The University of Chicago

Financial Services

  

Student Travel and Reimbursements

POLICY:

Reimbursements are not reportable to the Internal Revenue Service (IRS) as income to the student if the student can document that the reimbursement:

Any reimbursement to an undergraduate or graduate student which has not meet one of the criteria above for University student reimbursement will be taxable scholarship income to the recipient, but not reported on Forms W-2 or 1099-MISC.* It is the recipient's responsibility to maintain records for these scholarship payments. NOTE: Students can receive per diems with special permission from the Associate Vice President for Finance.

*Nonresidents for tax are required to have a 14% federal withholding and the payment will be reported as scholarship income (Income code 15) on form 1042S.

To certify the payment is a University reimbursement, the student and Faculty member or Principal Investigator (if paid from a federal grant) must complete Payroll Form "Student Certification for Business Related Reimbursement". If the certification letter is not attached to the reimbursement request, the payment will be considered taxable scholarship income.

EXAMPLES:

Student reimbursements are of a complex nature and the below explanations are not inclusive and determinations may need to be made on an individual basis.

The student travel payment is generally considered reimbursement (nontaxable, nonreportable) if:

Examples of reimbursement:

The student travel payment is generally considered to be scholarship (taxable, reportable) if:

Examples of Scholarship:

NOTE: If payment requires that the student perform services to receive the funding, this is considered wage/compensation. Payment should not be made as a reimbursement or scholarship; payment is required to be processed through Payroll Services.

TAXES and REPORTING:

Domestic Students (includes U.S. Citizens, permanent residents and residents for tax)

Business related reimbursements are not considered reportable or taxable income. There is no tax withholding requirement for scholarship/fellowship payments, but this income is reportable and taxable income to the recipient. This income is not reported on a tax document (e.g. W2 or 1099), but is considered to be self-reported income per IRS publication 970. Students may be required to pay estimated quarterly taxes to federal (IRS form 1040-ES) and Illinois state revenue offices (IL-1040-ES) on this income.

Foreign Students (nonresidents for tax)

Business related reimbursements are not considered reportable or taxable income. There is a 14% federal tax withholding on scholarship/fellowship payments, and this income is reportable and taxable income to the recipient. This income is reported on tax document 1042S. Students may be required to pay estimated quarterly taxes to federal (IRS form 1040-ES) and Illinois state revenue offices (IL-1040-ES) on this income.

To help communicate the IRS policy and regulations on student payments to individuals receiving scholarship or travel reimbursement payments, Payroll Services has created a sample memorandum for departments/divisions to provide to students.

REQUESTING PAYMENTS:

Business Related Reimbursement

Reimbursements should be requested through the ePayment system. Each request must have a Payroll Form "Student Certification for Business Related Reimbursement".

Scholarship Payment

Scholarship Payments should be entered into PowerFaids (if appropriate), through the ePayment system or on the Payroll Stipend Form 21. Payroll Stipend Form 21 should be sent directly to Payroll Services at 6054 S. Drexel Ave, Suite 300.

Domestic requests are processed thru the A/P system

  1. Payments processed via ePayment system or Stipend Form 21
  2. Form W9 must be attached to payment request
  3. Typically upon receipt of all documents, checks will be available within 5 business days
  4. Payments can be mailed directly to the recipient or held at the Bursar's Office

 Foreign requests are processed thru the Payroll System

  1. Enter payment request via PowerFaids (if appropriate) or Stipend Form 21
  2. See Payroll Website for appropriate documents to attach to request.
  3. Payment requests will be paid on the biweekly payroll
  4. Checks will be sent to the Bursar's Office for pick up under the stipend delivery code.
  5. Payments cannot be a wire transfer or direct deposit.

August 16, 2012 Student Travel and Reimbursement PowerPoint


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