What Should 501(c)(3) PTAs Know About Form 990 Filing?
- Updated August 14, 2023 - 2.00 PM - Admin, Tax990
If an organization is organized and operated towards any not-for-profit purposes, they are eligible to apply for federal tax exemption under the IRS section 501(c)(3).
This article discusses how Parent Teacher Associations (PTAs) can obtain 501(c)(3) tax-exempt status and their tax filing requirements.
Table of Contents
What are Parent Teacher Associations (PTAs)?
A Parent Teacher Association (PTA) is an organization or a group formed between parents, family members, teachers, and staff members to make schools a better place for students and to improve parental involvement in schools.
PTAs in the U.S. are generally part of the National Parent Teacher Association (National PTA), a nonprofit organization located in Alexandria, Virginia.
Generally, most public and primary schools have PTAs, and these groups work toward the welfare of students’ education and health.
Are PTAs 501(c)(3) Tax-Exempt?
Yes! Generally, the PTAs are regarded as nonprofits and are eligible to obtain tax-exempt status from the IRS. PTAs that obtain tax-exempt status from the IRS are exempt from paying federal income taxes.
Contributions made to tax-exempt PTAs are tax-deductible. Also, PTA members can get a reimbursement of their membership fees in the form of expenses such as commutation, accommodation, food, and telephone charges.
How can PTAs Obtain 501(c)(3) Tax-Exempt Status?
PTAs that need an exemption from paying federal taxes under the IRS section 501(c)(3) are required to file Form 1023, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.
They can also file Form 1023-EZ based on their gross receipts and their answers on the
Steps to file Form 1023
PTAs can file Form 1023 by following the steps below:
Register for an account on Pay.gov
Search for “1023” in the search box and select it.
Complete the form.
Once approved, the IRS will provide the determination letter regarding the PTA’s tax-exempt status, which should be part of the permanent records of the PTA.
Restrictions for 501(c)(3) PTAs
The IRS has established certain limitations for PTAs to stay eligible for 501(c)(3) tax exemption.
A 501(c)(3) PTA must be organized and operated exclusively for charitable, educational, or scientific purposes.
During a PTA’s dissolution, their assets must be devoted to one or more of their exempt purposes.
The PTA must not engage in any political activities.
The PTA's engagement in lobbying activities is limited.
What are the 990 Filing Requirements for 501(c)(3) PTAs?
PTAs that obtained 501(c)(3) tax-exempt status from the IRS are required to file Form 990 returns annually to report details regarding their financial status, activities, and other information required by the IRS.
The Form 990 series consists of different variants, and PTAs are required to file the applicable one based on their gross receipts and assets.
PTAs with gross receipts less than or equal to $50,000 must file Form 990-N
PTAs with gross receipts less than $200,000 but greater than $50,000 and assets less than $500,000 must file Form 990-EZ
PTAs with gross receipts equal to or greater than $200,000 (or) assets equal to or greater than $500,000 must file Form 990
Reporting Unrelated Business Income
PTAs that have an income of $1000 or more from unrelated businesses during the corresponding tax year are required to file Form 990-T.
An activity will be regarded as yielding unrelated business income only if it’s a trade or business that is regularly carried on and is unrelated to the organization’s tax-exempt purpose.
Additional Filing Requirements for PTAs
PTAs that file Form 990 or 990-EZ may be required to report additional information through various Schedules. For example, if the PTA has received a contribution of $5000 or more from any one contributor, they must attach Form 990 Schedule B. Learn more about Schedules
When is the Deadline for PTAs to file Form 990?
Generally, 990 forms are due by the 15th day of the 5th month after the PTA’s accounting period ends. Therefore, PTAs following a calendar tax year must complete their 990 filing on or before May 15th.
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