Avoid These Common Form 990 Mistakes: A Nonprofit’s Guide with Presti & Naegele

Why Form 990 Is More Than a Tax Document

Form 990 isn’t just a tax return. It’s a public disclosure document that communicates your nonprofit’s mission, finances, leadership, and programs. It’s often the first place donors, grantmakers, and watchdog organizations look when evaluating your transparency and financial integrity.

What Form 990 Reveals:

• Your organization's mission and primary activities
• How funds are spent (program vs. administrative)
• Salaries of key officers
• Information about governance practices
• Public support level and revenue sources

This means the form is as much about storytelling and public trust as it is about numbers.

For that reason, Presti & Naegele’s approach to Form 990 preparation and filing includes both compliance and strategy. We help your organization present a clear, accurate narrative that reflects your impact while satisfying IRS requirements.

Most Common Mistakes Nonprofits Make on Form 990

Form 990 is complex, and mistakes are common—especially for organizations attempting to complete it in-house. Here are some of the most frequent (and costly) errors nonprofits make.

1. Missing the Deadline

The IRS Form 990 is due five and a half months after the end of your organization’s fiscal year. Missing that deadline not only triggers late penalties but could also flag your organization for additional scrutiny. Worse, missing it for three consecutive years leads to automatic revocation of your tax-exempt status.

2. Filing the Wrong Form

The IRS provides different versions of Form 990 depending on your organization’s size:

• Form 990-N (e-postcard): Gross receipts ≤ $50,000
• Form 990-EZ: Gross receipts < $200,000 and total assets < $500,000
• Form 990: Larger organizations
• Form 990-PF: Private foundations

Using the wrong form can lead to inaccurate reporting and even IRS penalties. At Presti & Naegele, we ensure you file the correct version based on your structure and financials.

3. Inconsistent or Inaccurate Financials

Form 990 must align with your organization’s accounting records. Discrepancies between revenue and expenses, inconsistencies in program costs, or missing numbers can lead to errors or raise red flags for the IRS.

4. Neglecting Key Schedules

Many organizations overlook the importance of Form 990 schedules. For example:

• Schedule A defines your public charity status.
• Schedule B reports donor contributions.
• Schedules C, D, G, and others address lobbying, fundraising, and additional activities.

Incorrect or omitted schedules can result in an incomplete filing.

5. Poor Narrative in Program Descriptions

The IRS requires descriptions of your major programs and services. Too often, nonprofits submit vague or generic responses. This is a missed opportunity to clearly communicate your impact to the public.

6. Missing Governance Disclosures

Part VI of Form 990 asks about policies on conflicts of interest, document retention, and board oversight. Leaving these blank or answering incorrectly can raise compliance concerns.

Avoiding these mistakes starts with having the right guidance. Presti & Naegele helps nonprofits complete Form 990 with the precision and depth the IRS—and the public—expects.

Consequences of Filing Errors or Omissions

Mistakes on Form 990 aren’t just administrative slip-ups. They carry real consequences, including financial penalties, reputational damage, and IRS scrutiny.

1. Late Filing Penalties

The IRS can impose penalties up to $20 per day, and for larger nonprofits, that rate increases to $100 per day, with caps in the tens of thousands.

2. Loss of Tax-Exempt Status

Three consecutive missed filings will automatically revoke your nonprofit status. Getting reinstated is a complex, time-consuming process that may cost you donors and credibility in the meantime.

3. Public Scrutiny

Because Form 990 is public, any mistakes—or perceived gaps in governance—can be flagged by watchdog groups or investigative journalists. That’s the kind of attention nonprofits want to avoid.

4. Decreased Donor Confidence

Donors often look to Form 990 to assess how their money is being used. Sloppy or incomplete filings can make your nonprofit appear disorganized or mismanaged.

With Presti & Naegele, nonprofits get comprehensive, compliant, and strategic Form 990 preparation that protects their reputation and standing.

How to File Form 990 Correctly (and Strategically)

Avoiding errors starts with good planning and a strategic mindset.

1. Maintain Accurate Books Year-Round

Your accounting system should be up-to-date before you even begin preparing Form 990. Having accurate financial records avoids last-minute surprises and errors.

2. Align Your Narrative with Your Financials

The descriptions in Part III (Program Service Accomplishments) should be consistent with the budget and expenses reported. If a major program isn’t reflected in your expenses, it may appear misleading.

3. Showcase Your Mission and Impact

Use the open sections of Form 990 to explain how your organization delivers value to the community. Avoid vague or recycled boilerplate language.

4. Consult with Your Board

Certain parts of the form require information about board meetings, policy adoption, and oversight. Make sure your leadership is informed and engaged.

5. Work with an Expert

Even with good internal practices, the technical complexity of Form 990 can trip up seasoned nonprofit professionals. That’s why many organizations turn to Presti & Naegele for their Form 990 preparation and filing.

Why Outsourcing to a Form 990 Specialist Pays Off

Form 990 isn’t a one-size-fits-all document. For each organization, it presents unique challenges—and opportunities.

Presti & Naegele brings decades of experience in nonprofit tax compliance. Their dedicated team handles every aspect of the process, from the main form to complex schedules, ensuring accuracy and alignment with your mission.

Key Advantages of Working with Presti & Naegele:

• Preparation and electronic filing of Form 990, 990-EZ, and 990-PF
• Expert handling of complex schedules (A, B, C, D, G, etc.)
• Detailed review of public support tests and compliance metrics
• Clear, compelling program narratives that highlight your impact
• Year-round support for nonprofit tax planning and governance

Learn more about how Presti & Naegele helps nonprofits turn Form 990 into a strategic asset, not just a tax requirement.

Year-Round Support: Going Beyond the Annual Filing

Filing Form 990 shouldn’t be a once-a-year scramble. Nonprofits benefit from continuous advisory services that support better governance, transparency, and donor relations.

Ongoing Benefits of Partnering with Presti & Naegele:

• Continuous access to tax and nonprofit accounting expertise
• Assistance with amended returns or prior-year corrections
• Guidance on changes in IRS regulations and reporting requirements
• Strategic planning to improve public support ratio and fundraising transparency
• Training and support for staff and board around compliance topics

Presti & Naegele serves clients nationwide, including New York, Los Angeles, Houston, Chicago, and more—making expert Form 990 help accessible wherever your organization is based.

Explore how Presti & Naegele can support your mission, both during and after filing season.

Conclusion: Avoid the Pitfalls—Let Experts Handle Your Form 990

Form 990 is too important to risk doing it wrong. It’s a public-facing document that affects your organization’s reputation, donor relationships, and tax status. Common errors—from missed schedules to late filings—can result in costly consequences.

The good news? You don’t have to do it alone. With more than 40 years of experience, Presti & Naegele helps nonprofits complete Form 990 with precision, clarity, and strategic focus. Their white-glove service ensures every line, footnote, and figure is handled by professionals who understand nonprofit needs.

Whether you're a foundation, religious organization, charitable trust, or advocacy group, Presti & Naegele offers tailored support to keep you compliant, confident, and focused on your mission.

Ready to file smarter, not harder? Contact Presti & Naegele today.