Voice of Experience

Voice of Experience is a contributed feature in the Journal of Research Administration provided by various senior leaders of the Society of Research Administrators International, especially those who served as Past Presidents of the Society. This featured column continues a long-standing tradition of the Society to provide discussion and direction for emerging topics of interest and concern for research administrators around the globe. The following are the areas, questions, discussions, and directions collected and collated in the last several months. 1. Stipends Q: Exactly what is a graduate student stipend? How are stipends handled, for tax purposes? Should the recipient get a W-2 or a 1099? How do you pay them: through accounts payable, payroll or the Bursars office? A: When the term is used appropriately, is not payment for services rendered. Fellowship is a synonym. It is a payment to an individual undergoing a specific training experience; in this case graduate study. Essentially it is a payment to cover living needs and specifically does not provide a need for services in return. In fact some programs prohibit the recipient from having a job in addition. Both and fellow are commonly misused to describe a payment to a student or a non-faculty, non-classified employee. A stipend is explicitly neither compensation nor a wage payment, as defined by the IRS. Therefore neither tax withholding nor collection and payment of FICA taxes are required. A stipend is income to the recipient for tax purposes, but certain costs may be excluded to find the total taxable to the recipient; see the tax law for details. The payment of a stipend should be reported on form 1099 MISC, with the payment in box 3, Other income, NOT Box 7, Non-employee Compensation, because it is NOT compensation. This does put a burden on the recipient to have funds to pay the tax due, come April. I suggest you should find a way to pay a true fellowship other than through the payroll system. This minimizes errors on taxability questions caused because payroll is set up to handle compensation. The appropriate method of handling it outside of payroll is somewhat at the convenience of the institution. Some institutions use accounts payable but have a classification that is not procurement because it is not a common purchase. Some pay it through student aid, again treating it especially because it is not quite what student aid usually means. Incidentally, generally the recipient of a stipend has tenure in the stipend so long as he/she is making reasonable progress toward the training goal. However, the award terms need to be read carefully to determine exactly what the measure of tenure is. In addition, one must be careful when is applied to students, undergraduate or graduate. Most student payments are for services rendered: research assistant, teaching assistant, etc. However there are true fellowships for students; most are funded by sponsored programs. The distinction in terms can be equally valid outside the USA, and can affect taxation status. However International members would need to check the wording for their own country. 2. TE see A-21. It may be, but not necessarily is, the same T&E report faculty and other salaried persons sign off on. Typically student workers are on an hourly payroll, and time sheets create the necessary record. If you are paying a stipend (not wage, see above) you need some indication of attendance/participation adequate to show that the goals of the training program are met. …