In our last blog, we reviewed in more detail the process of completing Part I, II, and III of the 990-EZ form. In this blog, we will look at completing Parts IV, V, and VI of the 990-EZ return.
In this section of Form 990-EZ, you will be providing detailed information regarding your organization’s officers, directors, and key employees as well as your annual activities.
Let’s dive right in!
Part IV – Part IV List of Officers, Directors, Trustees, and Key Employees
In Part IV, you list everyone in leadership roles, like officers, directors, trustees, and key employees. This isn’t just for paid staff; it’s also about showing their roles and the hours they spend with the organization each week. This number can be presented as an average, as the IRS understands that volunteers and part-time employees may not follow the same schedule from week to week. You fill in Column A with each person’s first and last name and their job title in the organization.
Each listed employee must have a title. In Column B, you will list the average hours worked per employee weekly. Column C is for reporting compensation. If the employee was not compensated by the organization, you can report zero in their field, however, you can not leave the field blank. If the organization paid an employee whether it be through contract work reportable on a 1099 Form, or a W-2 payroll employee, their compensation can be listed in Column C. In Column D, you can report the health benefits, deferred compensation, and contributions to employees.
If there is nothing to report for this section, you can again report a zero value, but you cannot leave the field blank. Column E is used to report any other compensation paid. This would include both taxable and nontaxable fringe benefits. You would not report any values reported in Column C or D in Column E. If you have nothing to report in Column E, you again can report a zero value.
Part V – Other Information
Tax990 generates the necessary schedules based on the information provided on the 990-EZ return itself. In Part V, you will answer a variety of questions about the activities of your organization during the year to determine what 990 Schedules you are required to complete.
If you answer ‘Yes” on any of these questions, you will be prompted to complete the associated schedule information. It is important to read each question carefully. If you answer a question incorrectly, you may end up forgetting a schedule or completing a schedule that is not necessarily required.
Part V explains to the IRS what additional documentation your organization files.
If you are unsure if your organization should answer ‘Yes’ or ‘No’ in Part V, we recommend speaking to the IRS or a tax preparer to ensure you comply with all IRS forms.
Part VI – Section 501(c)(3) Organizations Only
Part VI is only to be completed by 501(c)(3) organizations. If you did not indicate on page 1, that you are a 501(c)(3) organization, you do not need to complete Part VI. If you are a 501(c)(3) organization, you will need to complete the entire Part VI to proceed with your return.
You will provide a ‘Yes’ or ‘No’ response to questions 47-49 to indicate basic activities and organization details to the IRS. If you choose ‘Yes’ on any of these questions, you will be prompted to complete additional information or schedules.
Line 50 includes a chart that allows you to report the organization’s five highest compensated employees who each received more than $100,000 of compensation from the organization. You would not include officers, directors, trustees, and key employees in this section. This chart is identical to the chart of officers, directors, trustees, and key employees reported in Part IV, but only needs to be completed if the employee received $100,000 or more in compensation from the organization. If the organization did not pay any single individual $100,000 or more, then you can enter NONE in this section.
Line 51 is where you will report the five highest compensated independent contractors who each received more than $100,000 of compensation from the organization. These would be the employees who you file 1099 forms for. If you did not have any independent contractors who each received more than $100,000 of compensation from the organization, you can report NONE in this section. If you did have independent contractors who each received more than $100,000 of compensation from the organization you would provide their name, and business address, the type of service they provided, and the total compensation they received from the organization.
The last line of Part VI is to indicate whether the organization completed a Schedule A. All 501(c)(3) organizations must include a Schedule A in their 990-EZ return.
Complete Form 990-EZ a Step at a Time with Tax990!
Navigating the 990-EZ may seem like a lot, but you can take it step by step, referring to the IRS form instructions for further clarification. And remember, Tax 990 is here to help – our reviewer and approver feature allows a second pair of eyes to confirm the accuracy of your return. We’ve got your back!
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