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Accounts Payable (AP), in accordance with Internal Revenue Service (IRS) regulations, must report to the IRS and be able to produce 1099 tax forms for non employees receiving payments or in-kind payments that in aggregate exceed $600. All individuals and organizations classified as independent contractors and requesting payment from UNF must complete IRS Form W-9 in Purchasing. UNF must determine if an individual providing services is an independent contractor (payment should be made via Purchasing and reported on Form 1099) or an employee (payment should be made via the Payroll Department and reported on Form W-2). Payments made to non-resident aliens are subject to special tax provisions and withholding under the Internal Revenue Code, thus, payments to nonresident aliens must be processed by the Payroll Department. Departments should carefully consider answers provided to questions on the form as any taxes, interest or penalties assessed by the IRS due to misclassification of an individual as an independent contractor, will be paid by the UNF Department authorizing the payment.
UNF Departments may approve payment of moving expenses for new employees. Payments meeting the Internal Revenue Service (IRS) definition of a "qualified moving expense" will not result in taxable income to the employee. Payments of "non-qualified moving expenses" will result in additional taxable income to employees subject to federal income tax withholding and employment taxes (FICA & FATA). The following is a recap of the IRS definitions of qualified and non-qualified moving expenses and it is recommended that Departments refer to the procedures listed on the Purchasing and Accounts web pages for more complete details with regard to what may be allowable or not allowable.
Qualified moving expenses will not be reported as wages if the expenses meet the following conditions are documented in the payment file:
Expenses other than qualified employer-provided moving expenses are taxable fringe benefits subject to FICA, FUTA, and federal income taxes.
Examples of non-qualified moving expenses include:
UNF is required to follow IRS rules to determine if payment or reimbursement of living expenses to employees must be included in taxable wages. Payment or reimbursement of living expenses to an employee on a temporary work assignment is excluded from taxable income while payment to an employee on an indefinite work assignment must be included in taxable wages. IRS rules define a temporary assignment as one that is initially expected to last (and does in fact last) one year or less. An indefinite work assignment is one that is realistically expected to last more than one year. Please contact the Payroll Office for further guidance regarding the taxation of fringe benefits.
As explained in IRS Publication 463, UNF must determine whether an employee's assignment is temporary or indefinite as of the date work begins.
The following examples illustrate whether an assignment or job is temporary or indefinite:
Example 1You are a construction worker. You live and regularly work in Los Angeles. You are a member of a trade union in Los Angeles that helps you get work in the Los Angeles area. Because of a shortage of work, you took a job on a construction project in Fresno. Your job was scheduled to end in 8 months. The job actually lasted 10 months.
You realistically expected the job in Fresno to last 8 months. The job actually did last less than 1 year. The job is temporary and your tax home is still in Los Angeles. This example qualifies as a temporary assignment, and temporary living expenses paid by employer may be excluded from employee's taxable income.
Example 2The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 18 months. The job actually was completed in 10 months.
Your job in Fresno is indefinite because you realistically expected the work to last longer than 1 year, even though it actually lasted less than 1 year. This example does not qualify as a temporary assignment, thus living expenses paid by employer must be included in employee's taxable income.
Example 3The facts are the same as in Example 1, except that you realistically expected the work in Fresno to last 9 months. After 8 months, however, you were asked to remain for 7 more months (for a total actual stay of 15 months).
Initially, you realistically expected the job in Fresno to last for only 9 months. However, due to changed circumstances occurring after 8 months, it was no longer realistic for you to expect that the job in Fresno would last for one year or less. Living expenses paid by employer for the first 8 months of the job are considered temporary and may be excluded from the employee's taxable income (as employment is not expected to last more than one year). However, living expenses paid by the employer after expectations changed (it was realistic to expect employment would last for more than one year) are considered indefinite and must be included in the employee's taxable income.
Temporary living expenses include ordinary and necessary expenses incurred when traveling away from home on business. These must be evaluated closely depending on the particular facts and circumstances.
The University of North Florida is required to withhold U.S. income tax at the time a payment is made to a nonresident alien or to a third party on his or her behalf. If the taxes are not properly withheld from Nonresident Aliens payments, the University can be held liable for the tax that is not withheld and any penalties that may be imposed by the IRS. The following list is the types of payments to Nonresident Aliens that need to be analyzed to determine if taxes are to be withheld or not withheld:
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