Definition and Purpose of Schedule I (Form 990-EZ)
Schedule I (Form 990-EZ) is designed for organizations that report grants or assistance to individuals or organizations during the tax year. It accompanies Form 990-EZ, which is filed by small to medium-sized non-profit organizations, and ensures transparency in financial allocations. The form requires detailed information about the specific recipients of grants and the purposes for which funds were used. Organizations must disclose the amount granted, the nature of the support, and the qualifying criteria used to determine recipient eligibility. This level of detail aids the IRS and the public in evaluating how non-profits allocate resources in furtherance of their missions.
How to Use Schedule I (Form 990-EZ)
Using Schedule I involves several important steps:
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Identify Applicable Grants and Assistance: Review your organization's records to identify grants and assistance provided during the tax year. This includes financial aid to individuals, other organizations, or governmental units.
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Document Recipient Information: For each recipient, record their legal name, address, and the amount and purpose of the grant or assistance given.
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Justify Distribution Criteria: Provide a detailed explanation of how recipients were selected. Highlight the criteria or processes in place that justify the distribution, ensuring compliance with organizational objectives.
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Complete Form 990-EZ Filing: Attach the completed Schedule I to Form 990-EZ when filing your organization's annual information return.
By following these steps, organizations can effectively utilize the form to comply with federal regulations and uphold transparency standards.
Steps to Complete Schedule I (Form 990-EZ)
Completing Schedule I requires careful attention to detail:
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Prepare Organizational Information: Begin by providing your organization’s name, EIN, and tax year.
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Aggregate Grant Information: List all grants provided in the reporting year. This includes accumulating the total number of grants and the sum of funds distributed.
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Detail Specific Grant Entries: For each entry, detail the recipient’s information, the purpose of the grant, and the selection criteria used.
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Attach Supporting Documentation: Maintain proper documentation supporting each entry to bolster your organization's compliance if reviewed by the IRS.
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Finalize and Review Entries: Check for accuracy and completeness before finalizing. Ensure consistency across all parts of Form 990-EZ.
Meticulous completion safeguards against potential penalties and supports your organization's standing as a responsible and compliant non-profit.
Key Elements of Schedule I (Form 990-EZ)
Schedule I comprises distinct sections, each highlighting crucial data:
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Part I - General Information on Grants and Other Assistance: This section identifies aggregate data concerning distributed funds.
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Part II - Breakdown of Individual Recipients: Detailed when grants exceed a threshold amount, possibly $5,000, requiring line-by-line reporting.
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Part III - Recipient Selection Criteria: Outlines the methodology behind recipient selection, ensuring alignment with foundational organizational goals.
Understanding these sections aids in appropriately categorizing and accurately reporting all philanthropic efforts.
IRS Guidelines for Filing Schedule I (Form 990-EZ)
Adhering to IRS guidelines ensures compliance:
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Accurate Reporting: All financial figures and recipient data must be precise and verifiable.
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Complete Questions Promptly: Address every prompt thoroughly, even if certain sections appear non-applicable at first.
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Mandatory Attachments: Provide any necessary attachments or additional documentation required by the IRS.
Failure to adhere to these guidelines may result in compliance checks or financial penalties.
Penalties for Non-Compliance
IRS penalties can arise from improper filing:
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Late Submission Penalties: Delay in filing may incur daily monetary penalties, compounded the longer a form is overdue.
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Erroneous Information Penalties: Incomplete or inaccurate entries can carry fines or attract audit examinations.
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Loss of Tax-Exempt Status: Severe non-compliance could result in the revocation of tax-exempt privileges, severely impacting organizational operations.
Ensure complete compliance and submission accuracy to mitigate these risks.
Required Documentation for Schedule I (Form 990-EZ)
Prepare to gather and verify essential documents that substantiate your listed entries:
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Grant Agreements and Awards: Copies of contracts or agreements specifying grant amounts, terms, and recipient obligations.
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Selection Criteria Documentation: Internal criteria documents that guided the grant selection process.
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Financial Records: Verification of disbursed funds, bank statements, or receipts that correspond with Schedule I entries.
Being organized and ready with these documents conveys diligence and adherence to IRS expectations.
Software Compatibility for Schedule I (Form 990-EZ)
Utilizing the right software streamlines the filing process:
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Accounting Software Integration: Solutions like QuickBooks assist with tracking fund disbursement entries.
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Tax-Filing Software: Services such as TurboTax and professional tax software provide structured promps and reminders, reducing errors.
Compatible software ensures structured data input and efficient report generation, simplifying IRS communications.
