Type: Guidelines
The University’s federal tax identification number is 04-3167352. The Commonwealth of Massachusetts’ tax identification number is 04-6002284. The Commonwealth’s number is used for payroll tax purposes.
Type: Guidelines
Reviewed 10/1/2014, Scope, This guideline addresses the tax reporting requirements applicable to educational assistance provided by the University to employees’ relatives. Educational assistance includes tuition waivers and tuition remission., Graduate Courses, Graduate level educational assistance provided to employees’ relatives must be promptly reported to the Campus Payroll office. Graduate level educational assistance provided to employees’ relatives generally results in taxable wages to the employees equal to the fair market value of the educational assistance. The Campus Payroll office is required to do the necessary payroll tax withholding and…, Example, In 2006, Professor A’s wife, Mrs. A, decides to enroll in a graduate level computer science course. The regular tuition for the course is $300 and the total fees are $200. Professor A completes a tuition waiver form and gets Mrs. A’s tuition waived. Mrs. A must pay only the $200 of fees. As a result, Professor A has taxable income of $300, the amount of Mrs. A’s tuition waiver., Undergraduate Courses, Undergraduate level educational assistance provided on a nondiscriminatory basis to employees’ relatives is generally tax free under a provision allowing an exclusion of the benefit from the employees’ wages. The authority for this rule is Internal Revenue Code Section 117(d). Employee relatives eligible for this provision include the employee’s spouse and dependent children., Example, In 2006, Professor X’s husband, Mr. X, enrolls in an undergraduate computer science course. The regular tuition of the course is $300 and the total fees are $200. Professor X completes a tuition waiver form and gets all the tuition waived. Mr. X must pay only the $200 of fees. As a result of the exclusion provision for undergraduate level courses, Professor X has no taxable income from the…
Type: Guidelines
Reviewed 10/1/2014, Scope, This guideline addresses the tax reporting requirements applicable to graduate-level educational assistance provided by the University to employees. A separate guideline covers educational assistance provided to employees’ relatives. Educational assistance includes tuition waivers and tuition remission. Payroll Tax Guideline 110 summarizes the Internal Revenue Code provisions applicable to…, Educational Assistance Tax Form, All non job-related graduate-level educational assistance provided to employees by the University must be promptly reported to the Campus Payroll Office., General Rule, The University may exclude from an employee’s gross wages $5,250 of educational assistance each year, regardless of whether the courses are graduate-level, undergraduate level, job-related or non-job-related. If the value of educational assistance exceeds the annual $5,250 limit, the excess value attributable to graduate-level courses is excludible only if the courses are job-related. If the…, Job-Related Tests, If the two part job-related test is satisfied and documented, graduate level courses taken by employees qualify for exclusion from income. Acceptable documentation would include a form or memorandum signed by the employee’s supervisor. The job-related tests are not satisfied unless both of the following tests are met. First the educational assistance must meet one of the following requirements:…
Type: Guidelines
Revised April 4, 2018, Sections, 01: Summary 02: Scope and Purpose 03: HR - Payroll 04: Communication, 01: Summary, This policy promotes the proper stewardship of University funds by providing general guidelines for the appropriate and legal uses of University funds in support of the University's missions. This policy contemplates also that certain institutional duties and responsibilities have been delegated to the operating units (department/division) of the University involved in the conduct of business and…, 02: Scope and Purpose, The Internal Revenue Code that provided an exclusion from employees’ income for qualified moving expense payments and reimbursements made by employers has been suspended, except for military-related moving expenses, for tax years 2018 through 2025. All such payments made to an employee, or on an employee’s behalf, are now taxable income to the employee and are required to be reported on the…, 03: HR Payroll , The transition allowance will be paid through the payroll system as taxable compensation, following normal payroll procedures, using payroll earnings code MNQ – Transition Relocate Allowance. This earnings code “pays” and adds to taxable gross income., 04: Communication, The hiring department is responsible for communicating information regarding payment and taxability of the allowance to the employee. Tax treatment of an employee’s moving expenses, which will now be paid as a transition allowance, are governed by the Internal Revenue Service. All such payments made to an employee will be reported on the employee’s Form W-2. Federal and state income taxes,…, Sample Statement:, A comprehensive transition allowance in the amount of $____________ will be paid in lieu of moving, relocation and employment transition cost reimbursements and/or direct payments to commercial moving companies. The amount of the allowance will be paid to you during your first month of employment. The allowance will be processed as taxable compensation through the Payroll system with all…, Note:, Calendar Year (CY) 2018 is a Transition Year. This means expenses incurred in the previous Calendar Year (2017) will be taxed as stated above if payments are made in CY 2018.
Type: Guidelines
Reviewed 10/1/2014, Scope, This guideline covers federal tax reporting and withholding requirements related to wage payments made by the University for services rendered by nonresident alien employees., Background, Payments to nonresident alien employees are subject to unique tax withholding and reporting requirements. Payments to nonresident alien employees must be reported to the employees and the I.R.S. as follows: on Form W-2 (if no tax treaty applies), on Form 1042-S (if a tax treaty applies to all wages), or on both forms (if a tax treaty applies to some, but not all wages). The nonresident alien must…, Nonresident Aliens Defined, For federal tax purposes, individuals are generally taxed as nonresident aliens if they do not fall into any of the following categories: United States Citizen, Individual with a Green Card, or Individual without a Green Card who meets the substantial presence test. The “substantial presence test” is generally satisfied if the individual was in the U.S. for at least 31 days in the current…, U.S. Source Wages vs. Foreign Source Wages, The IRS tax reporting and withholding requirements only apply to U.S. source wages. Foreign source wages are not subject to U.S. tax law. In general, wages are sourced by reference to where the services are performed. U.S. source wages result from compensation earned with respect to services performed within the United States and foreign source wages result from services performed outside the…, References and Technical Resources, More information about the U.S. taxation of nonresident aliens is available at the IRS webpage: https://www.irs.gov/individuals/international-taxpayers IRS Publication 513 – Tax Information for Visitors to the United States IRS Publication 515 – Withholding of Tax on Nonresident Aliens and Foreign Entities IRS Publication 519 – U.S. Tax Guide for Aliens IRS Publication 520 – Scholarships and…
Type: Guidelines
Reviewed 10/1/2014, Scope, This guideline covers the tax reporting and withholding requirements applicable to the personal use of University automobiles., General Rule, Personal use of a University automobile by a University employee must be reported as taxable wages on the employee’s Form W-2. University automobiles include any automobile leased, owned, or insured by the University or by a University affiliated entity. Courtesy cars provided to athletic department coaches and staff are generally treated as University automobiles for tax purposes. Personal use…, Courtesy Cars, When an automobile is provided to a University employee by a third party, such as a booster club or an automobile dealer, the University will include the automobile’s personal use on the employee’s Form W-2 if the automobile was contemplated during the employment process or was provided through an arrangement with the institution., Mileage Record Tax Form Responsibilities, A standard mileage record tax memorandum/form is used to determine the personal portion of University automobile usage and to calculate the attendant taxable wages. Any University employee that uses a University automobile for personal use must complete a mileage record tax form annually. It is the employee’s responsibility to maintain records necessary to permit accurate completion of the…, Annual Lease Value Method, The Annual Lease Value Method uses tables which consider the lease value of the car to be approximately 25% of the car’s fair market value plus $500. Generally the fair market value of an automobile is amount that an individual would have to pay in an arm’s-length transaction to purchase the particular automobile in the jurisdiction in which the vehicle is purchased or leased. Once calculated,…, Gasoline, The annual lease value does not include any fuel furnished by the University. If fuel paid for by the University is consumed in connection with personal use, the value of the fuel is considered additional compensation. Gasoline can generally be valued at the actual cost or at 5.5 cents per mile.
Type: Guidelines
Reviewed 10/1/2014, Scope, This guideline addresses social security tax and related withholding issues related to student payroll. Specifically, it explains which employees are eligible to be on the student payroll. University of Massachusetts employees who are ineligible for the student payroll must either be moved to a non student payroll or must be coded in such a way as to generally require that Alternate Retirement…, Background, Like other educational institutions, the University of Massachusetts must distinguish between employees on the regular payroll and employees on the student payroll. Student employees at the University are generally exempt from Mandatory Alternate Retirement Plan (OBRA) withholding and from Medicare tax withholding. These exemptions are contingent upon the employee qualifying as a student under…, Definition of Student-Employee, The Internal Revenue Code defines a student employee as one “who is enrolled and regularly attending classes” at the University (IRC section 3121(b)(10)). The IRS has provided guidance for schools to aid in determining whether an employee qualifies as a student. The Notice generally provides that an individual who is either a half-time undergraduate or half-time graduate student at the University…
Type: Guidelines
Reviewed June 1, 2016, Summary, An independent contractor is generally an individual who is in an independent trade, business, or profession in which he or she offers services to the general public. Independent contractors are not employees, not paid through the payroll system, not covered by the University’s workers’ compensation program, and not eligible for unemployment benefits following the contract performance period.…, Note: An individual who performs a service for an employer (the University) is presumed to be an employee, unless all the factors (described below) are present to establish an independent contractor relationship., The University deems individuals performing services for the University to be employees unless all of the legal criteria for classification as an Independent Contractor are present., Procedure to Evaluate Individual as Employee or Independent Contractor, A. Legal Criteria, The Massachusetts Independent Contractor Law, M.G.L. c.149 §148B, is generally considered more rigid than the Federal law [1] and requires three factors to be present. The factors are sometimes referred to as the ABC test (referring to the sub-paragraphs in the Law). The burden of proof is on the employer to establish that all three of the factors are present., Factor 1:, The individual must be free from control and direction in connection with the performance of the service, both under his/her contract for the performance of the service and in fact. This factor focuses on the relationship between the individual and the employer, and specifically, the degree to which the employer controls the individual in the performance of the service. Although the individual…, Factor 2:, The service performed must be outside the usual course of the business of the University. (Services provided at all campuses must be considered) This factor focuses on the ordinary services that the employer provides. Generally, an employer cannot hire independent contractors to perform services within its normal business operation. Two examples are illustrative:, Example #1., An accounting firm brings in a painter to repaint their offices. Assuming the individual meets the tests in Factors 1 and 3, the individual can be classified as an independent contractor., Example #2, ., An accounting firm brings in an accountant to assist during the busy season. Even if the individual meets the tests in Factors 1 and 3, the individual cannot be classified as an independent contractor. In Athol Daily News v. Division of Employment and Training , 439 Mass. 171 (2003), the court held that newspaper carriers were performing the “usual course of business” of the newspaper because…, Note: This question covers the entire University, not a particular department or location. Departments may seek information and guidance on this issue from the appropriate Campus or University Human Resources Department, Factor 3:, The individual must be customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. This factor focuses on the individual and his/her business. Generally, an individual who has a relationship with an employer such that the future of the individual’s business depends on the continuation of that…, B. Special Circumstances, Former employees will generally be regarded as employees, regardless of retirement status. For current employees receiving either royalties, prizes, awards, cash gifts or honoraria these payments are generally considered compensation and reportable on the W-2. The following fees paid to non-employees are not for services rendered on behalf of the University; individuals receiving such fees are…, C. Procedure, Hiring managers who wish to engage an individual as an independent contractor must complete a Determination of Independent Contractor Status form for review and approval by the chief human resources official at the applicable location prior to any services being performed by the individual. Approved Determination of Independent Contractor Status forms are filed with the competed Contract for…
Type: Guidelines
Reviewed 10/1/2014 Gifts, awards, and prizes provided to employees are generally taxable income to the employee since they are presented in return for the employee’s performance or services. Cash awards and the fair market value of non-cash awards are subject to income tax withholding and FICA and should be reported on an employee’s W2, unless a statutory exclusion clearly applies., Internal Revenue Code (I.R.C.) limitations that often apply to gifts, prizes, and awards include the following:, Gifts (I.R.C. § 274(b)), Gifts made directly or indirectly to any individual in excess of $25 per year should be considered employee income unless certain terms and conditions apply (such as being inscribed with the recipients name and not being transferable)., Service and Safety Awards (I.R.C. § 274(j)), Awards of tangible personal property given to employees for length-of-service or safety achievement are not considered employee income if the value of the award does not exceed specified limits – $400 per employee per year for all awards presented under a nonqualified plan; $1,600 per employee per year under a qualified written plan that does not favor highly compensated employees and that has an…, De Minimis Fringe Benefits (I.R.C. § 132(e)), A de minimis fringe benefit is any property or service infrequently provided to an employee that has so little value that accounting for it would be unreasonable or administratively impracticable. Cash, no matter how little, is never excludible as a de minimis fringe, except for occasional meal money or transportation fare. Similarly, a cash equivalent (such as a gift coupon or certificate) is…, Working Condition Fringe Benefits (I.R.C. § 132(d))5a), A working condition fringe benefit is any property or service provided to an employee to the extent that, if the employee paid for the property or service, such payment could be claimed as a business deduction. In general, cash payments do not qualify as working condition fringe benefits. There are three requirements for a working condition fringe: the employee’s use of the property or service…, Scholarships (I.R.C. § 117), When the University provides property to a student who is also an employee of the University, the issue of whether the award is compensation awarded to an employee or a scholarship awarded to a student should be considered. If the property was provided as a reward for services rendered, it should be treated as compensation. If the property was provided as an award for academic excellence, it…
Type: Guidelines
