Part VI. Section 501(c)(3) Organizations

All section 501(c)(3) organizations (including, for purposes of Form 990-EZ, section 4947(a)(1) nonexempt charitable trusts) must complete Part VI.

Line 47. Lobbying Activities Answer “Yes” and complete Schedule C (Form 990), Part II, if the organization engaged in lobbying activities or had a section 501(h) election in effect during the tax year. All section 501(c)(3) organizations that had a section 501(h) election in effect during the tax year must complete Schedule C (Form 990), Part II-A, regardless of whether they engaged in lobbying activities during the tax year. See the Instructions for Schedule C (Form 990) for a discussion of lobbying activities.

Line 48. Schools Answer “Yes” and complete Schedule E (Form 990) if the organization checked the box on Schedule A (Form 990), Part I, line 2, indicating that it is a school.

Line 49. Transfers to Exempt Non-Charitable Related Organizations Answer “Yes” if the organization made any transfer to a related organization that is an exempt organization other than a 501(c) (3) organization, such as a related 501(c)(4) organization or a related 527 political organization.

A transfer for this purpose is any transaction or arrangement in which the organization transferred something of value (cash, other assets, services, use of property, etc.) to the exempt non-charitable related organization, whether or not for adequate consideration. The organization can (but isn’t required to) explain the transfer in Schedule O (Form 990).

For purposes of Form 990-EZ, a related organization is an organization (including a nonprofit organization, a stock corporation, a partnership or LLC, a trust, and a governmental unit or other governmental entity) that is in one or more of the following relationships to the filing organization at any time during the tax year.

Parent. An organization that controls the filing organization (see definition of “control,” later).

Subsidiary. An organization controlled by the filing organization.

2025 Instructions for Form 990-EZ 25

institution trustee that is also the trustee of another trust, the other trust isn’t a brother/sister related organization of the filing organization on the ground of common control by the bank or financial institution trustee.

Supporting/Supported. An organization that claims to be at any time during the tax year, or that is classified by the IRS at any time during the tax year, as the following.

• A supporting organization of the filing organization within the meaning of section 509(a)(3), if the filing organization is a supported organization within the meaning of section 509(f) (3); or

• A supported organization, if the filing organization is a supporting organization.

members, then an organization that controls X also controls the partnership.

See Regulations sections 301.7701-2, -3, and -4 for more information on classification of corporations, partnerships, disregarded entities, and trusts.

Line 50. Five Highest Compensated Employees Over $100,000 Complete this table for the five employees (other than officers, directors, trustees, and key employees as defined in the Part IV instructions, earlier) with the highest annual compensation over $100,000. On line 50f, enter the number of other employees (other than officers, directors, trustees, and key employees) with annual compensation over $100,000 who aren’t individually listed.

A fiscal-year organization must use the calendar year ending within its tax year to determine its five highest compensated employees over $100,000, and to report the compensation. Combine the compensation includible in Part VI, columns (c), (d), and (e), in determining whether compensation exceeds $100,000 for the calendar year.

See the Part IV instructions, earlier, for more information on compensation reporting and for completing table columns (a) through (e) of line 50, and for information on the $10,000-per-item exception for column (e).

Example. Sam isn’t a key employee. The organization uses a calendar tax year. During the year, Sam received a salary of $80,000 and a $2,000 bonus. Sam contributed $5,000 of the salary on a pre-tax basis to a qualified defined-contribution retirement plan, and received a matching employer contribution of $5,000 from the organization. Sam contributed another $5,000 of the salary on a pre-tax basis to a qualified health plan. Sam received from the employer nontaxable health benefits for self and family of $10,000, and nontaxable family educational benefits of $5,000.

To determine whether Sam is to be listed as among the five highest compensated employees, Sam's compensation in column (c) would be $82,000, the amount reportable in box 5 of Form W-2 consisting of the $80,000 salary (including Sam’s contributions to the qualified plans) and the $2,000 bonus. Sam's compensation in column (d) would be $15,000, consisting of the organization's payments of $5,000 to the retirement plan and $10,000 to the health plan. Sam wouldn’t report the $5,000 in nontaxable family educational benefits in column (e) because it is excluded under the $10,000-per-item exception for column (e). Thus, Sam's total compensation of $97,000 wouldn’t place Sam among the five highest compensated employees over $100,000.

See Pub. 525 for more information.

Line 51. Five Highest Compensated Independent Contractors Over $100,000 Complete this table for the five highest compensated independent contractors that received more than $100,000 in compensation for services, whether professional services or other services, from the organization. On line 51d, enter the number of other independent contractors with annual compensation over $100,000 that aren’t individually listed.

Independent contractors include organizations as well as individuals and can include professional fundraisers, law firms, accounting firms, publishing companies, management companies, and investment management companies. Do not report public utilities or insurance providers as independent contractors. See Pub. 1779, Independent Contractor or Employee, and Pub. 15-A, Employer's Supplemental Tax Guide, for distinguishing employees from independent contractors.

For purposes of determining whether an organization is related, control exists in the following situations.

Control of a nonprofit organization (or other organization without owners or persons having beneficial interests, whether the organization is taxable or tax exempt). One or more persons (whether individuals or organizations) control a nonprofit organization if they have the power to remove and replace (or to appoint, elect, or approve or veto the appointment or election of, if such power includes a continuing power to appoint, elect, or approve or veto the appointment or election of, periodically or in the event of vacancies) a majority of the nonprofit organization’s directors or trustees, or a majority of members who elect a majority of the nonprofit organization’s directors or trustees.

Such power can be exercised directly by a parent organization through one or more of the parent organization’s officers, directors, trustees, or agents acting in their capacity as officers, directors, trustees, or agents of the parent organization. Also, a parent organization controls a subsidiary nonprofit organization if a majority of the subsidiary’s directors or trustees are trustees, directors, officers, employees, or agents of the parent.

Control of a stock corporation. One or more persons (whether individuals or organizations) control a stock corporation if they own more than 50% of the stock (by voting power or value) of the corporation.

Control of a partnership or LLC. One or more persons control a partnership if they own more than 50% of the profits or capital interests in the partnership (including an LLC treated as a partnership or disregarded entity for federal tax purposes, regardless of the designation under state law of the ownership interests as stock, membership interests, or otherwise). A person also controls a partnership if the person is a managing partner or managing member of a partnership or LLC that has three or fewer managing partners or managing members (regardless of which partner or member has the most actual control), or if the person is a general partner in a limited partnership that has three or fewer general partners (regardless of which partner has the most actual control). For this purpose, a “managing partner” is a partner designated as such under the partnership agreement, or regularly engaged in the management of the partnership even though not so designated.

Control of a trust with beneficial interests. One or more persons control a trust if they own more than 50% of the beneficial interests in the trust. A person’s beneficial interest in a trust shall be determined in proportion to that person’s actuarial interest in the trust as of the end of the tax year.

Control can be indirect. For example, if the filing organization controls Entity A, which in turn controls Entity B, the filing organization will be treated as controlling Entity B. To determine indirect control through constructive ownership of a corporation, rules under section 318 apply. Similar principles apply for purposes of determining constructive ownership of another entity (a partnership or trust). If an entity X controls an entity treated as a partnership by being one of three or fewer partners or

26 2025 Instructions for Form 990-EZ

The organization must use the calendar year ending with or within its tax year in determining its five highest compensated independent contractors and reporting their compensation in such year on line 51.

Column (c)—Compensation. Enter the amount of compensation the organization paid, whether reported in box 1 of Form 1099-NEC and/or box 6 of Form 1099-MISC or paid under the parties’ agreement or applicable state law, for the calendar year ending with or within the organization’s tax year. Otherwise, report the amount paid under the parties' agreement or applicable state law.

Tip: Forms 1099-NEC and 1099-MISC aren’t always required to be issued for payments to an independent contractor.

Compensation includes fees and similar payments to independent contractors but not reimbursement of expenses. However, for this purpose, the organization must report the gross payment to the independent contractor that includes expenses and fees if the expenses aren’t separately reported to the organization.