Outstanding UW students and employees are frequently rewarded with cash or other benefits as awards or prizes for exemplary academic performance or employee service. Payments are made through different UW administrative offices depending on whether the awardee is a student or employee. Complex federal tax laws complicate the amount, tax withholding and tax reporting of these payments. A matrix below offers guidance on the taxability of awards and prizes.
Prizes are given to students who have submitted entries to a judged competition, for example, the best architectural design, best short story, or music or poster competitions.
Awards are given to students and employees when no formal entry or submission has been made by the student or employee to win the award. In general, employees receive only awards, not prizes.
Make requests for payment of awards or scholarships to UW Students by
completing the Request for
Payment of Award or Prize form and send
to:
Student Fiscal Services
Scholarships Unit
Box 355871
Student Fiscal Services requires that either the student or requesting
department pick up the award or prize check at the SFS office in Schmitz
Hall. Checks will not be mailed. For additional information phone
206-543-3708 or email sfshelp@u.washington.edu.
Make requests for payment of awards to UW employees by completing the
Request
for Payment of Award or Prize form and send to:
Payroll Office
Box 355655
Make requests for payment of awards or prizes to non-UW students or
payment of prizes to UW students by completing Check
Request form UW 1570 and send to:
Accounts Payable
Box 351130
Phone: 206-685-5377
Awards made to students are considered "scholarships" by the IRS and are not taxable to the extent they are used to pay tuition and required fees, books and equipment. Amounts in excess of these requirements are taxable to the student. If award proceeds are not restricted as described above, please contact the UW Tax Office at taxofc@u.washington.edu, or 206-616-3003 for further clarification.
For awards to students who are US citizens or resident aliens, there are no tax reporting or withholding requirements. All awards for non-resident alien students must be reported on a Form 1042-S by the University of Washington; amounts not used for tuition, books and fees must be withheld at 14%.
Prizes won by students are taxable, but are not considered wages, even if the student is employed by the University. For US citizens and resident alien students, these payments are reported by the UW at year end on a Form 1099-MISC if they exceed $600. For non-resident alien students, 30% is withheld, and payments are reported by the UW on Form 1042-S for all payments. The country of permanent residence must be on the Check Request form.
Awards made to employees, except non-cash awards of less than $25 value, are considered wages to the employee and are subject to federal tax withholding and social security tax; they are reported along with regular wages on the Form W-2.
Please refer to the matrix below for more detailed guidance on the taxability of awards and prizes.
| Student Awards and Prizes | Employee Awards | ||||||
|---|---|---|---|---|---|---|---|
| Nature of Award | Recognizes accomplishments as a student | Recognizes services as an employee, including services of student employees | |||||
| Status of Individual | UW student (except NRA) | UW NRA student | Student not at UW | UW employee, including nonresident aliens (NRA) | |||
| Awards | Prizes | Awards | Prizes | Awards | Prizes | ||
| Processed/Paid By | Student Fiscal Services | Accounts Payable** | Student Fiscal Services | Accounts Payable** | Accounts Payable** | Accounts Payable** | Payroll Office |
| IRS Reporting | None | under $600=none over $600=1099-MISC |
1042-S | 1042-S | none | under $600=none over $600=1099-MISC |
W-2 |
| Tax Consequences | May be taxable* | Taxable; tax due when return is filed | May be taxable*; Taxable portion withheld at 14% | Taxable; tax withheld at 30% | May be taxable | Taxable; due when return is filed - NRA withheld at 30% | taxable; tax withheld when prize paid |
PRIZES generally require the recipient to enter into a judged competition. Such competitions include raffles, contests, or music or writing competitions.
AWARDS are given to individuals where no formal entry has been made. Award proceeds for students are restricted to the use of cost of the student's education.
* The portion of total restricted scholarships received in a calendar year that exceeds tuition and required fees, books, and equipment is taxable.
** See Financial Services Tax Desk information above.
Note: Medical Residents are treated as employees for purposes of this chart. Treatment of awards to Student Appointees is based on the nature of the award—if related to student activity, as a student; if related to employee activity, as an employee.
For questions about gift certificates for employee recognition
For questions about 1099MISC tax reporting for US citizens and resident aliens, email ten99@u.washington.edu
For questions about tax withholding and reporting for non-resident aliens, email nratax@u.washington.edu
For questions about award or prize payments to Non-UW students or for prizes to UW students, email taxofc@u.washington.edu
For questions about payment of awards or scholarships to UW Students, email sfshelp@u.washington.edu
