Form 990 Part VII

Reportable compensation. Reportable compensation consists of:

• For officers and other employees, amounts required to be reported in box 1 or 5 of Form W-2 (whichever amount is greater) (as well as in box 1 of Form 1099-NEC, and/or in box 6 of Form 1099-MISC if the officer or employee is also compensated as an independent contractor of the filing organization or a related organization);
• For directors and individual trustees, amounts required to be reported in box 1 of Form 1099-NEC; and/or in box 6 of Form 1099-MISC for director and other independent contractor services to the organization or a related organization, plus amounts required to be reported in box 1 or 5 of Form W-2 (whichever amount is greater) if also compensated as an officer or employee of the filing organization or a related organization; and
• For institutional trustees, fees for services paid pursuant to a contractual agreement or statutory entitlement. While the compensation of institutional trustees must be reported on Form 990, Part VII, it need not be reported on Schedule J (Form 990).

If the organization didn’t file a Form 1099-NEC or 1099-MISC because the amounts paid were below the threshold reporting requirement, then include and report the amount actually paid. For a full definition of reportable compensation, see the Glossary.

For certain kinds of employees and for retirees, the amount in box 5 of Form W-2 can be zero or less than the amount in box 1 of Form W-2. For instance, recipients of disability pay, certain members of the clergy, and religious workers who aren’t subject to social security and Medicare taxes as employees can receive compensation that isn’t reported in box 5. In that case, the amount required to be reported in box 1 of Form W-2 must be reported as reportable compensation.

If an officer, director, trustee, key employee, or highest compensated employee of the organization is a foreign person who received U.S. source income during the calendar year ending with or within the organization’s tax year from the filing organization or a related organization, and if such income was reported in box 2 of Form 1042-S, then treat this income as reportable compensation and report it in Part VII, Section A, column (D) or (E). For foreign persons for whom compensation reporting on Form W-2, Form 1099-NEC, Form 1099-MISC, or Form 1042-S isn’t required, treat as reportable compensation in column (D) or (E) the total value of the compensation paid in the form of cash or property during the calendar year ending with or within the organization’s tax year. Report other compensation from foreign organizations as “other compensation” in column (F).

To determine whether an individual received more than $100,000 (or $150,000) in reportable compensation in the aggregate from the filing organization (and, as discussed later, certain third parties such as common paymasters, payroll/reporting agents, and certain unrelated organizations, compensation from which is considered compensation from the filing organization) and related organizations, add the following amounts.

• The amount reported in box 1 or 5 of Form W-2 (whichever amount is greater), in box 1 of Form 1099-NEC, and/or in box 6 of Form 1099-MISC, issued to the individual by the organization.
• Amounts reported in box 1 or 5 of Form W-2 (whichever amount is greater), in box 1 of Form 1099-NEC, or in box 6 of Form 1099-MISC, issued to the individual by each related organization that reported $10,000 or more.

To determine whether an individual received solely in his or her capacity as a former trustee or director of the organization more than $10,000 in reportable compensation for the calendar year ending with or within the organization’s tax year, in the aggregate, from the organization and all related organizations (and thus must be reported on Form 990, Part VII, and Schedule J (Form 990), Part II), add the amounts reported in box 1 of all Forms 1099-NEC, box 6 of all Forms 1099-MISC, and, if relevant, box 1 or 5 of all Forms W-2 (whichever amount is greater) issued to the individual by the organization and all related organizations for the calendar year ending with or within the organization’s tax year. Report such amounts only to the extent that such amounts relate to the individual’s past services as a trustee or director of the organization, and don’t disregard any payments from a related organization if below $10,000, for such purpose.

Disregarded entities. Disregarded entities (such as an LLC that is wholly owned by the organization and not treated as a separate entity for federal tax purposes) are generally treated as part of the organization rather than as related organizations for purposes of Form 990, including Part VII and Schedule J (Form 990). A person isn’t considered an officer or director of the organization by virtue of being an officer or director of a disregarded entity, but he or she can qualify as a key employee or highest compensated employee of the organization. An officer, director, or employee of a disregarded entity is a key employee of the organization if she or he meets the $150,000 Test and Top 20 Test for the filing organization as a whole, and if, for the Responsibility Test, the person has responsibilities, powers, or influence over a discrete segment or activity of the disregarded entity that represents at least 10% of the activities, assets, income, or expenses of the filing organization as a whole, or has or shares authority to control or determine the disregarded entity’s capital expenditures, operating budget, or compensation for employees that is at least 10% of the filing organization’s respective items as a whole. If an officer or director of a disregarded entity also serves as an officer, director, trustee, or key employee of the organization, report this individual as an officer, director, trustee, or key employee, as applicable, of the organization, and add the compensation, if any, paid by the disregarded entity to this individual to the compensation, if any, paid directly by the organization to this individual. Report the total aggregate amount in column (D).

Management companies. Management companies, as independent contractors, are reported on Form 990, Part VII (if at all), only in Section B. Independent Contractors, and aren’t reported on Schedule J (Form 990), Part II. If a current or former officer, director, trustee, or key employee has a relationship with a management company that provides services to the organization, then the relationship may be reportable on Schedule L (Form 990), Part IV. A key employee of a management company must be reported as a current officer of the filing organization if he or she is the filing organization’s top management official or top financial official or is designated as an officer of the filing organization. However, that person doesn’t qualify as a key employee of the filing organization solely on the basis of being a key employee of the management company. If a current or former officer, director, trustee, key employee, or highest compensated employee received compensation from a management company that provided services to the organization and was a related organization during the tax year, then the individual’s compensation from the management company must be reported on Form 990, Part VII, Section A, columns (E) and (F). If the management company wasn’t a related organization during the tax year, the individual’s compensation from the management company isn’t reportable in Part VII, Section A. Questions pertaining to management companies also appear on Form 990, Part VI, line 3; and Schedule H (Form 990), Hospitals, Part IV.

Employee leasing companies and professional employer organizations. In some cases, instead of hiring a management company, an exempt organization “leases” one or more employees from another company, which may be in the business of leasing employees. Alternatively, the organization may enter into an agreement with a professional employer organization to perform some or all of the federal employment tax withholding, reporting, and payment functions related to workers performing services for the organization. The organization should treat employees of an employee leasing company, a professional employer organization (whether or not certified under the new Certified Professional Employer Organization), or a management company as the organization’s own employees if such persons have the status of employees of the filing organization under the usual common law rules applicable in determining the employer-employee relationship or who are treated as employees of the filing organization for federal employment tax purposes under section 3121(d). See Pub. 1779, Independent Contractor or Employee, for more information. Otherwise, the compensation paid to leasing companies and professional employer organizations should be treated like compensation to a management company for purposes of Form 990 compensation reporting.

Compensation from common paymasters, payroll/reporting agents, and unrelated organizations or individuals (except for compensation from management companies or leasing companies, and compensation described in Taxable organization employee exception, later) must be treated as reportable compensation in determining whether the dollar thresholds are met for reporting (1) current or former employees as current or former key employees or highest compensated employees; or (2) former officers, directors, or trustees, on Form 990, Part VII, Section A. If the Form 990, Part VII, thresholds for reporting are met, then the compensation from the common paymaster, payroll/reporting agent, or unrelated organization or individual must be reported as compensation from the filing organization in Part VII. The compensation may also need to be reported on Schedule J (Form 990), Part II (see the instructions for Form 990, Part VII, Section A, line 5).

Column (A). For each person required to be listed, enter the name on the top of each row and the person’s title or position with the organization on the bottom of the row. If more than one title or position, list all. List persons in the order described under Order of reporting, earlier. List each person on only one line.

Column (B). For each person listed in column (A), estimate the average hours per week devoted to the organization during the year. Entry of a specific number is required for a complete answer. Enter “-0-” if applicable. Don’t include statements such as “as needed,” “as required,” or “40+.” If the average is less than 1 hour per week, then the organization can enter a decimal rounded to the nearest tenth (for example, 0.2 hours per week). For each person listed in column (A), list below the dotted line an estimate of the average hours per week (if any) devoted to related organizations.

Column (C). For each person listed in column (A), check the box that reflects the person’s position with the organization during the tax year. Don’t check more than one box, unless the person was both an officer and a director/trustee of the organization during the tax year. For a former officer, director, trustee, key employee, or highest compensated employee, check only the “Former” box and indicate the former status in the person’s title.

“Former” officers, directors, trustees, key employees, and highest compensated employees. Check the “Former” box for former officers, directors, trustees, and key employees only if both conditions below apply.

• The organization reported (or should have reported, applying the instructions in effect for such years) an individual on any of the organization’s Forms 990, 990-EZ, or 990-PF for any 1 or more of the 5 prior years in one or more of the following capacities: officer, director, trustee, or key employee.
• The individual received reportable compensation, from the organization and/or related organizations, in the calendar year ending with or within the organization’s current tax year in excess of the threshold amount ($100,000 for former officers and key employees; $10,000 paid to former directors and trustees for services rendered in their former capacity as directors or trustees).

If a person was reported (or should have been reported) as an officer, director, trustee, or key employee on any of the organization’s prior five Forms 990, 990-EZ, or 990-PF, and if the person was still employed at any time during the organization’s tax year either (1) by the organization in a lesser capacity other than as an officer, director, trustee, key employee, or highest compensated employee; or (2) by a related organization in any capacity, but not by the filing organization, and if the person received reportable compensation that exceeded the threshold amount described above, then check only the “Former” box. For example, don’t check both the “Former” and “Officer” boxes for a former president of the organization who wasn’t an officer of the organization during the tax year.

Whether or not the organization files Form 990 based on a fiscal year, use the calendar year ending within the organization’s tax year to determine all “former” officers, directors, trustees, key employees, and five highest compensated employees (because their status depends on their reportable compensation, which is reported for the calendar year).

Check the “Former” box for the former five highest compensated employees only if all four conditions below apply.

1. The individual wasn’t an employee of the organization at any time during the calendar year ending with or within the organization’s tax year.
2. The individual was reported (or should have been reported, under the instructions in effect for such years) on any of the organization’s Forms 990, 990-EZ, or 990-PF for 1 or more of the 5 prior years as one of the five highest compensated employees.
3. The individual’s reportable compensation exceeded $100,000 for the calendar year ending with or within the organization’s tax year.
4. The amount of the individual’s reportable compensation for such year would place him or her among the organization’s current five highest compensated employees if the individual were an employee during the calendar year ending with or within the organization’s tax year.

Example 1. X was reported as one of Y Charity’s five highest compensated employees on one of Y’s Forms 990, 990-EZ, or 990-PF from 1 of its 5 prior tax years. During Y’s tax year, X wasn’t a current officer, director, trustee, key employee, or highest compensated employee of Y. X wasn’t an employee of Y during the calendar year ending with or within Y’s tax year. During this calendar year, X received reportable compensation in excess of $100,000 from Y for past services and would be among Y’s five highest compensated employees if X were a current employee. Y must report X as a former highest compensated employee on Y’s Form 990, Part VII, Section A, for Y’s tax year.

Example 2. T was reported as one of Y Charity’s five highest compensated employees on one of Y’s Forms 990, 990-EZ, or 990-PF from 1 of its 5 prior tax years. During Y’s tax year, T wasn’t a current officer, director, trustee, key employee, or highest compensated employee of Y, although T was still an employee of Y during the calendar year ending with or within Y’s tax year. T received reportable compensation in excess of $100,000 from Y and related organizations for such calendar year. T isn’t reportable as a former highest compensated employee on Y’s Form 990, Part VII, Section A, for Y’s tax year because T was an employee of Y during the calendar year ending with or within Y’s tax year.

Example 3. Z was reported as one of Y Charity’s key employees on Y’s Form 990 filed for 1 of its 5 prior tax years. During Y’s tax year, Z wasn’t a current officer, director, trustee, key employee, or highest compensated employee of Y. For the calendar year ending with or within Y’s tax year, Z received reportable compensation of $90,000 from Y as an employee (and no reportable compensation from related organizations). Because Z received less than $100,000 reportable compensation for the calendar year ending with or within Y’s tax year from Y and its related organizations, Y isn’t required to report Z as a former key employee on Y’s Form 990, Part VII, Section A, for Y’s tax year.

Columns (D) and (E). Enter the amounts required to be reported (whether or not actually reported) in box 1 or 5 of Form W-2 (whichever is greater), box 1 of Form 1099-NEC, and/or box 6 of Form 1099-MISC, issued to the person for the calendar year ending with or within the organization’s tax year. Enter an amount for each person in each of columns (D) and (E). Enter “-0-” if the person received no reportable compensation. For institutional trustees that don’t receive a Form 1099-NEC or 1099-MISC, enter the amount that the organization would have reported in box 1 of Form 1099-NEC or box 6 of Form 1099-MISC if the form(s) had been required.

Reportable compensation paid to the person by a related organization at any time during the entire calendar year ending with or within the filing organization’s tax year should be reported in column (E). If the related organization was related to the filing organization for only a portion of the tax year, then the filing organization may choose to report only compensation paid or accrued by the related organization during the time it was actually related. If the filing organization reports compensation on this basis, it must explain on Schedule O (Form 990) and state the period during which the related organization was related.

Column (F). Other compensation generally includes compensation not currently reportable in box 1 or 5 of Form W-2, in box 1 of Form 1099-NEC, or in box 6 of Form 1099-MISC, including nontaxable benefits other than disregarded benefits, as discussed under Disregarded benefits, later, and in the instructions for Schedule J (Form 990), Part II. Treat amounts paid or accrued under a deferred compensation plan, or held by a deferred compensation trust, that is established, sponsored, or maintained by the organization (or a related organization) as paid, accrued, or held directly by the organization (or the related organization). Deferred compensation to be reported in column (F) includes compensation that is earned or accrued in one year and deferred to a future year, whether or not funded, vested, qualified or nonqualified, or subject to a substantial risk of forfeiture. But don’t report in column (F) a deferral of compensation that causes an amount to be deferred from the calendar year ending with or within the tax year to a date that isn’t more than 21/2 months after the end of the calendar year ending with or within the tax year if such compensation is currently reported as reportable compensation.

Enter an amount in column (F) for each person listed in Part VII, Section A. (Enter “-0-” if applicable.) Report a reasonable estimate if actual numbers aren’t readily available.

Other compensation paid to the person by a related organization at any time during the calendar year ending with or within the filing organization’s tax year should be reported in column (F). If the related organization was related to the filing organization for only a portion of the tax year, then the filing organization may choose to report only other compensation paid or accrued by the related organization during the time it was actually related. If the filing organization reports compensation on this basis, it must explain on Schedule O (Form 990) and state the period during which the related organization was related.

The following items of compensation provided by the filing organization and related organizations must be reported as “other compensation” in column (F) in all cases regardless of the amount, to the extent they aren’t included in column (D).

1. Tax-deferred contributions by the employer to a qualified defined contribution retirement plan.
2. The annual increase or decrease in actuarial value of a qualified defined benefit plan, whether or not funded or vested.
3. The value of health benefits provided by the employer, or paid by the employee with pre-tax dollars, that aren’t included in reportable compensation. For this purpose, health benefits include (1) payments of health benefit plan premiums, (2) medical reimbursement and flexible spending programs, and (3) the value of health coverage (rather than actual benefits paid) provided by an employer’s self-insured or self-funded arrangement. Health benefits include dental, optical, drug, and medical equipment benefits. They don’t include disability or long-term care insurance premiums or allocated benefits for this purpose.
4. Tax-deferred contributions by the employer and employee to a funded nonqualified defined contribution plan, and deferrals under an unfunded nonqualified defined contribution plan, whether or not such plans are vested or subject to a substantial risk of forfeiture. See the examples in the Schedule J (Form 990), Part II, instructions.
5. The annual increase or decrease in actuarial value of a nonqualified defined benefit plan, whether or not funded, vested, or subject to a substantial risk of forfeiture.

Disregarded benefits. Fringe benefits excluded from gross income under § 132 need not be reported in column (F). Disregarded benefits. Disregarded benefits under Regulations section 53.4958-4(a)(4) need not be reported in column (F). Disregarded benefits generally include fringe benefits excluded from gross income under § 132. These benefits include:

• No-additional cost service,
• Qualified employee discount,
• Working condition fringe,
• De minimis fringe,
• Qualified transportation fringe,
• Qualified retirement planning services, and
• Qualified military base realignment and closure fringe.

For descriptions of each of these disregarded benefits, see the Instructions for Schedule J (Form 990).