Bit of a pickle...If I had a non-exempt nonprofit do I file a schedule C for it like a business?

Wintery
Wintery Member Posts: 1 Newcomer
in General

I had created a non profit last year and wasn't aware of the 1023 form that needed to be filed to complete the tax exemption process. I also don't want to continue the non profit so I've since dissolved it but I did create an EIN under the name of the organization.

So at this point I filed a 990 Postcard form to inform the IRS about the less than $50K earnings but I don't know if I also need to file a Schedule C for the EIN number. In addition, my husband filed us jointly married for 2025 and so my earnings information is already filed but none of the expenses or any other bits that would normally be filed along with a business (which the nonprofit was run as in the end).

What's my next step?

Answers

  • MatthewD
    MatthewD FreeTaxUSA Admin, FreeTaxUSA Agent Posts: 893 image
    Hi Wintery,

    Since your organization never received official tax-exempt status from the IRS (because Form 1023 was never filed and approved), it was not a tax-exempt nonprofit in the eyes of the IRS. The 990-N e-Postcard is technically only for recognized tax-exempt organizations, so filing it is not required or appropriate for your situation. That said, the more pressing issue is how the income and expenses are reported on your personal return.

    Because the organization was never tax-exempt, its income is treated as taxable income. If you operated it as an unincorporated entity (which it sounds like you did), the income and expenses would typically be reported on a Schedule C as self-employment income, similar to a sole proprietorship. The good news is that means you can also deduct legitimate business expenses, which could reduce what you owe.

    Since your husband already filed your joint 2025 return with the income included but without the expenses, you would generally need to file an amended return (Form 1040-X) to add the Schedule C and claim those deductions.

    I'd recommend consulting with a tax professional or CPA who can review the full picture before you proceed. They can confirm the right approach for your specific situation and help you avoid any unintended issues with the IRS. Contact Customer Support and consider adding Pro Support.

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