations filing the simplified Form 990-EZ may still be required to complete Schedule G under specific circumstances. If an organization reports over $5,000 in gross receipts from fundraising events, or engages in professional fundraising services, Schedule G becomes mandatory, even with the 990-EZ.
This ensures transparency even for smaller nonprofits. The threshold for event reporting is crucial; exceeding $5,000 triggers the need for detailed event-specific information on Schedule G. Failing to file when required can lead to penalties. Carefully review your organization’s fundraising activities to determine if Schedule G is necessary alongside your Form 990-EZ filing.
X. Changes to Schedule G (Recent Updates ⏤ 2024/2026)
Recent IRS updates, finalized in December 2024 and applicable for filings in 2026, refine Schedule G reporting requirements. These changes primarily focus on clarifying definitions and enhancing transparency regarding fundraising activities. The IRS released draft forms in November 2024, signaling these adjustments.
Key updates involve more precise guidance on reporting gross receipts versus net income, particularly for fundraising events. Organizations must now meticulously track and report gross amounts, regardless of any associated losses. The updates also address ambiguities surrounding professional fundraisers, ensuring consistent reporting standards. Staying informed about these changes is vital for accurate Schedule G completion and compliance.
XI. Common Errors to Avoid on Schedule G
Several frequent errors plague Schedule G filings. A primary mistake is reporting net income instead of gross receipts for fundraising events – the IRS requires the former. Incorrectly classifying fundraising activities, or failing to report events exceeding the $5,000 or $15,000 thresholds, are also common.
Organizations often struggle with accurately detailing professional fundraising services and associated fees. Another error involves overlooking the need to report gaming activities, even if losses occur. Thorough recordkeeping and careful review of the instructions are crucial; Failing to mark the appropriate “Yes” responses on Form 990, triggering Schedule G, is a frequent oversight.
XII. Utilizing ProConnect Tax Software for Schedule G
ProConnect Tax Software streamlines Schedule G preparation. To generate the form within the software, ensure lines 17, 18, or 19 on Form 990, Part IV, are marked “Yes,” indicating fundraising or gaming activity. The software guides users through each section, minimizing errors and ensuring compliance.
ProConnect automatically calculates totals and flags potential issues, simplifying the reporting process. It facilitates accurate data entry for professional fundraising services, event details, and gaming income/expenses. Utilizing the software’s built-in help resources and validation checks significantly reduces the risk of penalties due to incorrect reporting. It’s a valuable tool for efficient and accurate Schedule G filing.
XIII. Understanding Line Items on Schedule G
Schedule G’s line items require careful attention. Lines 17, 18, and 19 act as triggers; answering “Yes” to any necessitates completing the schedule. These lines inquire about professional fundraising services, fundraising events exceeding specific gross receipt thresholds ($5,000 and $15,000), and gaming activities.
Subsequent lines detail revenue and expenses for each activity. Reporting gross receipts, not net income, is crucial. Events with over $15,000 in contributions require detailed listing. Accurate completion ensures transparency and avoids scrutiny. Understanding these line items is vital for compliant Form 990 filing, reflecting a nonprofit’s fundraising efforts comprehensively.
A. Line 17, 18, and 19 ⏤ Triggering Schedule G
Schedule G isn’t always required; lines 17, 18, and 19 on Form 990 determine necessity. Line 17 asks about engaging professional fundraising services. A “Yes” answer mandates completing Part I. Line 18 concerns fundraising events with gross receipts exceeding $5,000, triggering Part II reporting.
Finally, line 19 addresses gaming activities, requiring completion of Part III if answered affirmatively. These lines act as gatekeepers, ensuring only organizations with relevant activities file Schedule G. Answering “Yes” to any necessitates detailed disclosure of associated revenue and expenses, promoting transparency in nonprofit fundraising practices.
XIV. Impact of Fundraising Losses on Schedule G
Schedule G requires reporting even if fundraising events result in a net loss. The IRS focuses on gross receipts, not net income, when determining reporting requirements. While a loss might seem counterintuitive to report, it provides a complete picture of fundraising efforts.
Organizations must disclose both revenue and expenses associated with the event, even if expenses exceed contributions. This transparency helps the IRS assess the organization’s financial health and fundraising efficiency. Reporting losses doesn’t necessarily trigger penalties, but omitting them would be non-compliant.
XV. Recordkeeping Requirements for Schedule G
Maintaining detailed records is crucial for accurate Schedule G reporting. Organizations must retain supporting documentation for all reported fundraising activities, including professional fundraising contracts, event invoices, and gaming revenue statements. These records should demonstrate the gross receipts and expenses associated with each activity.
Specifically, keep records of donor lists, event attendance, and any related promotional materials. The IRS may request these documents during an audit, so accessibility is key. Proper recordkeeping ensures compliance and simplifies the preparation of Form 990 and Schedule G, minimizing potential issues.
XVI. IRS Resources for Schedule G
The IRS provides several resources to assist organizations in completing Schedule G accurately. The official Form 990 instructions, available on IRS.gov, offer detailed guidance on each line item and reporting requirement. These instructions are updated regularly, reflecting changes in tax law.
Additionally, the IRS website features FAQs and publications related to exempt organizations and fundraising. Tax professionals and software providers also offer support and training. Utilizing these resources ensures compliance and minimizes errors. Remember to consult the latest versions of IRS publications for the most current information regarding Schedule G reporting.
XVII. Penalties for Non-Compliance
Failure to properly complete and file Schedule G with Form 990 can result in significant penalties from the IRS. These penalties can include monetary fines, potentially escalating with repeated offenses or the extent of the non-compliance. Incorrect or incomplete reporting may trigger an audit, leading to further scrutiny of the organization’s financial practices.
Moreover, non-compliance can jeopardize an organization’s tax-exempt status. It’s crucial to maintain accurate records and adhere to all reporting requirements. Seeking professional tax advice can help ensure compliance and avoid costly penalties. Proactive adherence to IRS guidelines is essential for maintaining good standing.
XVIII. Schedule G and State Reporting Requirements
Beyond federal requirements, many states have their own reporting obligations for nonprofit organizations, often mirroring or expanding upon the information requested in Schedule G of Form 990. These state-level filings may necessitate duplicating fundraising data, including details about professional fundraisers, events, and gaming activities.
Organizations must investigate specific state regulations to ensure full compliance. Failure to meet these state requirements can lead to penalties, similar to those imposed by the IRS. Maintaining meticulous records and consulting with a tax professional familiar with both federal and state laws is highly recommended for navigating these complex reporting landscapes.
XIX. Preparing Schedule G: A Step-by-Step Guide
Begin by gathering all relevant financial records related to fundraising activities: professional fees, event income and expenses, and gaming revenue. Next, determine if your organization meets the filing threshold – specifically, if lines 17, 18, or 19 on Form 990 are answered “Yes”.
Then, meticulously complete each part of Schedule G, ensuring accuracy and consistency with Form 990. Utilize tax software like ProConnect to streamline the process and minimize errors. Double-check all calculations and supporting documentation before submission to the IRS, adhering to all deadlines to avoid penalties.
XX. Frequently Asked Questions About Schedule G
Q: Who needs to file Schedule G? Organizations filing Form 990 or 990-EZ with professional fundraising, events exceeding $5,000, or gaming activities.
Q: Does net loss impact Schedule G? Yes, even if fundraising events result in a loss, they must be reported on Schedule G, detailing both revenue and expenses.
Q: What’s the difference between gross receipts and net income? Schedule G requires reporting gross receipts, the total amount raised, not net income after expenses.
Q: What are recent updates? The IRS released updated forms in December 2024, so ensure you’re using the latest version.