For tax purposes payments to individuals at Syracuse University fall into two basic categories:
- Payments for which no past, present, or future services are required to be performed by the recipient
- Payments which do require past, present, or future services to be performed by the recipient:
- Payments to employees
- Payments to independent contractors
Within these categories, the rules for taxation are based upon the recipient’s citizenship status of U.S. citizen, permanent resident, or non-resident alien.
- Payments for which Services are Not Required: Scholarships/Fellowships
- Payments for which Services are Required: Wages/Compensation
Payments for which Services are Not Required: Scholarships/Fellowships
As defined by the Internal Revenue Service, scholarships are amounts paid for the benefit of a student at an educational institution to aid in the pursuit of studies, and fellowships are amounts paid for the benefit of an individual in the pursuit of study or research. A qualified scholarship or fellowship grant is tax-free only if the recipient is a candidate for a degree at an educational institution.
Qualified scholarship and fellowship grants are amounts paid for tuition and fees required to enroll in, or to attend an educational institution, or fees, books, supplies, and equipment that are required for the courses at the educational institution.
Amounts paid for incidental expenses are taxable. Incidental expenses include, but are not limited to, expenses for room and board, travel, research, clerical help, equipment, and other items not required for either enrollment or attendance at an educational institution, or in a course of instruction at an educational institution.
The following table indicates the tax treatment of scholarship and fellowship payments:
| Payment for | Degree candidate | Not a degree candidate |
|---|---|---|
| Tuition | Not Taxable | Taxable |
| Fees | Not Taxable | Taxable |
| Books * | Not Taxable | Taxable |
| Supplies | Not Taxable | Taxable |
| Equipment | Not Taxable | Taxable |
| Room | Taxable | Taxable |
| Board | Taxable | Taxable |
| Travel | Taxable | Taxable |
*Must be required of all students in a course of instruction at an educational institution
U.S. Citizens and Permanent Residents
U.S. Citizens and Permanent Residents must have a Social Security Number in order to receive a scholarship or fellowship from Syracuse University.
By law, the grantor of scholarships and fellowships to United States citizens and permanent residents of the United States is not required to report these payments to the Internal Revenue Service or to the recipient. Likewise, there is no tax withholding required. It is the responsibility of the individual receiving the scholarship or fellowship to determine whether it is taxable and to report such payments as required on their personal income tax return.
Internal Revenue Service Publication 970 – Tax Benefits for Education provides additional information, and may be obtained from the Internal Revenue Service website or by calling 1-800-829-3676.
Non-resident aliens must have a Social Security Number or an individual taxpayer identification number in order to receive a scholarship or fellowship from Syracuse University. Non-qualified scholarships and fellowships given to non-resident aliens must be reported to the Internal Revenue Service and to the recipient on form 1042-S.
Qualified scholarships (scholarships for tuition and fees required for enrollment at Syracuse University) granted to candidates for a degree are not subject to tax withholding. Absent the existence of a tax treaty with an appropriate provision, scholarships and fellowships that are not applied directly to tuition and fees required to enroll in, or to attend an educational institution, or that exceed such fees, when given to non-resident aliens must have taxes withheld (at a rate of 14% for individuals on an F, J, M, or Q visa), even if the excess moneys are used for the purposes described above as being tax free. Where appropriate, the individual may apply for a tax refund upon filing their personal income tax return.
Absent the existence of a tax treaty with an appropriate provision, all scholarships or fellowships (qualified and not qualified) for study, training or research at an educational institution granted to individuals who are not candidates for a degree, that are present in the U.S. on an F, J, M, or Q visa, are subject to withholding at 14%.
Non-qualified scholarships and fellowships other than those described above are subject to withholding at 30%.
To enable the University to determine the proper tax status for a non-resident aliens fellowship recipient, for each calendar year it is necessary for the individual to complete the online questionnaire in the Foreign National Information System. Based upon the information provided, the individual’s proper tax status will be determined. Any required forms will be sent to the individual for signature and return to Payroll.
Internal Revenue Service Publication 519 – Tax Guide For Aliens provides additional information, and may be obtained from the Internal Revenue Service website or by calling 1-800-829-3676.
Regardless of how a scholarship or fellowship payment is spent by the recipient, this type of payment is a financial aid expense to the University. Accordingly, the appropriate accounts must be used in the chartstring, and the appropriate University forms must be used.
Requests for scholarships and fellowships to undergraduate students against non-sponsored accounts must be submitted to General Accounting on a Grant Authorization Form.
Requests for tuition scholarships to undergraduate students on sponsored projects must be submitted to Sponsored Accounting on a Scholarship Tuition Information Sheet.
Requests for fellowship payments to undergraduate students on sponsored projects must be submitted to Sponsored Accounting on a Monthly Stipend Information Sheet.
Requests for payments of scholarships and fellowships to graduate students on non Sponsored accounts by University departments other than the Graduate school are submitted to General Accounting on a Monthly Stipend Information Sheet.
Requests for tuition scholarships to graduate students on sponsored projects must be submitted to Sponsored Accounting on a Scholarship Tuition Information Sheet.
Requests for fellowship payments to graduate students on sponsored projects must be submitted to Sponsored Accounting on a Monthly Stipend Information Sheet.
Requests for fellowship payments to employees or for reimbursements to employees for incidental expenses must be processed on an Employee Expense Voucher. It is important to realize that requiring receipts does not change the nature of the payment or have any effect on taxability.
Requests for fellowship payments to students or for reimbursements to students for incidental expenses must be processed on a purchase requisition. It is important to realize that requiring receipts does not change the nature of the payment or have any effect on taxability.
Under no circumstances should scholarships, fellowships, grants, or any other payment for which services are not required, take the form of a direct purchase or payment to a vendor on behalf of the recipient.
Questions regarding the payment of scholarships, fellowships and grants should be directed to the Comptroller’s Office at 315-443-3765.
Payments for which Services are Required – Wages/Compensation
Payments for services fall into two categories; employees and independent contractors. The primary factor in distinguishing between these classifications is the degree of control over the individual performing the services.
Prior to engaging an individual to perform services for the University as an independent contractor, the Syracuse University Department Worksheet to Determine if an Individual should be Paid as a Non-Employee [DOC] must be completed. This worksheet provides guidelines and directions for proper classification and payment of individuals.
Additional information for each category of payment is provided below.
If the University exercises control and direction of the individual performing the services, the individual is an employee. Payments to such individuals for which any past, present, or future teaching, research, or performance of other services is required to be performed for the University, an awarding agency, or any other party, are taxable compensation, subject to withholding of Federal and State income taxes, as well as FICA tax, and must be paid through Payroll. This includes payments to candidates for a degree, even if all candidates for a degree are required to perform the services to receive the degree.
Grants for lecturing, teaching or to perform research in the United States, as well as abroad, are payments for services, subject to U.S. income tax. This includes cash reimbursement for transportation expenses and the value of transportation furnished in kind. Professors and teachers regularly employed by an educational institution in the United States, temporarily absent (less than 1 year) from the school to teach or lecture abroad, generally may deduct travel expenses. This includes the cost of ordinary and necessary traveling expenses while away from your tax home, including meals and lodging, for the duration of the stay. These deductions apply only to the expenses of the professor/teacher and not to any expenses for any person who may accompany the professor/teacher. The requirements for classifying travel expenses as nontaxable business expenses are explained in the Syracuse University Guidelines for Travel Advances and Substantiation of Travel.
U.S. Citizens and Permanent Residents
U.S. Citizens and Permanent Residents must have a Social Security Number in order to receive payment from Syracuse University as an employee.
Payments to U.S. Citizens and Permanent Residents for services as an employee are taxable income, subject to FICA withholding, Federal Income Tax, and New York State Income Tax withholding based upon the withholding status and allowances submitted by the individual. The University is required to report wage payments and taxes withheld on form W-2 to the recipient and to the IRS.
Non-resident aliens must have a Social Security Number in order to receive payment from Syracuse University as an employee. In addition, the individual must be present in the United States on a visa that permits employment. The Slutzker Center for International Services should be consulted to verify visa type and eligibility prior to hiring a non-resident alien.
Absent the existence of a tax treaty, payments to a non-resident alien for services as an employee are taxable income, subject to withholding based upon the withholding status and allowances. The University is required to report these wage payments and taxes withheld on form W-2 to the recipient and to the IRS. Payments for services performed outside of the United States are not taxable or reportable.
The existence of a tax treaty between the individual’s country of residence and the U.S. with a provision for payments as an employee may result in an exception to the withholding requirement, if the individual meets the terms of the treaty. These terms may pertain to length of stay in the U.S. and/or the amount of the payment. Wage payments exempt from withholding by treaty are required to be reported to the recipient and the IRS on form 1042-S.
To enable the University to determine the proper tax status for a non-resident alien employee, for each calendar year it is necessary for the individual to complete the online questionnaire in the Foreign National Information System. Based upon the information provided, the individual’s proper tax status will be determined. Any required forms will be sent to the individual for signature and return to Payroll.
An individual is hired as a University employee by processing an “Interactive Job Action Notice” (iJAN) using the PeopleSoft HRSA Applications within Administrative Applications in the MySlice. Changing the appointment of an existing University employee requires an iJAN.
Payments to non-exempt employees require weekly online time input and approval. Payments to exempt employees require the existence of a current semimonthly appointment and the completion of semimonthly on-line time input and approval.
Adjustments to prior pays are processed using the online “Request for Additional Pay” (RAP), using the PeopleSoft HRSA Applications within Administrative Applications in the MySlice. Payment to an existing University employee for one-time services performed outside the employee’s home department also requires an online RAP.
Under no circumstances should any payment for which services are required, take the form of a direct purchase or payment to a vendor on behalf of the recipient.
Questions regarding an individual’s status as an employee should be directed to the Office of Human Resources at 315-443-4042 or hrservic@syr.edu. Questions regarding payments to employees please contact Payroll.
For information on student employment, which may differ from the above guidelines, contact Student Employment Services at 315-443-2268 or seo@syr.edu.
Payments to Independent Contractors
Prior to engaging an individual to perform services for the University as an independent contractor, the Syracuse University Department Worksheet to Determine if an Individual should be Paid as a Non-Employee [DOC] must be completed. This worksheet provides guidelines and directions for proper classification and payment of individuals.
If the University has control only of the result of the services, and not over how, when, where, or under what conditions the work is performed, the individual is an independent contractor. Fees and honoraria are lump sum payments for professional services rendered by non-employees of the University for a short-term period, as well as payments to bonafide consulting firms for services rendered fall into the category of payments to independent contractors. Payments to independent contractors are made through Disbursements Processing.
U.S. Citizens and Permanent Residents
U.S. citizens and permanent residents must submit a W-9 form which provides their Social Security Number and a permanent home address in order to receive a payment from Syracuse University as an Independent Contractor.
Payments to U.S. citizens and permanent residents for services as an independent contractor are taxable income, but there is no tax withholding required. The University is, however, required to report payments of $600.00 or more made to non-employees for services on form 1099MISC. to the recipient and to the IRS. Payments totaling less than $600.00, although taxable income to the recipient, are not required to be reported.
To be paid as an independent contractor, a non-resident alien must be present in the United States on a visa that permits the individual to receive such payments. The Slutzker Center for International Services should be consulted to verify visa type and eligibility prior to arranging for services/payments of this nature. In addition, it is preferred that the individual have a Social Security Number or an Individual Taxpayer Identification Number for tax reporting purposes.
Generally, payments to a non-resident alien for services as an independent contractor are taxable income, subject to withholding at 30%, and reportable to the recipient and to the IRS on form 1042-S. Payments for services performed outside the United States are not taxable or reportable.
The existence of a tax treaty between the individual’s country of residence and the U.S. with a provision for payments for independent personal services may result in an exception to the withholding requirement, if the individual meets the terms of the treaty. These terms may pertain to length of stay in the U.S. and/or the amount of the payment.
Prior to paying a non-resident alien as an independent contractor, departments should contact Payroll to determine the individual’s tax status as well as to learn about requirements or obtain forms that are necessary to initiate payment. See Payments to Nonresident Aliens as Independent Contractors/Consultants-Checklist.
Payments to individuals for services as an Independent Contractor are made on a Request for Payment of Professional Services Rendered by Non-Employees form [PDF] with a completed Syracuse University Department Worksheet to Determine if an Individual should be Paid as a Non-Employee [DOC] attached.
Bonafide consulting firms should be paid against an invoice issued by the consulting firm. Questions regarding an individual’s status as an independent contractor should be directed to the Office of Human Resources at 315-443-4042 or hrservic@syr.edu. Questions regarding payments to independent contractors should be directed to Disbursements Processing at 315-443-2484 or disburse@syr.edu.