Student Travel Payments and Reimbursements August 16, 2012 Financial Services - Payroll

Agenda Terms and Definitions Policy/IRS regulations How to request taxable and nontaxable student travel payments Tax Implications and Reporting Requirements

Terms and Definitions Stipend Reimbursement Scholarship Fellowship Payment made to students used to help defray the costs of housing, food and transportation. This is a fixed sum of money that is paid periodically and usually agreed upon before payment is made. Reimbursement Making restoration for out-of-pocket expenses by an individual for business purposes. Scholarship An award for a student to further education Fellowship Monetary awards connected to working in a specific field, usually at the graduate or post-graduate level. While students complete extra training in a field, or have funding to continue research, the fellowship allows them to complete their training, internship or research without having to devote time to working outside their field or take on additional loans. Accountable Plan Employee reimbursement in which 3 tests must be met: (1) expenses are paid or incurred deductable expenses while performing services as an employee; (2) claims must be substantiated in a reasonable amount of time; (3) amounts in excess of substantiated expenses are returned within a reasonable amount of time.

Policy/IRS Publication 970 regulations Qualified expenses (Non-Reportable) Tuition and fees required to enroll at or attend an eligible educational institution, Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Expenses that do not qualify (Reportable) Room and board Travel Research Clerical help Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution.

Policy/IRS regulations Student travel payments are considered scholarship if the travel: Is for activities in which the University is relatively disinterested or research is student led. The project/research’s primary purpose and original intent is to further the student’s education or training. The University obtains little or no benefit. Activities are performed to contribute to the development of skills needed in the student’s studies. Examples of scholarship income: Student travels for dissertation research which is not research the University would otherwise conduct – the student dissertation is the primary purpose of the travel – the student is the primary beneficiary. Student travels to a conference as an attendee and does not present/contribute in official capacity. Student travels to China for Mandarin language training which will assist in language proficiency needed for degree. This is supplemental work that the student may need to succeed, but it is not a required part of the degree.

Policy/IRS regulations - Exceptions Student travel payments are considered reimbursement if the travel: Directly supports a faculty member’s project or research program Primary purpose and original intent is for the University to obtain useful results from the project/research Results or research will be used by the University Research is performed to fulfill University's obligations to outside funding entity Is related to presenting at a conference Poster/website/brochure with student's name is required Published evidence of presentation Is integral/required part of the student’s degree work Activity is required for degree or credit Activity impacts student’s grade Is official University business Representing the University at a competition

Policy/IRS regulations - Exceptions Examples of reimbursements: Student travels to represent the University is a scholastic competition. Student travels to present at a conference, where the student’s name is published (poster, website, brochure) as a presenter/contributor at the conference. Student travels to perform research, which happens to be the topic of her dissertation. The University would otherwise perform research on this topic, regardless of the student’s research – the University is the primary beneficiary.

How to Request a Payment - Reimbursement Travel Expense Voucher – Payment Serviceshttps://travelvoucher.uchicago.edu/ Supporting documents – actual receipts for non-reportable income. A letter certifying one of the above must accompany the reimbursement request. Letter must be completed by the student and faculty member/PI. If the certification letter is not attached to reimbursement request, the reimbursement will be considered taxable scholarship income. The certification letter is evidence of IRS exception for the University and is documentation for student for not reporting as income.

How to Request a Payment – Scholarship Domestic Student requests are processed thru the A/P system Received by Independent Contractor Section Requested using Stipend Form 21 and attaching W9 form Able to be processed quicker and be held at the Bursar’s Office under a requested number. Foreign Student requests are processed thru the Payroll System Received by Foreign Payroll Must attach alien documents to Stipend Form 21 Only processed on biweekly payrolls Held at the Bursar’s Office under a stipend check delivery code

Reimbursements are not reportable or taxable to the student. Tax and Reporting Domestic Students (U.S. Citizens, Permanent Residents, Residents for tax) Reimbursements are not reportable or taxable to the student. Non-qualified stipend/fellowship/scholarship is reportable and taxable income. Students will not receive a tax form from the University. Even though the students may not receive a tax document from the University regarding the payments – this does not mean it is not reportable. Students should submit quarterly tax payments if appropriate for these payments to both federal and Illinois state.

Foreign Students (Nonresidents for tax) Tax and Reporting Foreign Students (Nonresidents for tax) Reimbursements are not reportable or taxable to the student. Non-qualified stipend/fellowship/scholarship is reportable and taxable income. Non-resident students will receive form 1042S at year end. Students will have a 14% federal tax withholding if they are non-residents. If the students are residents for tax, no withholding (treated like a domestic student). Tax treaties apply to these payments. Students should submit quarterly tax payments if appropriate for these payments to Illinois state.