Nonprofit Form 990 Reporting: Executive Compensation and IRS Requirements Explained

May 25, 2025

A common question we hear when working on a nonprofit’s Form 990 is whether the Executive Director’s or CEO’s salary must be reported. While executive compensation may be sensitive information, it is the board’s responsibility to hire executive management and establish compensation that is reasonable and not excessive, while also being competitive enough to attract and retain qualified talent. Accurately reporting leadership compensation on Form 990 is essential for maintaining good standing with the IRS and demonstrates a commitment to transparency with the public.

Tax-exempt organizations are required to disclose reportable compensation for all officers, directors, trustees, key employees, and the five highest-compensated employees who served during the tax year in their annual Form 990 filing. It is helpful to examine the individual’s responsibilities and/or the amount of compensation to determine whose compensation must be disclosed.

Here’s how the IRS defines these roles to help determine whose compensation should be listed:

Officer

An officer is anyone elected or appointed to manage the organization’s daily operations during the tax year—this includes titles such as president, vice president, secretary, treasurer, and/or board chair. Officer roles may be required by state law or determined by referencing the organization’s founding documents, bylaws, or board resolutions.

For Form 990 purposes, an organization’s top management official and/or top financial official are considered officers, regardless of title. These are individuals ultimately responsible for implementing board decisions, managing finances, or overseeing the organization's operations. Executive Director, CEO, and CFO roles typically include these responsibilities and are therefore considered officers by the IRS.

Form 990, Part VII, requires listing all officers who served during the tax year and their reportable compensation, with no minimum earnings threshold.

Director or Trustee

A director or trustee is a member of the governing body who held voting rights at any point during the tax year. Any reportable compensation for a director or trustee must be disclosed on Form 990.

Key Employee

An employee is considered a Key Employee if they meet all of the following criteria:

$150,000 Test – Received more than $150,000 in reportable compensation during the calendar year ending within the organization’s tax year.
Responsibility Test – An employee whose role includes one of the following:
1. Significant responsibilities and influence over the organization as a whole - similar to officers, directors and trustees.
2. Authority to control or determine 10% or more of the organization’s capital expenditures, operating budget, or employee compensation.
3. Manages a discrete segment or activity representing 10% or more of the organization’s activities, assets, income, or expenses of the organization.
Top 20 Test – Only the highest-paid 20 employees who are not officers, directors, and trustees, and satisfy all tests must be reported on Form 990.

Highest Compensated Employees

The five highest-paid employees who are not officers, directors, or key employees—but who earn more than $100,000 in reportable compensation—must also be listed on Form 990.

Former Employees

Former officers, key employees, and highest-compensated employees from the past five years must be reported if they received more than $100,000 in reportable compensation during the tax year. Former directors and trustees must be disclosed if they received more than $10,000.

Reportable Compensation

Reportable compensation generally includes income reported on a W-2, 1099-NEC, or 1099-MISC. Nonprofits must also report other income such as nontaxable benefits (e.g., retirement contributions, health care expenses). Compensation from related organizations (e.g., parent, subsidiary, or affiliate organizations) must also be included.

It is a nonprofit’s responsibility to report leadership compensation accurately to the IRS and the public. Determining who to list and what to report can be complex. Other factors to consider which may add complexity are fiscal year differences from calendar year, various forms of compensation, or income from related organizations. Consult a trusted tax professional for guidance.

Larson & Company offers a suite of services tailored to the needs of nonprofit organizations, and we’re here to help. Please reach out to us for additional guidance.