Nonprofit Tax Season Checklist: What must be ready before filing

For many nonprofits, tax season feels like a race against the clock.

Deadlines approach, accountants ask for documents, and leadership suddenly realizes how much information is scattered across systems, inboxes, and spreadsheets. Even organizations with strong missions and dedicated teams often find themselves scrambling, not because they do not care, but because their bookkeeping was never fully prepared for filing.

Here is the hard truth.

Most nonprofit tax season problems are not tax problems. They are bookkeeping readiness problems.

Filing Form 990 and related returns is the moment when everything must be accurate, reconciled, and defensible. This checklist focuses on what your bookkeeping must already have in place before you even think about filing.

Why bookkeeping readiness matters more than tax forms

Many nonprofits focus their tax season preparation on forms and deadlines.

But tax filings are only the final output of a year’s worth of financial activity. If the bookkeeping behind that activity is incomplete or inconsistent, tax season becomes a cleanup project instead of a filing process.

Guidance from the IRS makes it clear that Form 990 is not just a tax document. It is a public disclosure that reflects financial integrity, governance practices, and how funds are used. Errors or delays do not just affect compliance. They affect credibility.

Strong bookkeeping turns tax season into a predictable process. Weak bookkeeping turns it into a crisis.

The nonprofit tax season bookkeeping checklist

Use this checklist to assess whether your books are truly ready before filing. Each section highlights why it matters and what commonly causes delays.

1. Financial close readiness

Before tax prep begins, the year must actually be closed.

That means: 

• All months in the fiscal year are closed 

• No pending transactions from prior periods 

• Clear cutoff between fiscal years

If your team is still adjusting prior months while preparing tax filings, delays are inevitable. Clean closes ensure that tax preparers are working with final numbers, not moving targets.

This is one of the most common reasons filings get pushed back.

2. Account reconciliations completed and reviewed

Every balance on the tax return traces back to reconciled accounts.

Before filing, confirm that: 

• All bank accounts are reconciled 

• Credit cards are reconciled monthly 

• Payroll and clearing accounts are reconciled 

• Differences are documented and resolved

Unreconciled accounts force accountants to investigate basic questions under deadline pressure. That work is slower, more expensive, and more stressful than addressing discrepancies earlier.

Accounting guidance from the AICPA consistently emphasizes that reconciliations are foundational to reliable reporting.

3. Restricted and unrestricted funds are clearly tracked

This is one of the most critical checklist items.

Before filing, your bookkeeping system should clearly show: 

• Which funds are restricted 

• The purpose and duration of restrictions 

• How restricted funds were used 

• Remaining balances by restriction

If restrictions are tracked in spreadsheets outside the accounting system, tax season becomes risky. Errors here often lead to follow up questions, corrections, or disclosures leadership did not expect.

Organizations supported by the National Council of Nonprofits frequently cite fund tracking issues as a major source of reporting stress.

4. Documentation is complete and consistently organized

Tax preparation requires support for what is reported.

Your bookkeeping should already include: 

• Invoices and receipts attached to transactions 

• Grant agreements and award letters accessible 

• Payroll and contractor documentation organized 

• Major contracts and leases on file

Missing documentation does not always stop filing, but it slows everything down. Accountants must request items, follow up repeatedly, and verify information manually.

Consistency matters more than perfection. A clear system beats a chaotic archive every time.

5. Chart of accounts supports reporting

Your chart of accounts should make reporting easier, not harder.

Before filing, review whether: 

• Accounts map cleanly to financial statements 

• Program and functional expense categories are clear 

• There are not excessive misc or catch all accounts 

• Revenue streams are properly separated

Overly complex or poorly structured charts force accountants to reclassify activity during tax prep, increasing the risk of errors and delays.

Experienced nonprofit firms like Moss Adams often note that many tax season issues originate from account structures that were never designed for reporting.

6. Governance and approvals are documented

Tax filings reflect governance, not just numbers.

Before filing, ensure that: 

• Financial statements were reviewed by leadership 

• The board reviewed financials during the year 

• Approval processes are documented 

• Officer and key employee information is current

Groups like the BoardSource emphasize that boards play a role in financial oversight, especially around filings that become public records.

Missing approvals or outdated governance information can delay final sign off.

Common mistakes that delay nonprofit tax filings

Even well intentioned nonprofits fall into familiar traps.

The most common include: 

• Waiting until tax season to reconcile accounts 

• Tracking restrictions outside the accounting system 

• Relying on one person to explain the books

• Sending partial information to accountants 

• Assuming cleanup can happen during filing

These mistakes turn tax season into a reactive process. Fixing them earlier reduces stress dramatically.

How to use this checklist before deadlines hit

This checklist is not meant to be used the week before filing.

The best time to review it is: 

• Mid year 

• At fiscal year end close 

• Immediately after a stressful tax season

Use it as a readiness assessment. Identify gaps. Fix the highest impact issues first.

Waiting until deadlines approach limits your options and increases pressure on everyone involved.

How MightyNonprofits helps nonprofits prepare before filing

At MightyNonprofits, we see the same pattern every tax season.

Organizations come to us exhausted, convinced tax filing is the problem. What they actually need is bookkeeping structure that supports filing.

We help nonprofits: 

• Close books consistently throughout the year 

• Build reconciliation routines that stick 

• Track restricted funds clearly and accurately 

• Organize documentation in repeatable ways 

• Reduce last minute tax season scrambling

Our goal is simple. Make tax season predictable instead of painful.

If filing feels stressful every year, it is a signal worth listening to.

Make tax season boring, in the best way

A smooth tax season is not about heroics.

It is about preparation.

When bookkeeping is ready: 

• Accountants ask fewer questions 

• Filings move faster 

• Boards stay confident 

• Leadership regains time and focus

If you want your next tax season to feel calm and controlled, the work starts long before the deadline.

A second set of experienced eyes on your books can help confirm what is ready and what needs attention.

FAQ 

What bookkeeping should be ready before nonprofit tax filing?

All months should be closed, accounts reconciled, restricted funds tracked accurately, documentation attached, and financials reviewed before filing begins.

Why do nonprofit tax filings get delayed?

Most delays are caused by incomplete bookkeeping, unreconciled accounts, missing documentation, or unclear fund restrictions, not by the tax forms themselves.

What is the biggest bookkeeping issue during tax season?

Unreconciled accounts and poor restricted fund tracking are the most common issues that slow down nonprofit tax preparation.

Should nonprofits fix bookkeeping issues during tax season?

Tax season is the worst time for cleanup. Fixing issues earlier in the year reduces stress, cost, and risk during filing.

How can nonprofits make tax season easier?

By maintaining clean, consistent bookkeeping year round and reviewing readiness before deadlines approach.