Form 990 Part VII Compensation Reporting: Who Must Be Reported?

Part VII is a definitional exercise before it is a data exercise. The listing is not a payroll report of highly paid staff; it is five distinct groups, each with its own test, and a person can fall into a group on responsibility rather than pay.

The five groups in Section A

• Current officers, directors, and trustees — listed regardless of compensation, including those paid nothing
• Current key employees — reportable compensation over $150,000 from the organization and related organizations, plus satisfaction of both the responsibility test and the top-20 test
• Current five highest compensated employees other than the above, with over $100,000 of reportable compensation
• Former officers, key employees, and highest compensated employees with over $100,000, generally looking back five years
• Former directors and trustees with over $10,000 in that capacity

The key employee test in practice

The $150,000 threshold is only the entry point. The responsibility test requires that the person have responsibility, powers, or influence over the organization as a whole similar to that of an officer or director, or manage a discrete segment or activity representing 10% or more of the organization's activities, assets, income, or expenses, or have or share authority to control 10% or more of the capital expenditure, operating budget, or compensation for employees. The top-20 test then limits the group to the twenty highest paid individuals meeting the first two tests.

A program director running a single large grant-funded program frequently meets the responsibility test and is omitted because the preparer treated the title as dispositive.

Which amounts, and for which period

Reportable compensation is measured on a calendar-year basis for the calendar year ending with or within the organization's tax year, not on the fiscal year itself. It is Box 1 or Box 5 of Form W-2, whichever is greater, and Box 1 of Form 1099-NEC for non-employee compensation. Compensation from related organizations is aggregated for the threshold tests and reported in a separate column.

Other compensation — the third column — captures items such as employer retirement contributions, nontaxable health benefits, and other deferred amounts, and it does not enter into the $150,000 or $100,000 thresholds.

Independent contractors

Section B is a separate list: the five highest compensated independent contractors that received more than $100,000 of compensation from the organization for services during the organization's tax year. It uses the tax year, not the calendar year, and it includes entities as well as individuals.

When Schedule J is triggered

Schedule J is required when any listed person has total reportable and other compensation exceeding $150,000, when the organization provided certain compensation arrangements such as first-class travel, a housing allowance, or a severance payment, or when compensation was paid by an unrelated organization for services to the filer. The Part VII listing therefore determines the scope of Schedule J, and an omission in Part VII propagates.