Re: Stipends Stephen F. Turner 23 Jun 2003 13:26 EST
There are now additional reporting requirements for stipends and other payments to students because of Public Law 107-131. Beginning 01/01/03, Institutions will now be required to report scholarships or grants received for the individual's costs of attendance that the institution administered and processed during the calendar year. Institutions will report this information on the 1098-T form which also reports tuition payments from students. Stephen Turner Research Accounting University of Arkansas (479)575-6281 -----Original Message----- From: Research Administration List [mailto:xxxxxx@HRINET.ORG] On Behalf Of Herbert B. Chermside Sent: Monday, June 23, 2003 12:28 PM To: xxxxxx@HRINET.ORG Subject: Re: [RESADM-L] Stipends A "stipend" is not payment for services rendered. "Fellowship" is a synonym. Both "stipend" and "fellow" are commonly misused by faculty, but from the question I believe you are using it correctly. It is a payment to an individual undergoing a specific training. Essentially it is a payment to cover living needs and specifically does not provide a need for services in return. In fact some programs prohibit the recipient from having a "job" in addition. It is "income" for income tax purposes, but certain costs may be excluded to find the total taxable income; see the tax law. The institution does not have a legal duty to withhold income tax both because it is not "wage income" (payment for services rendered), and also cannot reasonably know what part is taxable because that amount is very individualized to the taxpayer. It is not "wage income" for social security and medicate tax/contribution purposes. If it is being handled like "wage income", which almost always happens when the payroll system is used, it is in error. The appropriate method of handling it outside of payroll is somewhat at the convenience of the institution. It is not a purchase, so a simple accounts payable could confuse that matter; our institution does use accounts payable but has a classification that is not "procurement". Some have paid it through student aid, but if you go that route you have to be sure that you are very careful in the handling of it; I know there are significant confusions in that area, but not what they are. Incidentally, generally the recipient of a stipend has tenure in the stipend so long as he/she is making reasonable progress toward the training goal. However, the award terms need to be read carefully to determine exactly what the measure of tenure is. Chuck At 09:17 AM 6/23/2003 -0400, you wrote: >I would like to get some information on how other colleges and universities >handle stipends on U.S. Dept. of Education grants. This has been an >ongoing debate in our institution for quite sometime. > >Specifically how are they handled for tax purposes: >How do you pay them? Through accounts payable, payroll or the Bursars >office. >Are they provided with a 1099? > >Thanks for your input! > > >*************************************** >Lisa Heilman >Grant Accountant >234 Michael Schwartz Center >330-672-0985 >330-672-2203 (fax) >*************************************** > > >====================================================================== > Instructions on how to use the RESADM-L Mailing List, including > subscription information and a web-searchable archive, are available > via our web site at http://www.hrinet.org (click on "Listserv Lists") >====================================================================== Herbert B. Chermside, CRA Director, Sponsored Programs Administration Virginia Commonwealth University PO BOX 980568 Richmond, VA 23298-0568 Express Delivery Only: Biotech One, Suite 113 Virginia Biotechnology Research Park 800 East Leigh Street Richmond, VA 23219 Voice: 804-828-6772 Fax 804-828-2521 OFFICE e-mail xxxxxx@VCU.EDU Personal e-mail xxxxxx@vcu.edu http://www.research.vcu.edu/ospa.htm ====================================================================== Instructions on how to use the RESADM-L Mailing List, including subscription information and a web-searchable archive, are available via our web site at http://www.hrinet.org (click on "Listserv Lists") ====================================================================== ====================================================================== Instructions on how to use the RESADM-L Mailing List, including subscription information and a web-searchable archive, are available via our web site at http://www.hrinet.org (click on "Listserv Lists") ======================================================================