Expenses reimbursed to and paid for (or on behalf of) an individual
The University reimburses expenses to its students, employees, independent contractors and other individuals on a regular basis. The University may also pay expenses to a third party for or on behalf of these individuals. Depending on the facts and circumstances, the expenses could be taxable compensation or scholarship to the recipients, or nontaxable business expenses.
Expenses associated with services provided by the individual
Determination of services provided to the University
If the individual engages in activities that primarily benefit the University, he/she is considered to provide services to the University.
- employees travel on University business to attend work-related conference, workshop or work-related training, or perform other employee duties
- independent contractors travel to perform under the contract with the University
- non-employee students or visitors participate in conference/workshop hosted or organized by the University, and the participation primarily benefits the University. Such participation include: presenting in the event, participating in round table discussion, or sharing ideas and knowledge in any other means.
Note: if the purpose of the event is specifically for the participant’s own training/study, the expenses are considered primarily benefit the participants, therefore are scholarship to the participants.
If the expenses are determined associated with services provided to the University, the substantiated expensesare considered business expenses, which is not reportable or taxable to the individual. For example, an employee (or an independent contractor) travels on the University business. The substantiated travel expenses are business expenses, therefore, are not reportable or taxable for him.
However, in the case that the expenses are not substantiated, the payment (if allowed) will be considered compensation (dependent or independent). Contact Accounts Payable for questions regarding substantiation requirements.
Expenses not associated with services provided by the individual
If no service is provided to the University, the expenses are income to the individuals. The type of income and the tax reporting requirements depend on the facts and circumstances:
- Expenses for a job candidate’s family member(s) to accompany the candidate for the interview –“other income” to the job candidate and reported on IRS Form 1099
- Expenses for a future employee (who has accepted the job offer) for a pre-moving house hunting trip – wages and salaries and reported on IRS Form W-2
- Expenses for an employee to apply for permanent residency, when the University is not the petitioner (such as Application for Adjustment of Status) – wages and salaries, and reported on IRS Form W-2
- Expenses for a student (UA student or student from other institution) to attend conference for the student’s own training/study – scholarship income to the student, and reported on IRS Form 1042-s if he/she is a nonresident alien for tax purposes