Form 990–Reporting Issues

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According to an article recently published in the AICPA  Tax Adviser, there are eight common reporting issues.

1. Identifying the president as both an officer and a key employee:  The organization should only report the president one time under Section A, Column C of Part VII.

2. Reporting only salaries as compensation expenses:  The Statement of Functional Expenses should include all compensation and benefits paid to the officer or director.  Additional benefits could include, pension plan contributions or medical/dental insurance.

3.  Improperly reporting compensation reported in a prior Form 990:  Schedule J, Part II, Column F should include compensation on the current W-2 that was previously reported.

4.  Failing to include the annual actuarial increase of defined benefit plans:  Schedule J of Part VII indicates that any increase in the actuarial value for deferred compensation should be be reported.

5.  Reporting only unrestricted income: Form 990 should include all items of income whether they are unrestricted, temporarily restricted or permanently restricted.

6.  Reporting support payments to a related organization as “other expense”:  A payment to another charitable organization in an attempt to support them should be reported as a grant and not an operating expense.

7.  Misidentifying the proper interested person:  On Schedule L, Part IV, the organization must enter the name of the interested person.

8.  Showing details of related transactions with a  501(c)(3) parent organization:  Transactions between related entities do not necessarily need to be reported. Transactions with controlled entities must be reported if the amounts meet the criteria noted in the instructions.

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