Prize & Award payments can be divided in to three categories:
- Employee Prize/Award Payments
- Scholarship/Fellowship Awards
- Non-Employee Cash Prize/Award
Employee Prize/Award Payments
Awards based upon achievement as an employee are to be paid through Payroll as an employee award. This includes student awards which are based upon an achievement while functioning as an employee. Employee awards are paid through the Personnel Payroll System (PPS) and are subject to employee tax withholding and reporting requirements.
Scholarship/Fellowship Awards
An award that is intended to help defray the cost of education, and does not require services. Scholarship/Fellowship Awards are paid through the Billing and Accounts Receivable (BAR) system, and are subject to Scholarship/Fellowship tax withholding requirements.
Non-Employee Cash Prize/Award
Prizes and Awards which are based upon a past achievement unrelated to employment, and not intended to defray the cost of education are to be paid through the BruinBuy system.
Nonresidents receiving Prize/Award payments processed through BruinBuy must be set up with records on the GLACIER system. Payroll Services reviews these payments to determine the tax withholding obligations. The payments are processed through the Accounts Payable system after Payroll Services review.
Tax Withholding and Reporting Obligations
- Non-employee Prize/Award payments to nonresidents are subject to 30% Federal Tax withholding, unless reduced by a Tax Treaty provision.
- Non-employee Prize/Award payments are reported to nonresidents at year end on Form 1042-S. Form 1042-S is issued annually by Payroll Services through the GLACIER online tax reporting system.
Questions related to nonresident tax reporting of Prize/Award payments, and setting up GLACIER records for Prize/Award recipients, should be directed to Payroll Services, Nonresident Tax Compliance Administrator (see below).
