Changes in revenue, expense allocations, and donor concentration can create Form 990 complications that aren’t always visible in the financial statements alone. This article walks nonprofit leaders through three key areas to review before year-end: supporting expense classifications across program, management, and fundraising functions; evaluating whether new income-producing activities trigger unrelated business income tax; and monitoring public-support calculations when donor concentration is rising. Addressing these issues early keeps year-end surprises to a minimum and helps protect your organization’s tax-exempt status.

The backdoor Roth IRA strategy can trigger an unexpected tax bill if you overlook the pro-rata rule, which requires the IRS to treat all of your traditional IRA balances together when calculating how much of a conversion is taxable. A separate account, a prior 401(k) rollover, or even a year-end IRA balance you didn’t have at the time of conversion can all affect the result. Before contributing or converting, review your full IRA picture to avoid a costly surprise at tax time.

Starting in 2027, a new federal tax credit will allow eligible taxpayers to reduce their tax liability dollar for dollar by making cash contributions to qualifying Scholarship Granting Organizations that fund K-12 education. Unlike a charitable deduction, this credit directly offsets what you owe, with individual credits of up to $1,700 per year and up to $3,400 for married couples filing jointly. If you support education-focused giving, now is the time to understand how this new credit interacts with existing state programs and your overall charitable strategy.