How to complete Liabilities Section in Form 990?

The Liabilities section in Form 990 (Part X of the Balance Sheet) is where an organization reports everything it owes at the beginning and end of the tax year. This includes unpaid bills, loans, mortgages, deferred revenue, grants payable, tax liabilities, and any other financial obligations.

It helps the IRS understand the organization’s financial position and ensures that total liabilities, combined with net assets, match the organization’s total assets.

General Instructions for Completing the Liabilities Section in Form 990:

1. Start with your accounting records
   Use your organization’s balance sheet to report all liabilities at both the beginning and end of the tax year. The beginning amounts should match last year’s ending balances.

2. Report all financial obligations
   Include any amounts your organization owes—such as loans, mortgages, unpaid bills, accrued expenses, grants payable, deferred revenue, and tax liabilities.

3. Use book values, not estimates
   Enter liabilities exactly as they appear in your books. Follow the same accounting method used in your financial statements (cash or accrual).

4. Ensure consistency across the form
   The total liabilities must align with total assets and net assets. If totals don’t balance, review your entries for missing or misclassified items.

5. Disclose additional details when required
   Some liabilities may require extra explanation in Schedule D (for example, certain tax-exempt bond liabilities or other significant obligations).

6. Verify accuracy before filing
   Double-check that all liabilities are included, categorized correctly, and supported by proper documentation.