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  Pay Type 1A
Cash Awards + Prizes
 
Issued   28-Mar-01
Revised 28-Apr-04		   Procedure: Direct Payment

Table of Contents | Index
Definition | State w/hold Tax | Federal Tax
Decisions | Initiating Actions | Payment Process| Authorization | References

Definition:

Prize: A prize is offered in a competition or contest of chance.

Award: An award is made in recognition of scientific, educational, artistic, literary, or civic achievement.

CASH AWARD TO A NON-UC EMPLOYEE:
Cash awards are made in recognition of scientific, educational, artistic, literary, or civic achievement.  Note: Process FYAINVE using account code 001120 and Income Type PR.

CASH AWARD TO A UC EMPLOYEE:
Cash awards made to a UC Employee are paid through the payroll system (PPS), using the OPTRS system, EDFT function.  

For limits on awards see Business and Finance Bulletin G-41 - Employee non-Cash Awards, section V(B).  Awards up to the limits authorized in G-41 are not reported on the employee's W-2.

See Payment Guideline #26 for payment to a UC Employee for a Service, Performance, Honoraria, Royalty or Copyright Fee.

 
Cash Prizes and Awards
UC Employee Payment, whether job related or not, is processed through the PPS OPTRS system, EDFT function.
Non-UC Employee U.S Citizen Account Code 001120 Income Type PR
Non-Resident Alien Account Code 001380 Income Type PR
UC Student Employee Payment, if related to the student's employment, is processed through PPS using the OPTRS system, EDFT function. Ask yourself, would the student be receiving this payment if he/she were not a student employee?
UC Student Non-Employee U.S. Citizen Account Code 001120 Income Type PR
Non-Resident Alien Account Code 001380 Income Type PR
Non-Cash Prizes and Awards:
Employee Non-cash prizes and awards are purchased from a vendor. Code the purchase to 001120.
Non-employee

References:
BFB G-41 Employee Non-Cash Awards and Gifts
BFB G-42 Gifts Presented to Non-Employees on Behalf of the University

Payments are detailed below, including outside links to the summary tables:

 Table A: US Citizens & US Resident Aliens  Table B: Non-US Citizens
 Notes:
1.  Process the payment only if the 1099 vendor indicator defaults into the field or if you have the social security number provided by the individual to input into the Tax ID Field. 
2.  CA STATE WITHHOLDING TAX AND REPORTING (FTB 592-B)
A. State tax withholding applies for services performed within California by the below listed entities if the expected total payments from UCSC will exceed $1,500 during the calendar year. Withholding amounts will be reported on the Franchise Tax Board Form 592-B at year end.
1. Non-California resident (US citizen or US resident alien)
2. Non-California partnership
3. Out-of-state corporation that performs services within California
4. Non-US citizens
5. Non-US companies (corporations)
* Any portion of the service that is performed outside of California or the United States is not subject to California withholding tax.  Enter the actual location(s) where the service(s) were performed into the text field of FYAINVE.   The invoice must indicate the location(s) of the vendor’s services, or the vendor may complete a CA Form 587 (Nonresident Income Allocation Worksheet). This form can be obtained from AP by calling 459-4797.
B. State tax withholding does not apply for services performed within California by:
1. California resident
2. US resident alien claiming California as their state of residency
3. California partnership
4. California corporation
3. FEDERAL TAX REPORTING AND WITHHOLDING (Form 1099 Reporting):
A. US CITIZENS AND US RESIDENT ALIENS:
Services performed worldwide are Form 1099 reportable only.
B. NON-US CITIZENS:
1. Services performed outside the United States are not Form 1099 reportable.
2. Services performed within the United States are processed as 1099 reportable payments for tracking purposes and federal tax withholding (if applicable per tax treaties).  In lieu of receiving a Form 1099, the non-US citizen will receive a Form 1042S at year end.
3.

Some or all of the forms listed below may be required for non-US Citizens for services performed within the United States.  Federal taxes apply, depending on US tax treaties.  Submit the forms to the Payroll Office with the required payment documentation (UCSC Direct Payment Form, Purchase Order, Contract, etc.).  Please contact Payroll at 459-4208 for the forms that will be required prior to processing the payment. 

4. Individuals who do not qualify for a social security number (SSN) must apply for a tax payer identification number (TIN) by completing a W-7 and forwarding to the address on the form.  No payment will be made until the individual is issued a TIN or SSN.
C. NON-US COMPANIES:
Services performed within or outside the United States are not subject to federal tax and are not 1099 reportable.
4.  One-time vendors may not be used for a 1099 tax reportable payment.
 
 

References:

Policy:

Web:

FIS Manual: Direct Pay Invoice (FYAINVE)
Direct Payments Quick Reference Guide
Process: Foreign Visitors
AP Guideline #26 Payment to a UC employee
Business & Finance Bulletin G-41

Forms:

204 Form
Direct Payment Form

Accounts & Income Types

See Summary Table A for US Citizens & Resident Aliens
See Summary Table B for non-US Citizens

Content Comments to: aphelp@ucsc.edu - Author: Jane Kling

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