Prize, Awards, and Gifts Policy

Union College is committed to compliance in all areas of its operation. Accordingly, the practices set forth below ensure that we find meaningful ways to recognize our students and employees, while also complying with IRS regulations. The Internal Revenue Code states that under certain circumstances the value of prizes and awards/gifts to individuals is considered taxable income. Non-US citizens may be subject to additional tax rules, depending on circumstances and treaty status.

The taxable period is the calendar year, i.e. January 1 through December 31

Union College complies with all IRS regulations concerning the giving of prizes and awards/gifts to faculty, staff, and students of the College. The Taxable Prize or Award/Gift Form collects required information to report the taxable portion of a prize or award/gift.

Other than the limited exceptions, a gift or an award is considered supplemental wages
by the IRS. Therefore, it must be processed through the payroll system with the appropriate taxes
withheld and will be included in the recipient’s Form W-2 (or Form 1042-S if they are a nonresident alien).

• If an employee wins a prize for a reason not related to their employment and the contest, program or raffle is open to the general public, the prize amount is treated as 1099 income. The recipient will receive a Form 1099-MISC on any winnings totaling over $600.00 in a calendar year.
• For students, if the prize or award is related to employment services performed for the college (e.g., outstanding student worker in a department), the prize or award must be processed as supplemental wages via Payroll, with appropriate income taxes withheld. However, if the award is not related to services performed as an employee (e.g. academic achievement, contest), it is still taxable income to the recipient and must be reported on Form 1099 (*in this case, it is not subject to withholdings).
• For non-employees, the prize or award can be processed without tax withholding but is still considered income to the recipient. Such payments are reported as taxable income to the recipient using Form 1099, Miscellaneous Income. Accounts Payable will require a W-9 be provided before the award is processed.

All awards, regardless of dollar amount, must have a valid, documented business purpose and must comply with Union College purchasing, expense and approval procedures.