Process for Payments to Students Who Win Awards
We often receive questions from departments regarding payments to students who win awards from Clark departments. Below is information that departments need to handle these payments.
Definition of an Award
An award is different from a prize in that students do not submit a formal application. Instead, departments present awards to students they deem to have general merit: for instance, a high GPA or a student’s efforts on a department project.
Tax Policies Regarding Awards
Here’s what you need to know about tax policies regarding student awards:
- The Internal Revenue Service (IRS) considers awards in the same category as student scholarships.
- Awards are not taxable as long as they are used to pay tuition, required fees, books, and equipment. They are not reportable unless the total award amount exceeds these academically related costs.
- Non-resident alien students (a definition used by the IRS) must report scholarships and awards on Form 1042-S if the scholarship is used for non-required fees such as room and board. Any award amount not used for academic costs may be withheld at 14 percent.
- Awards are processed through Student Accounts.
- Departments must submit award requests on a form. In the section that indicates which department account should be charged, use the account code 5119 for student scholarships/awards.
- If a student has an outstanding balance on their account, the funds from the awards may be used to satisfy the balance.