A Primer on Gifts, Prizes, and Awards
What is considered a gift, prize, or award?
Gifts, prizes and awards are typically gifts of cash (including gift cards/certificates) or other tangible personal property given to Kettering University faculty, staff, or students in recognition of outstanding achievement in teaching, research, academic performance, other performance-related activities, or for winnings in competitions, drawings, or student events. In rare instances, Kettering University departments may also present gifts, prizes, or awards to non-Kettering faculty, staff, and students.
Are gifts, prizes, and awards considered taxable income to the recipient?
In general, gifts, prizes, and awards are includible in the recipient's gross income if the gift is paid for by Kettering University. This may include items directly charged to your budget for items purchased at the bookstore.
Gifts, prizes, and awards of tangible personal property (other than cash or cash equivalents, such as gift certificates) of $75 or less are excludable from gross income. Similarly, the value of a turkey, ham, or other item of merchandise of similar nominal value distributed to an employee at holiday time is not taxable. However, any gift of cash (including gift cards/certificates) is considered taxable.
You are required to report any gift, prize, or award given to a recipient (regardless of whether it is charged to your budget directly, your purchasing card, or paid to you through reimbursement) to Accounts Payable on the Gifts, Prizes, or Awards Recipient Information form found at the Kettering Web site under Business Office - Forms.
If the recipient is an employee of Kettering University, the gift, prize, or award is considered supplemental wages and must be processed through our Payroll system with appropriate federal, state, local, and FICA/Medicare taxes withheld. The gift, prize or award is included in the recipient’s Form W-2, Wage and Tax Statement.
For Kettering University students, if the gift, prize, or award is related to services performed, it is processed as supplemental wages through Payroll with the appropriate income taxes withheld. However, if the gift, prize, or award is not related to services, it is still taxable income to the recipient and may be reported on Form 1099-MISC, but it is not subject to withholding.
For non-Kettering University recipients, a gift, prize, or award can be processed without tax withholding but is still considered income to the recipient (except for payments to non-resident aliens which may be subject to withholding). Such payments are reported as taxable income to the recipient using Form 1099-MISC, Miscellaneous Income. (Form 1099-MISC is only required to be filed if the total payments to the recipient total $600 or more in the calendar year.)
Note: There are special withholding rules related to payments made to non-resident aliens. Please call Payroll at x9776 regarding these requirements.
How do I request reimbursement for gifts, prizes, and awards?
If you are spending University monies for gifts, prizes, or awards, regardless of the amount, you must identify the recipients by completing the Gifts, Prizes, or Awards Recipient Information form found at the Kettering Web site under Business Office - Forms and send it to Accounts Payable along with a properly approved Funds or Materials Request form and the receipt of purchase. We are unable to process any requests for reimbursement if this information is not provided.
Direct additional questions regarding gifts, prizes or awards to Paul Gratsch at x7942.