1. Expenditure Coding and
1099-Misc ReportING
Today we are going to talk about how expenditure types we use at UVA require reporting on the IRS 1099-MISC form.
Table of Contents
1. Overview of 1099-MISC Process
2. Oracle’s Integration with the 1099-MISC Process
3. Choosing the Correct Expenditure Type
4. Frequently Asked Questions
5. Notes on Ways the 1099 Process is Improving

2. 3,500 The University issues 3,500 1099-MISC every January.
Payments made to each vendor type that meet 1099-MISC criteria are determined by combining payments made by the University, the Medical Center, and UVA Wise. Those vendors receiving more than the minimum in qualifying payments are issued a 1099-MISC.
Our past accounting practices have not separated 1099-MISC activity by expenditure type, requiring, in some instances, a line by line review of expenditures. Going forward these activities are to be separated, so that 1099-MISC payments are in separate expenditure types which simplifies the process and makes it more accurate.

3. Form 1099-MISC
I. The IRS uses a variety of different forms to collect information on income and other information that is then matched against the tax return that is filed.
A W-2 is used to report information on salaries, taxable benefits and the taxes that have already been withheld on the earnings. That is the form we get every January from the University that shows how much money we made the previous year.
A 1042-S is used to report payments to any foreign person. A foreign person includes a nonresident alien individual, foreign corporation, a foreign partnership, a foreign trust, a foreign estate, and any other person that is not a U.S. person. Payments that the University makes to a foreign person show on a 1042-S, not on a 1099-Misc.
A 1098-T is the form that the University uses to report amounts received for qualified tuition and related expenses from students.
A 1099-Misc is used to report to the IRS income that may not be reported elsewhere.
One copy goes to whomever we made the payment to and one copy to the IRS

4. Form 1099-MISC
In general, a 1099-MISC will be generated when UVA makes:
Payment for services performed that are greater than or equal to $600 OR
Certain other payments like rent that are greater than or equal to $600
Payment for royalties greater than or equal to $10
AND
These payments are paid to UVA employees that have registered as vendor type Employee Vendor and who are US citizens or permanent residents and the payment is not reimbursement for an approved UVA related business expense and not related to their work at UVA
A US tax payer individual/sole proprietor/single member LLC, partnership or trust/estate
A US corporation that provides legal, healthcare or medical services

5. UVA employees register as Employee Vendors when they are providing a service or rental to the University as an individual separate from their UVA employment.
All reimbursements to employees for an approved UVA related business expenses are done through ExpenseUVA/Chrome River.
UVA employees includes academic employees, medical center employees or UVAWise employees.
Distinction between employee vendor and an employee reimbursement:
Employee reimbursement is repaying an employee for an approved UVA business expense that the employee incurred on behalf of the University.
An employee is an employee vendor when they provide to the University a service or rental that is outside of the scope of their employment.
Ex:
Reimbursement: I pay personally to rent a house for an employee retreat at Lake Anna with my supervisor’s permission as she considered it an allowable UVA business related expense.
Employee Vendor: I own a home at Lake Anna that my supervisor is renting from me to hold an employee retreat.

6. Form 1099-MISC
I. The boxes that UVA uses most often on the 1099-MISC are:
Box 1 – Rents
Box 2 – Royalties
Box 3 – Other Income
Box 6 – Medical and Health Care Payments
Box 7 – Nonemployee Compensation
Box 14 – Less frequently used – gross proceeds paid to an attorney

7. UVA Expenditure Types included in Box 1
Box 1 Rents includes:
Rent or leases for real estate including land and buildings
Rent or leases for equipment
Rent or leases for computer hardware and software
UVA Expenditure Types included in Box 1
Rent, Buildings & Facilities Lease, Capital Bldg & Land
Rent, Computer Peripheral Lease, Capital Building
Rent, Computer Processor Lease, Capital, Comp Processor
Rent, Conference/Meeting Space Lease, Capital, Equipment
Rent, Equipment Lease, Capital, Software
Rent, Land
Rent, Land & Buildings
Rent, Software

8. UVA Expenditure Types included in Box 2
Box 2 Royalties includes:
Literary royalties
Patent royalties
UVA Expenditure Types included in Box 2
Svcs, Royalties, Corporation
Svcs, Royalties, Individual

9. Box 3 Other income includes:
Prize and award payments that are not for services performed which includes the fair market value of noncash prizes
Human subject compensation
UVA Expenditure Types included in Box 3
Awards & Prizes (cash)
Contributions
Gifts (noncash)
Svcs, Human Subject Payments

10. Box 6 Medical and health care payments include:
Payments to physicians and other suppliers/providers of medical or healthcare services when organized as individuals, partnerships or corporations. Includes doctor fees, drug testing, lab fees, physical therapy, etc.
Does not include payments to pharmacies or tax exempt hospitals
UVA Expenditure Types included in Box 6
Svcs, Clinic
Svcs, Dental
Svcs, Hospital
Svcs, Medical
Svcs, Professional, UPG
Svcs, Professional, UPG-AHPs

11. Box 7 Nonemployee Compensation:
Payments to nonemployees for fees, commissions, honorariums, prizes and awards for services performed including guest lecturers and entertainers
Professional nonemployee service fees to accountants, architects, contractors, engineers
Payments to students who are not employed by the University for services performed
Payments to employees for services performed if work done is outside of the scope of the employee’s primary job at UVA. The employee would have to register as an Employee Vendor.
UVA Expenditure Types included in Box 7
All service expenditure types (except those included in other boxes).
Honoraria
Install Purch, Equip
All service expenditure types from A-X! will be 1099d for most vendors.
Honoraria is money given to a person to thank them for their service. It is not required or requested to perform the service and cannot be given to an employee. Ex: A professor from another university speaks to your students and the department chair wants to give them $100 as a thank you.
All service types will be 1099d. Which service goes into which box, is not as much of a worry for the people in departments. Just know that all services will be 1099d.

12. Box 7 Nonemployee Compensation, cont’d:
Attorney’s fees paid to a corporation.
UVA Expenditure Types included in Box 7, cont’d:
Svcs, Attorney
Svcs, Legal
Most service payments to corporations are not reported on a 1099-MISC. The above service types and those on slide 10 are exceptions and are reported to the IRS on a 1099-MISC.

13. Box 14 Gross proceeds paid to an attorney
Gross proceeds are the payments made to an attorney as part of a legal settlement or court order and may include an amount for the attorney’s services.
If you can determine the amount of the gross proceeds that are for the attorney’s fees, include the fee amount in box 7 and the remainder in box 14.
UVA Expenditure Type included in Box 14
Box 14 is seldom used. Items to be coded to Box 14 will be identified by the 1099 Processing team.

14. It is important to use the correct expenditure type:
For vendor types that meet the 1099-MISC criteria:
All services receive a 1099-MISC.
(No reimbursements go to service expenditure types.)
All supplies expenditure types do not receive a 1099-MISC.
All equipment expenditure types do not receive a 1099-MISC.

15. Payments for supplies only are not reported through a
1099-MISC.
Ex: Lab Supplies Ex: Office Supplies
Invoices that include both supplies and freight should be coded to the supplies account and the expense will not be reported through the 1099-MISC.
Invoices that include both supplies and services such as installation, training, technical support, and customizing should be divided by expenditure type between supplies and service. The service portion is reported through a 1099-MISC.
If an invoice includes both supplies and service, but the amount of the payment for service cannot be determined, the entire amount should be coded to the correct service type.

16. Water expenditure types:
Svc Charge, Chilled Water - water as an utility
1099-MISC Svc Charge, Water - water as an utility
Svcs, Bottled Water – water delivery
Supplies, Food & Drink - case of water
purchased from the grocery
NO 1099-MISC

17. Travel expenditure types do not generate a 1099-MISC.
Travel Costs, Training (all) Travel, Parking & Misc
Travel, Agent Fees Travel, Personal Vehicle
Travel, Aid Travel, Public Carrier, For
Travel, Meals Actual, For Travel, Public Carrier, US
Travel, Meals Actual, US Travel, Rental Vehicle, For
Travel, Meals Per Diem, For Travel, Rental Vehicle, US
Travel, Meals Per Diem, US Travel, State Vehicles
Travel, OSP Trainee Travel, Subsist & Lodging, For
Travel, Other Airline Fees For Travel, Subsist & Lodging, US
Travel, Other Airline Fees, US Tuition & Training, ADA

18. reported through a 1099-MISC.
Payments to a UVA Employee, Student Employee, Medical Center Employee, and Petty Cash Custodian that are reimbursements for approved UVA business expenses are
not
reported through a 1099-MISC.

19. reported through a 1099-MISC.
Payments made to vendor types Foreign Corporations, Foreign Government/Agencies, Foreign Individuals, Nonresident Alien (NRA) Employees, NRA Students, NRA Suppliers, NRA UVA Fellows, and International Students are
not
reported through a 1099-MISC.

20. Payments made to vendor types Corporation Nontaxable,
Federal Government, Local/State Government,
Nonprofit Organization, Student Organization, UVA Fellow and UVA Foundation are
not
reported through a 1099-MISC.

21. Payments to students for which the primary purpose is aid for study or research whether United States Citizens, United States Permanent Residents or Nonresident Alien Students are
not
reported on Form 1099-MISC.

22. It is important to use the correct expenditure type:
If software is rented or leased from an outside vendor it is coded to Lease, Capital Software (for purchases equal to or greater than $5,000) or Rent, Software (for purchases less than $5,000), expenditure types that will produce a 1099-MISC.
If software is purchased from an outside vendor rather than rented, it should be coded to Supplies, Office, an expenditure type that will not produce a 1099-MISC.

23. It is important to use the correct expenditure type:
In Expense UVA, the expenditure tile Food/Drink/Supplies under the Equipment and Supplies Tile should be used for travel funds provided by a university employee to students or individuals participating in athletic events. A 1099-MISC will not be generated.
Do not use expenditure type Svcs, Athletic Fees for travel funds provided by a university employee to students or individuals participating in athletic events. This will generate a 1099-MISC.
When a service is provided such as occasionally working at a ball game use expenditure type Svcs, Skilled Other. This requires vendor registration and a 1099-MISC will be generated.

24. It is important to use the correct expenditure type:
Clothing provided, for example by the Athletic Department, which has a UVA logo should be coded to expenditure type Supplies, clothing which will not generate a 1099-MISC.
Items coded to Awards & Prizes are 1099-MISC reportable and will generate a 1099-MISC.

25. It is important to use the correct expenditure type:
If UVA is reimbursing an individual for living expenses, use expenditure type Living Allowance NONSTUDENT, which will not generate a 1099-MISC.
Expenses coded to rent and lease expenditure types will generate a 1099-MISC.

26. It is important to use the correct expenditure type:
Use expenditure type Employee, Recognition Awards if the gift, award or prize is to an employee regardless if it is cash or other than cash.
Use expenditure type Gifts (non-cash) for a nonemployee if the gift, award or prize is other than cash.
Use expenditure type Awards & Prizes (cash) for a nonemployee if the gift, award or prize is cash.

27. Frequently Asked Questions:
If a person makes less than $600 of 1099-MISC reportable income, are they still liable to report the income to the IRS? Yes, even if an individual does not receive a 1099-MISC, the income must be reported to the IRS on their tax return.
If software is paid for through a subscription, does that expenditure fall under Rent, software or Supplies, office? Rent, software
Are expenses paid by T&E card reported on a 1099-MISC? Yes, but they are reported by the Bank of America not by the University.
Can an employee receive both a W-2 and a 1099-MISC from the University in the same year? Yes, under two circumstances. If an employee provides a service distinct from their primary job and registers and is paid as an employee vendor, they would receive both. The second scenario is a person could be a vendor and then be hired as an employee by the University (or vice versa), and would receive a 1099-MISC for a portion of the year and a W-2 for the remainder.