"Gross receipts" sounds like an accounting detail, but for a nonprofit it is the number that decides which annual return you file. It is also easy to get wrong, because it isn't the same as your income, your revenue or your bank balance. Here is what it includes, how the IRS averages it, and how to compute it from your own books.
The definition
The IRS defines gross receipts as the total amounts the organization received from all sources during its tax year (including a short year), without subtracting any costs or expenses.
That last part is the important one. Your financial statements usually show many activities on a net basis: a gala's ticket sales minus the cost of the venue, sales of merchandise minus what the merchandise cost, the sale price of an investment minus what you paid for it. For gross receipts, you add back every one of those costs. The test is how much flowed in, not how much you kept.
What counts
- Contributions and grants, including government grants and pledges you booked (on the accrual method)
- Program service revenue: tuition, fees, admissions, contracts
- Membership dues
- Fundraising event receipts, at the full amount attendees paid
- Sales of inventory, at the full sale price, before cost of goods sold
- Investment income: interest, dividends, rents (before rental expenses) and royalties
- Gross proceeds from selling assets such as securities or property, not just the gain
What doesn't
Money you collect purely as an agent for another organization is not your gross receipts. The IRS example is a local fraternal lodge that collects insurance premiums for its parent lodge and passes them on without any right to use them; the parent reports them. The same treatment applies whenever one organization collects funds merely as an agent for another.
Social clubs (501(c)(7)) use a different, special definition of gross receipts to check whether they stay within their limits on nonmember income. That special definition is only for the exemption test. For choosing a return, clubs use the ordinary definition on this page.
Gross receipts vs total revenue
On Form 990, total revenue (Part VIII, line 12) is a net figure for several lines. Gross receipts, reported in item G at the top of page 1, add those costs back:
| Form 990, Part VIII line | Cost subtracted from revenue | Added back for gross receipts |
|---|---|---|
| 6b | Rental expenses | Yes |
| 7b | Cost or basis and sales expenses of assets sold | Yes |
| 8b | Direct expenses of fundraising events | Yes |
| 9b | Direct expenses of gaming | Yes |
| 10b | Cost of goods sold | Yes |
So: gross receipts = line 12 + lines 6b, 7b, 8b, 9b and 10b. On the Form 990-EZ, gross receipts are line 9 (total revenue) plus lines 5b, 6c and 7b. In the IRS example, an organization with $50,000 of total revenue that had deducted $2,000, $1,500 and $500 on those three lines has gross receipts of $54,000.
How gross receipts pick your return
| Return | Gross receipts test | Other test |
|---|---|---|
| Form 990-N | Normally $50,000 or less | None (assets don't matter) |
| Form 990-EZ | Less than $200,000 for the year | Total assets less than $500,000 at year end |
| Form 990 | $200,000 or more | Or total assets of $500,000 or more |
Private foundations file the 990-PF at any size, and some organizations can't use the shorter forms whatever their receipts. Our which-form guide covers those exceptions.
What "normally $50,000 or less" means
The 990-EZ and Form 990 tests look at one year. The 990-N test looks at what your gross receipts normally are, which depends on your organization's age:
| If the organization is… | Gross receipts are normally $50,000 or less if it… |
|---|---|
| Up to 1 year old | received, or donors pledged, $75,000 or less in its first tax year |
| Between 1 and 3 years old | averaged $60,000 or less in each of its first 2 tax years |
| 3 years old or more | averaged $50,000 or less over the immediately preceding 3 tax years, including the year being reported |
The averaging cuts both ways. A small organization that has one strong year can stay on the 990-N if the three-year average is under $50,000. An organization that has outgrown the e-Postcard can't drop back to it because of one weak year.
A youth theater's year. A hypothetical youth theater, five years old, had this year:
- Contributions and grants: $22,000
- Summer camp tuition: $14,000
- Spring gala: $18,000 of ticket sales (no contribution portion), with $9,000 of direct costs
- T-shirt sales: $4,000, with $2,500 cost of goods sold
- Interest: $600
- Sale of donated stock: $6,000 of proceeds, with a $5,800 basis
Its total revenue is $22,000 + $14,000 + $9,000 + $1,500 + $600 + $200 = $47,300. Its gross receipts are $22,000 + $14,000 + $18,000 + $4,000 + $600 + $6,000 = $64,600.
Looking only at this year, the theater is over $50,000. But it had gross receipts of $41,000 and $38,000 in the two prior years, so its three-year average is ($64,600 + $41,000 + $38,000) ÷ 3 = $47,867. Its gross receipts are normally $50,000 or less, and it may file the 990-N. If it chose a bigger return, $64,600 is well under the 990-EZ limit.
Keeping the right records
To compute gross receipts, you need records that show the gross amounts, not just net results. IRS Publication 4221-PC lists the kinds of documents that support gross receipts: donor correspondence, pledge documents, deposit slips, receipt books, invoices, card processor statements and Forms 1099. For events and sales, keep the ticket or sales totals separately from the expenses, even if your bookkeeping nets them.
If your numbers sit near a threshold, recompute gross receipts each year and keep the worksheet with your return. Filing a return that is too small is treated as not filing, which can bring late-filing penalties, and three years of that leads to automatic revocation.
Frequently asked questions
Are in-kind donations part of gross receipts?
Donated goods and property that you report as contributions are included. Donated services and the free use of facilities are not reported as contributions on Form 990, Part VIII, so they don't add to gross receipts.
Our gala netted $5,000 but sold $40,000 in tickets. Which figure counts?
The $40,000. Gross receipts include the full amount attendees paid, whether it is reported as a contribution or as event revenue on the return.
Does the 990-EZ also use a three-year average?
No. The 990-EZ test uses the gross receipts for the year being reported (less than $200,000) and total assets at the end of that year (less than $500,000). Only the 990-N test uses "normally".
Do 501(c)(4) and 501(c)(6) organizations use the same tests?
Yes. The gross receipts thresholds apply to organizations under all the 501(c) subsections. Section 527 political organizations have their own rule.
Sources
- IRS: 2025 Instructions for Form 990, General Instructions and Appendix B. irs.gov
- IRS: 2025 Instructions for Form 990-EZ. irs.gov
- IRS: Annual electronic filing requirement for small exempt organizations (Form 990-N). irs.gov
- IRS: Publication 4221-PC, Compliance Guide for 501(c)(3) Public Charities. irs.gov
- IRS: Form 990 series, which forms do exempt organizations file. irs.gov
IRS figures change; inflation-adjusted amounts are updated each year. We review this page when the IRS publishes new instructions.
990IRS.com is a private company, not the IRS. This page is general information, not legal or tax advice for your organization. Example organizations and figures are hypothetical.
