Activities can include grants and other assistance, program-related investments, fundraising activities, program services, and more.
Reporting this type of information is done using Schedule F and is for various geographic locations like Antarctica, Central America and the Caribbean, East Asia and the Pacific, Europe, and much more.
Here are some helpful guidelines to follow from the IRS when filing a Schedule F:
Part I - General Information on Activities Outside the United StatesThe first section of
Schedule F is for organizations with aggregate revenues or expenses greater than $10,000 from grantmaking, fundraising, business, investment, or program services outside of the United States. The IRS doesn't require any expenditure from services provided in U.S. for recipients inside and outside the U.S.
For Line 1, indicate whether the organization maintains records to substantiate the following:
- The monetary value of its grants and other assistance
- The recipients’ eligibility for grants or assistance
- The selection criteria used to award grants or assistance
Responses to Line 2 will go on Part V of the Schedule F. You should describe the organization’s procedures for monitoring the use of grants and assistance outside of the U.S. - this can include details from periodic reports and accountings, field investigations, or third-party audits.
Line 3 requires you to enter details for each type of activity conducted any time during the filling year for each region. If the organization has many activities per area, list each one separately for the same location name. Report any investments by regions as well; however, they should be separate from other activities listed in the same area. And you can list all investments from a particular region as a single entry.
It is not necessary to report any foreign investments indirectly held through a pass-through entity in the U.S. because the entity is not physically in a foreign location. You also won’t need to list any investments from entities located overseas that trade on a U.S. stock exchange.
Important: Listing funds transferred to a non-interest bearing account outside of the United States for program services is not necessary for Line 3; however, once those funds are used, the IRS requires you to list them on Line 3, Column F.
Complete the chart for Line 3 as follows
- Column A - List each region in which your organization conducts its foreign activity
- Column B - List the number of offices in each region
- Column C - List the number of employees, agents, and independent contractors in each region
- Column D - List the type of activity conducted in the region (i.e. fundraising, program services, etc.)
- Column E - Give a description of the particular type of service for any program services listed in Column D
- Column F - List total expenditures and investments in each region
With Lines 3a through 3c for Column B, report the total number of offices in foreign locations maintained by the organization during the tax year - don’t count any one office more than once. You’ll also enter the total number of employees and the overall sum of expenditures and investments on Lines 3a through 3c for their respective columns.
Part II - Grants and Other Assistance to Organizations or Entities Outside the United StatesExempt organizations with any recipients outside of the U.S. that have received grants or assistance of at least $5,000 need to be reported in this section. On Line 1, you need to list those recipients in the chart provided. Enter each organization or entity on separate lines. If you require more space for additional beneficiaries, you can attach duplicate copies as needed.
In this section, list cash or noncash grants and assistance based on the accounting method from your organization’s financial statements - you’ll need to describe this process later on in Part V. You should also report grants no matter the source of the funds or whether the organization chose the recipient.
Important: Completing Columns A or B in the chart isn’t necessary.
Finish the rest of the chart for Line 1 as follows
- Column C - Enter the region where the principal foreign office of the recipient organization is or where grant funds are getting used
- Column D - Describe the purpose of grant funds with specific terms like general support, school, construction, or medical supplies rather than broad words like educational or religious
- Column E - Enter the total dollar amount of cash grants, in U.S. dollars, for each recipient
- Column F - Describe how your organization disburses cash for each recipient (i.e. cash payment, check, money transfer, etc.)
- Column G - Enter the Fair Market Value of noncash properties in U.S. dollars
- Column H - Enter a description for any noncash goods or assistance listed
- Column I - Describe the method of valuation for noncash properties
On Line 2, report the total number of recipients from your list on Line 1 that is either recognized as a charity by the foreign country, recognized as tax-exempt by the IRS, or has provided a
section 501(c)(3) equivalency letter. With Line 3, enter the total number recipients that are not classified as described in Line 2.
Part III - Grants and Other Assistance to Individuals Outside the United StatesSimilar to Part II, this section is for exempt organizations who have given at least $5,000 in grants and assistance directly to foreign individuals or foreign groups for the benefit of a particular foreign individual.
You need to complete the chart in Part III the same way you did for Part II, Line 1. Be aware that for Part III, Column A, you’re going to use the same terms that you used for Part II, Line 1, Column D. The IRS also needs an explanation in Part V for any estimated numbers you come up with for Part III, Column C.
Part IV - Foreign FormsAny exempt organization filing a Schedule F must complete Part IV by answering each question from Line 1 to Line 6. It could be possible to answer each question as “No,” if applicable. But for any question answered “Yes,” the IRS requires you to the file the additional form listed with the question.
Part V - Supplemental InformationThe final section within Schedule F is for you to provide detailed explanations for the following parts you answered earlier:
- Part I, Line 2 - Methods for monitoring the use of your organization’s grants and assistance outside the U.S.
- Part I, Line 3, Column F - Methods used for accounting expenditures on the organization’s financial statements
- Part II, Line 1 and Part III - Methods used for accounting cash grants and noncash assistance on the organization’s financial statements
- Part III, Column C - Methods used to estimate the number of recipients
You can also supply any other explanations or descriptions as needed, but for anything written in Part V, you should write out the corresponding part and line of the schedule. For any tax-intensive questions regarding your organization’s activities outside of the U.S., we recommend speaking with a certified professional or contacting the IRS directly at 877.829.5500.
Although these employed individuals work for a tax exempt organization, they are not excluded from having taxes withheld from their earnings. Employment taxes are reported to the IRS through Form 941, Employer’s Quarterly Federal Tax Return.
