Payments to University of Illinois Students Prizes, Awards, Scholarships, and Grants

Prizes and Awards Definition – Financial support based on achievement, performance, competition, or other criteria and not related to employment services. Payments may be used for any purpose (not limited to educational expenses), are considered taxable income, and are subject to Form 1099-MISC reporting. How to process: Non-employment related prize and award payments are processed through University Payables, except for payments to Foreign National students, which must be processed through Payroll. Departments should prepare an Invoice Voucher and Travel/Program Advance Form , provide a complete description of the nature of the prize/award, and indicate that the funds are not restricted to educational purposes. To meet Federal Student Aid regulations, prize/award payments must be processed against account code 181700. Employment related prizes and awards must be treated as compensation and processed through University Payroll.

Scholarships and Grants Definition - Financial support to aid in the pursuit of a student's studies or research. Typically, these payments are used for educational purposes such as tuition, fees, room and board, books, supplies, and travel. Payment, even in the form of reimbursement, should be treated as a scholarship if the student primarily benefits from the purchase of the supplies or travel. A student is considered to be the primary beneficiary if the emphasis of the duties he/she performs is to provide training to the individual, rather than useful results to the University.

Scholarships and Grants (cont.) Questions to ask: Is the travel/research required for the student to receive credit for the course or to receive a degree? Will the travel/research enhance the student’s grade? Is the primary purpose of the travel/research to further the education and training of the student in his or her individual capacity? Will the University obtain no benefit, or only incidental benefit, as a result of the travel/research? Is the student only required to submit progress reports for the travel/research? Does the student determine the activities required to complete the research? Was the student selected primarily to further education?

Scholarships and Grants (cont.) How to process: To comply with IRS reporting requirements related to Form 1098-T, these payments must be processed through Student Financial Aid. Payments will be applied to the student's account, and payments in excess of account balances will be refunded to the student. Scholarships and grants given to less than 10 recipients are to be processed using the SAR Departmental Payment Request Form. Scholarships and grants given to 10 or more recipients are to be processed through Student Financial Aid. The request is processed through the DAWS system at UIUC. New scholarships or grants require a departmental request for a new fund/detail code. Payments for credit to a Foreign National student account can be processed on the SAR form or DAWS but will be updated in Payroll for withholding and reporting purposes. Payments such as airfare and conference fees may NOT be purchased with University P-Card.

Employee Reimbursements 60-day Policy; Direct Deposit

60-day Policy – “Accountable Plan” IRS “Accountable Plan” Rules: Bona-fide Business Purpose – expense incurred in connection with services performed as an employee Adequate Accounting – must verify date, time, place, amount, and business purpose Reasonable period of time – “safe harbor” = 60 days Non-taxable to employee if all three rules are met. If all three are not met, the reimbursement is considered taxable income to the employee – subject to all employment taxes and withholding. Tax withholding (at an approximate rate of 30%) will be deducted from employee’s net pay within one month of the reimbursement effective January 3rd, 2006.

Direct Deposit Beginning November 1st, all employee reimbursements will be paid via direct deposit to the bank account established in Payroll, including Paychek Plus! debit accounts. Employees that do not receive Payroll funds via direct deposit, will be issued an Accounts Payable check for expense reimbursements. Travel and program advances will also be paid via direct deposit. Walk-through option will be discontinued effective November 1st. Mail vouchers to 506 S. Wright MC-345 or drop off in Room 124 HAB. Payment will be made within 5 business days of voucher receipt. Employee will receive an e-mail when the deposit is transferred to their account.

Employee Moving Expense More Tax Issues Employee Moving Expense

Employee Moving Expense Qualified Moving Expense (non-taxable): Transporting household goods and personal effects Traveling (including lodging, but not meals) from the employee's former principal residence to the new principal residence. Non-Qualified Moving Expense (taxable): Meals Expenses of buying or selling a house Pre-move house hunting expense Temporary living expenses

Employee Moving Expense (cont.) If non-qualified moving expenses are paid directly by the department, the department must report these items to University Payroll (OBFS Policy Manual Section 4.3). Examples: House hunting trips – airfare or lodging paid with P-Card Temporary living quarters paid directly to landlord

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