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What an IRS Form 990 Will Tell You About a Charity

Donating to any charity organization can be rewarding and helpful to you when you file your taxes. When you donate to a charity, you want to make sure it is legitimate and that they can provide you with the correct documentation for when it comes time for you to settle up with the Internal Revenue Service. Did you know that there is an IRS form that can tell you a lot about your charity of choice? It is called the IRS Form 990, and you might be surprised at the information you can get using this particular form.

One of the first things you can learn about the charity is its official name and tax status. Only charities that have registered with the IRS as a charitable organization will have a tax status. As you look at the Form 990, you can immediately see whether or not the form is current by looking at the fiscal year listed on the form. The form will also tell you basic information about the charity such as the address and contact information. One thing you should keep in mind is that there may be several organizations with the same name so you need to look at the contact information and the address to make sure that you have the correct form for your charity of choice.

It is also important that you see whether or not the charity is exempt under the 501 (c) (3), also known as a non-profit organization such as churches, schools, and other types of charitable organizations. You will see this information on the 990 form. Only charities that are listed under this IRS rule are eligible for charitable contribution deductions. Check this information to make sure it applies to your charity.

Other information that could be of interest to you when you use a 990 form for your tax purposes it the information listed on the form that will tell you exactly how much revenue that the filer received during that fiscal year. You can see the revenue, expenses and net assets listed right on the file. This is important information for many people because it will give you an idea of the size of the operation and how the money is used once it is given to them. However, you also need to keep in mind that this information may not always be completely accurate and could possibly be misleading.

A true charitable organization relies on donations in order to operate. As with any other type of business some years are better than others and when you look at the 990 forms over a span of several years, you might get a better picture. This is because one year may receive record donations (think about the charities during Hurricane Katrina) and other years, the donations may be very light. You can also look at this information to see how many paid employees work for this organization and the amount of money they spend to pay their workers. Some of these charities may rely heavily on volunteers, while others may employ a few people.

In addition, you can also look at these numbers and tell how much money is coming in and how much money is going out. These amounts are usually broken down in services, management, fundraising, payments to affiliates and total expenses. Program services are considered the services that the charity uses to help their cause or mission. This dollar amount can tell you a lot about where your money goes after you have donated it to the organization. A true charity will have large amounts of money going out in this area.