What Is Other Compensation on Form 990?
Clarify "other compensation" on Form 990. Understand how tax-exempt organizations navigate complex reporting of executive benefits for public transparency.
Form 990 is the annual information return for tax-exempt organizations, providing public transparency regarding their operations and financial health. Accurate reporting of compensation paid to individuals is a significant focus on this form. Organizations must detail how they compensate leadership and employees to demonstrate compliance with tax regulations and maintain their tax-exempt status.
Defining Compensation on Form 990
Compensation on Form 990 includes all remuneration provided to officers, directors, trustees, key employees, and highly compensated employees. This covers both monetary and non-monetary benefits for services rendered, such as salaries, wages, bonuses, and severance payments. The Internal Revenue Service (IRS) requires this comprehensive view to assess if pay practices are reasonable and to prevent excessive private benefits. Organizations must consider all economic benefits, whether directly or indirectly provided, to ensure the full scope of an individual’s financial relationship is transparently disclosed.
Identifying Other Compensation
“Other compensation” on Form 990 includes non-cash benefits, indirect benefits, and certain deferred compensation not categorized as base salary or bonus. This category provides a complete picture of an individual’s total remuneration, acknowledging compensation extends beyond direct cash payments.
Examples include personal use of organizational assets like a company car or housing allowances. Club dues, health insurance premiums, and educational assistance beyond certain thresholds may also be included.
Deferred compensation, such as contributions to non-qualified plans or Supplemental Executive Retirement Plans (SERPs), also falls here. This covers compensation earned in one year but paid later. Expense allowances or reimbursements under non-accountable plans, parachute payments (large payments contingent on a change in organizational control), and certain severance benefits are also reported. Organizations must determine the fair market value of non-cash benefits for accurate reporting, as even non-taxable benefits must often be disclosed for transparency.
Reporting Other Compensation on Form 990
“Other compensation” is reported on Form 990 primarily within Schedule J, Part II. This schedule is required when individuals like officers, directors, trustees, key employees, or highly compensated employees exceed $150,000 in compensation. Compensation information is also summarized in Part VII of the main Form 990, which lists these individuals.
Schedule J, Part II, requires organizations to itemize various types of compensation, including “other compensation,” for each listed individual. Organizations must enter the precise amount for each benefit in the designated column. This detailed breakdown helps the public and the IRS understand the full scope of benefits provided. The instructions for Form 990 and Schedule J provide specific guidance on how to categorize and value these amounts.
Differentiating Compensation Categories
Form 990 and Schedule J organize total compensation into distinct categories, providing a comprehensive view of remuneration. This structure helps stakeholders understand how individuals are compensated beyond a single lump sum.
Base salary, the regular fixed amount paid for services, is reported in its own column on Schedule J. Bonus and incentive compensation, variable pay tied to performance, is also presented separately. While certain deferred compensation can be part of “other compensation,” qualified deferred compensation plans often have their own distinct reporting.
“Other compensation” captures non-cash benefits, indirect payments, and certain deferred compensation arrangements that do not fit into base salary or bonuses. These distinctions allow for a clearer assessment of total compensation’s reasonableness.