STIPENDS-TAX IMPLICATIONS

(Revised June, 1999)

The Internal Revenue Service regulations state that an employer is required to withhold income tax from any individual's wages with whom it maintains an employer/employee relationship. Wages are defined as all remuneration for services performed by an employee for the employer regardless of the circumstances under which the employee is employed or the frequency or size of the individual wage payments. Both stipends and honoraria qualify as payments for services performed and are reported as taxable earnings to the Internal Revenue Service. Taxes are withheld as if they were a one-time payment considering the exemption claimed and the salary level of the staff member.

Outside consultants, on the other hand, qualify as independent contractors rather than employees. Independent contractors are currently exempt from the income tax withholding requirements of the Internal Revenue Service. Wittenberg is, however, required by federal tax regulations to report payments to any independent contractor exceeding $600 for the taxable year. The outside consultant must provide a Social Security number to Wittenberg prior to receiving payment.

STIPENDS

Stipends, including but not limited to research stipends; payments to performers or speakers; contract payments; payments to research subjects and other services, should be paid by the Accounting, Student Employment or the Human Resources Office. Stipends should not be paid by personal check or cash at any time. In order to comply with Internal Revenue Service regulations we will process stipends using the following procedures:

Students who are employed by Wittenberg University

The stipend(s) will be included with the next monthly payroll check for students employed by Wittenberg University. The Student Employment Office will process stipends for these students and withhold the appropriate taxes.

Faculty Members

The stipend(s) will be included with the next monthly payroll check for faculty members. The Human Resources Office will process all stipends and withhold the appropriate taxes.

Individuals who are not employed by Wittenberg University

The stipend(s) will be issued on individual checks by the Accounting Services Office. These checks will be coded for miscellaneous income. If the individual meets the dollar threshold for the calendar year, currently $600, a 1099-Misc will be issued at year-end.

In order to process these checks, the Accounting Services Office will need each individual's name, address, social security number and a description of the services rendered.

STUDENT AND FACULTY AWARDS

In order to comply with Internal Revenue Service regulations we will process awards using the following procedures:

Students who are employed by Wittenberg University

The award(s) will be included with the next monthly payroll check for students employed by Wittenberg University. The Student Employment Office will process awards for these students.

Faculty Members

The award(s) will be included with the next monthly payroll check for faculty members. The Human Resources Office will process the awards.

Students who are not employed by Wittenberg University

The award(s) will be issued on individual checks by the Accounting Services Office. These checks will be coded for miscellaneous income. If the student meets the dollar threshold for the calendar year, currently $600, a 1099-Misc will be issued at year-end.