Tax Tip: Year-End Tax Forms

• February 6th, 2024
• in News

By mid-February, many year-end tax documents have been issued and the tax filing season is gearing up. This time of the year brings many questions, such as:

• My department on campus received a 1099 Form – what do I do with it?
• I’ve received a tax form from UA, but I don’t know what it’s for.
• I haven’t received my tax form from UA – where is it?
• How can I get another copy of my UA tax form?

To assist in responding to these types of inquiries, the UA Tax Office offers the following information:

If you are a University department that has received a Form 1099 from outside the University (including 1099-MISC, 1099-K, 1099-DIV, 1099-INT, or 1099-G), please send via campus mail to the Tax Office, Box 870130. We accept all 1099s for the University and related foundations, as they may be used in our annual tax filings.

If you have questions about tax forms issued to you by the University, the Tax Office provides a list of helpful contacts and resources, depending on the type of form such as 1099, W-2, 1042-S, or 1098-T:

http://taxoffice.ua.edu/year-end-documents/

For IRS tax filing tips, refer to the following website links:
https://www.irs.gov/newsroom/irs-tax-tips
https://www.irs.gov/filing

Tax Tip: 60-Day Rule for Expense Reports

• January 24th, 2024
• in News

To avoid tax consequences on expense reimbursements, University employees should remember the 60-Day Rule:

Expense reports for out-of-pocket expenses must be submitted within 60 days from the date the expense was incurred (in the case of travel, within 60 days from end of trip).

Per federal tax regulations, expenses submitted after 60 days will be reported as taxable income to the employee, and applicable Federal, State, FICA and Medicare taxes will be deducted from a subsequent salary check.

Timely reporting and submission of expense reports is the responsibility of the employee being reimbursed regardless of whether the employee self-submits or has designated a delegate for expense reporting.

When combining smaller instances into one expense report, employees are encouraged to submit at least once a month. (For example, mileage logs or multiple small out-of-pocket expenses)

The 60-Day Rule is stated in the University’s spending and travel policies and is necessary to comply with the IRS safe-harbor guidelines for expense reimbursements. For more information, refer to the following website links:

http://accountspayable.ua.edu/spending-policy/#Requests

http://accountspayable.ua.edu/travel-policy/#Documentation

http://taxoffice.ua.edu/fringe-benefit-taxation/#ExpenseReimb

Tax Tip: Educational Benefit Taxation

• November 9th, 2023
• in News

Educational benefits received by a University employee, his/her spouse, and/or child(ren) may be taxable to the employee.

Some examples of taxable educational benefits include:

• Tuition benefits for a child who is not an IRS dependent of the employee, including a child who is age 24 or over during the calendar year
• Graduate level tuition benefits for a spouse or child (limited exceptions may apply)
• Graduate level tuition benefits for an employee in excess of $5,250 per calendar year (limited exceptions may apply)

For those educational benefits which are taxable, Federal, State, and Social Security taxes will be withheld from the employee’s payroll checks at the end of each semester in which the educational benefit was received. Taxes will be withheld over four (4) pay periods for biweekly-paid employees and over two (2) pay periods for monthly-paid employees.

The Tax Office will notify the employee by email in advance of the taxation. The taxable educational benefit will appear as a line item on the employee’s pay stub in each period where taxation occurs. The number shown on the pay stub is the amount of benefit that is being taxed in that pay period, not the amount of taxes being deducted. The tax deduction amounts will vary depending on the employee’s individual tax bracket and filing status.

For further details, refer to the following website links:

http://taxoffice.ua.edu/fringe-benefit-taxation/#Education

http://hr.ua.edu/benefits/other-benefits – see Policy 702.00 Educational Benefits

Are you involved with paying Stipends?

• October 17th, 2023
• in News

If so, you may have lots of questions! Here are some of the most common questions that we see on campus relating to stipends:

• How do I process a stipend payment?
• Is an independent contractor form required?
• Which payment system should be used?
• What procedures and documentation are required?
• Is the stipend taxable?
• Will taxes be withheld from the payment?
• Will UA issue a tax reporting form to the recipient?
• Is the payment includible in the recipient’s income for tax filing?

To each of these questions, the initial answer is, “It depends”. The payment process and the tax treatment will vary by situation, depending on WHO is receiving the payment and WHY the payment is being made.

Stipends can be confusing, but the good news is, help is available! WHEN you are planning to pay a stipend, the Stipend Matrix can help you determine WHERE to start and HOW to proceed. For step-by-step guidance, please visit the Tax Office – Stipends website.

Tax Tip: Relocation/Moving Allowance

• August 1st, 2023
• in News

As a result of the Tax Cuts and Jobs Act that went into effect on January 1, 2018, the exclusion/deduction for qualified moving expenses has been eliminated, and the University has adopted a moving allowance policy. If a department wishes to pay an amount towards relocation costs for a new hire, this will be paid as a taxable moving allowance.

There are two options for the timing of moving allowance payments:

Prior to Employment Start Date: If the moving allowance is paid in advance of the employment start date, no taxes are withheld at the time of issuance. However, applicable taxes will be withheld from one or more regular paychecks once the employee is active on Payroll. The Tax Office will notify the employee by email in advance of the taxation. The taxable moving benefit will appear as a line item on the employee’s pay stub in each period where taxation occurs. The number shown on the pay stub is the amount of benefit that is being taxed in that pay period, not the amount of taxes being deducted. The tax deduction amounts will vary depending on the employee’s individual tax bracket and filing status.

After Employment Start Date: If the moving allowance is paid after the employment start date, the payment is processed through Payroll. For this option, applicable taxes are withheld at the time of payment with no impact on subsequent paychecks.

For further details, refer to the following website links:

Tax Office – Relocation/Moving Expenses: https://taxoffice.ua.edu/fringe-benefit-taxation/#RelocationMoving

A/P – Relocation Allowances: http://accountspayable.ua.edu/relocation-allowances/

A/P – Spending Policy – Section 9.0 Relocation/Moving Expenses: http://accountspayable.ua.edu/spending-policy/#Relocation

Tax Tip: Sales Tax Increase

• September 3rd, 2019
• in News

Beginning October 1, 2019, the City of Tuscaloosa and the City of Northport will implement a 1% sales tax increase. This means that the total sales tax rate in both cities will increase from the previous 9% to a rate of 10%. Any City of Tuscaloosa or Northport taxable sales made by the University starting Oct 1 should have sales tax of 10% charged or included in the price. For any sales made prior to the rate change that are applicable to and will be reported in October forward, 10% tax will be reported and paid even if only 9% tax was withheld (ex. Athletic tickets sold in May for a game occurring in October).

For questions concerning the increase relating to your department, please contact Amanda Robinson arobinson@fa.ua.edu. For more information regarding citywide effects of the sales tax increase for the City of Tuscaloosa and the City of Northport, see the articles below, respectively.

https://www.tuscaloosanews.com/news/20190717/tuscaloosa-sales-tax-hike-takes-effect-oct-1

https://www.tuscaloosanews.com/news/20190819/northport-approves-plans-for-spending-sales-tax-increase