IRS Form 990-T (Exempt Organization Business Income Tax Return) is used by tax-exempt organizations to report and pay tax on income generated from business activities unrelated to their exempt purposes. This income is referred to as Unrelated Business Taxable Income (UBTI).

For example, John Doe Private Foundation, a private nonoperating foundation, is invested in a restaurant business that is structured as a partnership. The foundation receives a Schedule K-1 (Form 1065), which reports its allocable share of the restaurant’s net profits. The flow-through income is unrelated to the foundation’s exempt purpose, so the foundation must file a Form 990-T to report the income and pay corporate income taxes.

What is the Purpose of Form 990-T

  • Reporting Unrelated Business Taxable Income (UBTI): To report income from a trade or business that is not substantially related to the organization’s exempt purpose. The tax-exempt organization must pay corporate income taxes on any net UBTI.
  • Calculating Tax Liability: To calculate and pay the corporate taxes owed on UBTI. In general, the corporate tax rate is a flat 21% on net taxable income for the 2023 tax year.

Who Must File and Reporting Deadlines

  • Tax-Exempt Organizations: Includes charities, religious organizations, educational institutions, and other types of organizations exempt from federal income tax under sections 501(c), 501(d), 401(a), and 408(e).
  • UBTI Threshold: Must file if the organization has gross income of $1,000 or more from unrelated business activities during the tax year.
  • Annual Filing: Must be filed annually for each tax year in which the organization has UBTI.
  • Due Date: The form is due on the 15th day of the 5th month after the end of the organization’s tax year. For calendar-year filers, this is May 15. The entity can file an extension request using Form 8868.

Video Tutorials on Form 990-T

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Additional Information

Taxpayers can find more information in the Form 990-T Instructions and on the IRS Publication 598 (Tax on Unrelated Business Income of Exempt Organizations).