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POLICY ON PAYMENTS TO STUDENTS
Definitions, Procedures,
Reporting Requirements and Individual Taxability
_____________________________________________________________________________
Click here for the
Quick Reference Table.
Candidate for a Degree – A
Student, full or part-time who either:
·
attends a primary or secondary
school, or is pursuing a degree at a college or university.
OR
attends an educational
institution that is authorized or accredited to provide a program that
is acceptable for full credit toward a bachelors or higher degree, or to
provide a program of training to prepare a student for gainful
employment in a recognized occupation.
1)
COMPENSATION -
Payment for work performed or services rendered. Includes any portion
of a scholarship/stipend/grant/fellowship/internship, as well as tuition
reduction, that represents payment for past, present or future teaching,
research or other services. This applies even if all candidates for a
degree are required to perform these services to receive the degree.
a)
US Citizen/Resident Alien
i)
Submit payment to Payroll
(http://www.wesleyan.edu/payroll/stuTimeRept.html).
ii)
Compensation is taxable to the
student and reported on a W-2.
b)
Non US Citizen/Nonresident
Alien
i)
Submit payment to Payroll
(http://www.wesleyan.edu/payroll/stuTimeRept.html ).
ii)
Compensation is taxable to the
student and reported on a W-2, with treaty earnings reported on a
1042-S.
2)
STIPEND/GRANT/FELLOWSHIP/INTERNSHIP (SERVICES REQUIRED) –
An amount paid for the benefit of a student at an educational
institution to aid in the pursuit of study or research. A student may
be pursuing either an undergraduate or graduate degree. There may be
instances when a scholarship may contain payment for services and for
non-compensation, and/or the intent of the payment is not defined or
unclear. Contact the Finance Office to discuss an individual payment
and its taxability and reporting requirements.
b)
US Citizen/Resident Alien
i)
Submit payment to Payroll
(http://www.wesleyan.edu/payroll/stuTimeRept.html ).
ii)
Payment is taxable to the
student and reported on a W-2.
c)
Non US Citizen/Nonresident
Alien
i)
Submit payment to Payroll
(http://www.wesleyan.edu/payroll/stuTimeRept.html ).
ii)
Payment is taxable to the
student and reported on a W-2, with treaty earnings reported on a
1042-S.
3)
STIPEND/GRANT/FELLOWSHIP/INTERNSHIP (NO SERVICES REQUIRED) – An
amount paid for the benefit of a student at an educational
institution to aid in the pursuit of study or research. The student may
be pursuing either an undergraduate or graduate degree. There may be
instances when a scholarship may contain payment for services and for
non-compensation, and/or the intent of the payment is not defined or
unclear. Contact the Finance office to discuss an individual payment
and its taxability and reporting requirements. The purpose of a non-service stipend is to aid
in travel and out- of-pocket expenses, without requiring the submission
of receipts.
b)
US Citizen/Resident Alien
i)
Submit payment to Accounts
Payable
(http://www.wesleyan.edu/finance/financeDept/accounts/PmtProcessProcedure.html).
ii)
A non service stipend is
taxable to the student but not reported by Wesleyan. According to IRS
notice 87-31. Neither the grantor nor the educational institution is
required under section 6041 to file a 1099-MISC to the IRS. It is the
responsibility of the student, the recipient, to report taxable non
qualified payments to the IRS. The student may seek taxability
requirements in IRS Publication
970(http://www.irs.gov/app/scripts/retriever.jsp).
c)
Non US Citizen/Nonresident
Alien
i)
Submit payment to the
International Tax Specialist. Each payment will be reviewed and
submitted to Accounts Payable.
ii)
A non service stipend is
taxable to the student at a 14% rate and reported on a 1042-S.
4)
PRIZES/AWARDS
– An amount awarded to a student for academic excellence, achievement or
special recognition. A prize/award is not considered compensation for
services.
a)
US Citizen/Resident Alien
i)
Submit payment to Accounts
Payable
(http://www.wesleyan.edu/finance/financeDept/accounts/PmtProcessProcedure.html
).
ii)
Prizes/awards are taxable to
the student and reported on a 1099-MISC.
b)
Non US Citizen/Nonresident
Alien
i)
Submit payment to
International Tax Specialist. Each payment will be reviewed and
submitted to Accounts Payable.
ii)
Prizes/awards are taxable at a
30% rate and reported on a 1042-S.
5)
TRAVEL REIMBURSEMENT
– An amount paid to a student to make the individual whole for an
out-of-pocket travel expense incurred. Travel reimbursement requests must be supported by original documentation,
including the purpose of the travel.
a)
US Citizen/Resident Alien
i)
Submit payment to Accounts
Payable
(http://www.wesleyan.edu/finance/financeDept/accounts/PmtProcessProcedure.html
).
ii)
Travel reimbursements, with
receipts, are not taxable to the student and not reported by Wesleyan.
b)
Non US Citizen/Nonresident
Alien
i)
Submit payment to
International Tax Specialist. Each payment will be reviewed and
submitted to Accounts Payable.
ii)
Travel reimbursements, with
receipts, are usually taxable to the student at a rate of 14% and
reported on a 1042-S.
6)
REIMBURSED EXPENSES
- An amount paid to a student to make the individual whole for an
out-of-pocket expense incurred. Reimbursement requests
must be supported by original documentation, or receipt, including the
purpose of the purchase.
a)
US Citizen/Resident Alien
i)
Submit payment to Accounts
Payable
(http://www.wesleyan.edu/finance/financeDept/accounts/PmtProcessProcedure.html
).
ii)
Reimbursed expenses, with
receipts, are not taxable to the student and not reported by Wesleyan.
b)
Non US Citizen/Nonresident
Alien
i)
Submit payment to
International Tax Specialist. Each payment will be reviewed and
submitted to Accounts Payable.
ii)
Reimbursed expenses, with
receipts, are usually taxable to the student at a rate of 14% and
reported on a 1042-S.
7)
NON QUALIFIED
SCHOLARHSIP – An amount that is given to a student that is
greater than the amount charged by the student’s educational institution
for tuition, required fees, books, supplies and equipment. Cash,
without receipts, disbursed to a student, is considered a non qualified
scholarship.
a)
US Citizen/Resident Alien
i)
Submit payment to Accounts
Payable (http://www.wesleyan.edu/finance/financeDept/accounts/PmtProcessProcedure.html
link).
ii)
A non qualified scholarship is
taxable to the student but not reported by Wesleyan. According to IRS
notice 87-31. Neither the grantor nor the educational institution is
required under section 6041 to file a 1099-MISC to the IRS. It is the
responsibility of the student, the recipient, to report taxable non
qualified payments to the IRS. The student may seek taxability
requirements in IRS Publication 970 (http://www.irs.gov/app/scripts/retriever.jsp).
b)
Non US Citizen/Nonresident
Alien
i)
Submit payment to
International Tax Specialist. The Tax Specialist will review and submit
to Accounts Payable.
ii)
A non qualified scholarship is
taxable at a 14% rate and reported on a 1042-S.
8)
QUALIFIED SCHOLARHSIP
– An amount that is given to a student to be used
for tuition, required fees, books, supplies and equipment that are
required for attendance at Wesleyan. Cash, without receipts, disbursed
to a student, is not qualified scholarship.
a)
US Citizen/Resident Alien
i)
A qualified scholarship is
applied to a student’s University account.
ii)
A qualified scholarship is not
taxable. Tuition only is reported on a 1098-T. A 1098-T is produced
only for individuals with a SSN.
b)
Non US Citizen/Nonresident
Alien
i)
A qualified scholarship is
applied to a student’s University account.
ii)
A qualified scholarship is not
taxable. Tuition only is reported on a 1098-T. A 1098-T is produced
only for individuals with a SSN.
OTHER PAYMENTS/STUDENT CREDITS
1)
ROOM AND BOARD
– An amount paid to a student to be used for room and board for
attendance at Wesleyan.
c)
Non US Citizen/Nonresident
Alien
i)
Room and board is applied to a
student’s University account.
ii)
Room and board is taxable and
is reported at a 14% rate on a 1042-S. |
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