Tax990 Knowledge Base

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What is the difference between direct and indirect expenses on Form 990 PF?

Direct Expenses are expenses that are directly involved in particular business activities. Those are, 

  • Compensation and travel expenses
  • The cost of materials and supplies utilized 
  • Fees paid to outside firms and individuals in connection with a business activity 

 
Expenses that are not directly involved in a particular business activity but are related to the direct costs incurred in conducting that activity are called Indirect expenses. Those are, 
Occupancy expenses 

  • Supervisory and clerical compensation
  • Repair, Rental, and Maintenance of equipment
  • Expenses incurred by other departments or cost centers that support the department or function responsible for the direct expenses associated with an activity
  • Other applicable general and administrative expenses. 

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