Best 990 Tax Software for Nonprofit Organizations

Filing Form 990 is a responsibility for nonprofit organizations, ensuring compliance with IRS regulations and maintaining tax-exempt status. Given the complexity of reporting financial details, selecting the right tax software can simplify the process, reduce errors, and save time.

With various options available, choosing software that aligns with an organization’s needs requires careful consideration.

Key Features of 990 Tax Software

A well-designed 990 tax software streamlines data entry, ensuring financial information is accurately categorized and reported. Automated calculations help prevent errors, such as misreporting revenue or misallocating expenses. Many platforms include validation checks that flag inconsistencies before submission, reducing the risk of IRS penalties.

Customization is key, as nonprofit organizations vary in size and structure. Some software allows users to tailor reporting fields to match their financial activities, whether they operate as a public charity, private foundation, or social welfare organization. This flexibility ensures compliance without unnecessary complexity.

Collaboration tools improve efficiency, particularly for nonprofits with multiple stakeholders involved in tax preparation. Cloud-based platforms enable real-time access for accountants, board members, and financial officers, allowing them to review and approve filings from different locations. Role-based permissions keep sensitive financial data secure while providing access to authorized users.

E-filing capabilities are now standard, as the IRS mandates electronic submission for most tax-exempt organizations. Software that integrates directly with the IRS system expedites processing and provides confirmation of receipt, reducing uncertainty. Some platforms also offer automatic deadline reminders to help organizations avoid late filing penalties, which can range from $20 to $110 per day depending on annual gross receipts.

Top 990 Tax Software Options for 2024

Selecting the right software requires evaluating factors beyond basic functionality. Some platforms cater to specific nonprofit structures, while others focus on simplifying multi-year tax filings or providing in-depth reporting tools.

TaxSlayer Pro is a popular choice for smaller nonprofits with straightforward reporting needs. It provides step-by-step guidance tailored to tax-exempt organizations, making it easier for users with limited accounting experience to complete filings accurately. Its cloud-based accessibility allows financial officers to work remotely without complex installations.

For organizations requiring advanced reporting, Drake Tax offers a robust solution. It generates detailed financial reports that align with IRS expectations, helping organizations maintain transparency. The platform also supports multi-year data comparisons, useful for tracking trends in revenue and expenditures.

Larger nonprofits with complex financial structures often turn to CCH Axcess Tax, which integrates with enterprise-level accounting systems. This software benefits organizations managing multiple revenue streams, such as grants, donations, and program service income. Its audit trail capabilities help ensure compliance by maintaining a detailed record of financial transactions, which can be invaluable in case of an IRS review.

Comparison of Pricing Models

Cost structures vary depending on the organization’s size, filing complexity, and additional service offerings. Some platforms charge a flat fee per return, making them a predictable option for nonprofits that file a single Form 990 each year. Others use a tiered pricing model, where costs increase based on the type of form filed—990-N, 990-EZ, or the full 990—as well as the inclusion of supplementary schedules. This is particularly relevant for organizations managing donor-advised funds or foreign grants.

Subscription-based pricing is common in software designed for accounting firms or large nonprofits handling multiple filings. These plans typically offer unlimited returns for a fixed annual fee, which can be cost-effective for organizations overseeing multiple entities under a parent nonprofit structure. Some providers bundle additional features, such as compliance monitoring and financial statement preparation, into higher-tier packages. While these services can streamline operations, they also increase costs, making it important to assess whether they are necessary.

Transaction-based pricing, where fees are charged per e-filed return, is prevalent among pay-as-you-go platforms. This model can be advantageous for smaller nonprofits that do not require ongoing tax software access but need a reliable solution for annual filings. However, some providers impose separate charges for state filings or amended returns, which can add up unexpectedly. Organizations should carefully review fee structures to avoid surprise costs.

User Experience and Support

Navigating Form 990 preparation can be overwhelming, especially for nonprofits with limited in-house financial expertise. The usability of tax software plays a significant role in ensuring organizations can efficiently complete their filings. Platforms with intuitive dashboards, logically organized menus, and responsive load times help users focus on data accuracy rather than struggling with navigation. Guided workflows, where users are led through each section of Form 990 with clear instructions, reduce the likelihood of errors.

Responsive customer support is also critical. Some providers offer live chat and phone support with tax professionals who can clarify IRS requirements or troubleshoot software issues in real time. Others rely on email ticketing systems, which may be slower but provide detailed responses for complex inquiries. The quality of customer assistance often varies by subscription tier, with premium plans including priority access to dedicated support teams.

Security and Compliance Features

Given the sensitivity of nonprofit financial data, security is a fundamental consideration when selecting 990 tax software. Organizations must ensure their chosen platform adheres to industry standards for data protection while meeting IRS regulations for electronic filing.

Encryption protocols safeguard financial records, particularly when transmitting data to the IRS. Leading software providers implement AES-256 encryption, the same standard used by financial institutions, to protect stored and transmitted information. Multi-factor authentication (MFA) further enhances security by requiring users to verify their identity through multiple credentials before accessing the system. This is particularly important for nonprofits with multiple users handling tax filings, as it reduces the risk of unauthorized logins.

Compliance with IRS e-file security requirements is another important factor. The IRS mandates that tax software providers meet stringent authentication and data integrity standards to prevent fraudulent filings. SOC 2 compliance, which evaluates a provider’s controls related to security, availability, and confidentiality, is a strong indicator that a platform follows best practices. Regular third-party audits help ensure software remains compliant with evolving cybersecurity threats. Some platforms also offer audit trails that track changes made to tax filings, providing transparency and accountability in case of an IRS inquiry.

Integration with Accounting Systems

Seamless integration between tax software and accounting platforms improves efficiency for nonprofit organizations. Instead of manually transferring financial data, integration allows for automatic syncing of revenue, expenses, and other key figures, reducing the risk of discrepancies in tax filings.

Many 990 tax software solutions support direct integration with widely used accounting platforms such as QuickBooks, Sage Intacct, and Xero. This connectivity enables real-time data imports, ensuring financial statements remain aligned with tax filings. For nonprofits that track restricted funds separately from general operating expenses, integration ensures these classifications carry over correctly, preventing misreporting. Some software also allows for automated journal entries, reducing the need for duplicate data entry and minimizing human error.

Customization within integrations is another factor to consider. Some platforms offer API access, allowing larger nonprofits to tailor data flows between their accounting and tax systems. This is particularly useful for organizations managing multiple grants or program-specific budgets. Additionally, integration with document management systems can streamline record-keeping, ensuring supporting documentation for tax filings is easily accessible in case of an audit.

Future Trends in 990 Tax Software

As tax regulations evolve and technology advances, 990 tax software is expected to incorporate new features that further streamline compliance and enhance financial transparency. Artificial intelligence and machine learning are playing an increasing role in automating tax preparation, reducing manual data entry, and identifying potential discrepancies before submission.

AI-driven analytics are becoming more prevalent, allowing nonprofits to gain deeper insights into their financial health. Some platforms offer predictive modeling, helping organizations forecast future tax liabilities based on historical data. This can be particularly useful for nonprofits with fluctuating revenue streams, such as those reliant on seasonal fundraising campaigns. Additionally, natural language processing (NLP) is being integrated into some systems, enabling users to ask tax-related questions and receive instant, AI-generated responses, reducing the need for extensive manual research.

Blockchain technology is also emerging as a potential tool for nonprofit tax compliance. While still in its early stages, blockchain-based record-keeping could enhance transparency by creating immutable financial records that auditors and regulators can verify in real time. This could be especially beneficial for large nonprofits that must demonstrate accountability to donors and grant providers. As regulatory agencies continue to explore digital ledger technologies, future iterations of 990 tax software may incorporate blockchain to improve data integrity and reduce the risk of fraud.