990 Reporting Issues

Posted by: Carrie Minnich

Although the revised Form 990 has been out for three years now, there appears to still be some confusion on completing the form properly. The July 2011 issue of The Tax Adviser addresses eight common reporting issues that occur in completing the redesigned Form 990.

1. Identifying the president as both an officer and a key employee
Only one title should be selected in Part VII, Section A, column C.

2. Reporting only salaries as compensation expense
All forms of salary and benefits should be included on Part IX, line 5.

3. Improperly reporting compensation reported in a prior Form 990
Schedule J, Part II, column F should include the total amount of the current year’s W-2 that was reported on the prior year’s Form 990 as deferred compensation.

4. Failing to include the annual actuarial increase of defined benefit plans
Any annual increase in the actuarial value of a defined benefit plan should be included in Part VII, Schedule J.

5. Reporting only unrestricted income
All income from all sources should be recorded on Form 990.

6. Reporting support payments to a related organization as “other expense”
A support payment should be recorded as a grant as opposed to other expense.

7. Misidentifying the proper interested person
The name of any interested persons involved in a business transaction with the nonprofit must be disclosed in Schedule L, Part IV. There is still some discussion as to how specific the disclosure must be.

8. Showing details of related transactions with a 501(c)(3) parent organization
Only transactions with Section 512(b)(13) controlled entities must be reported on Schedule R, Part V, line 2 if they meet the noted criteria in the Form 990 instructions.

To read the entire article by Michelle Michalowski, CPA click here - New Form 990: What's Confusing Filers?