Prizes and Awards

1099 Reportability of Prizes/Awards Given Out By Non-Profit Foundation?

Question:

We are a non-profit foundation to support a state university.  We often pay vendors for items (gifts/awards) that are given to students or alumni.  We normally collect W9 information from recipients who receive items in exess of $75, but don't report it because we have yet to have anyone receive items totalling $600 or more in a calendar year.  Just last week, we have had three items in excess of $600 each that have been given as gifts/awards and we are not sure how to handle them. 

One is a crystal that has been purchased from and engraved by a local jeweler and was presented to a student who won a poetry contest.  The total cost of the crystal was $1,000. 

The other two items were medals which were presented to alumni.  The base cost of the medals was $405 each, but there was also a die charge for the personalization and shipping charges.  The total invoice was $1,499.50 (or $749.75 each). 

We have been told by the AP department at the university that these types of awards (plaques, medals, trophies, etc.) should not result in a 1099 being issued because they are personalized and do not have a fair market value.  Is that correct, or should we issue 1099-MISC's for the cost of these awards? 

Also, we have gotten conflicting information regarding sending 1099-MISC forms to donors who are given appreciation gifts.  If we give a donor an appreciation gift in excess of $600 (i.e. - football tickets), would that be something we would report on a 1099?  We have always assumed that this is reportable, but have recently been told by another consulting firm that we should never send a 1099 to a donor.

Answer:

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Are Peformance Bonus Awards Paid to High Performing Employees Form 1099 Reportable?

Question:

My question is about the reporting requirement (W-2 or 1099-MISC) for performance bonus awards paid to high performer and overachieving employees.  I assume it would be on a W-2, but am I still within the law to report the performance bonus on a 1099-MISC form if in the event that we can not do it on a W-2 form?  Please let us know as soon as possible.

Answer:
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Rewards Program in which employees earn points and redeem for awards: How to Report?

Question:

Our company recently implemented a rewards programs in which employees can earn points and redeem them for rewards.  Our company already prepaid the points and the applicable sales taxes to the vendor administering the rewards program.  As current employees redeemed their points, we report the fair value (regardless of the amount) of what the employees redeemed on their paycheck so they can be taxed and included on the W2.   We don't make a distinction of how much of the points redeemed were from service awards versus performance awards.  In my research, it looks like the IRS allows a certain amount that can be exempt for tax reporting if the reward has something to do with service.  Should we be reporting everything or should we try to distinguish the portion of the points that is taxable?

For employees who separated, they are given three months from the separation date to complete the redemption of any rewards points.  If they redeemed $600 or more worth of points, our plan is to report this under 1099 Misc.  If it's below $600, then we don't report.  Again, we don't make a distinction of much of the points were for service versus performance.  We also don't report if the employees who separate chose not to redeem the points for rewards.  Please advise if this policy is in compliance with the IRS requirements.

Answer:

As far as the IRS is concer . . .

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Reportability of Freight and Sales Tax Regarding Prizes and Awards for Non-Employees?

Question:

Regarding prizes and awards for non-employees, in determining "Fair Market Value" of a prize (example: ipad), are items such as freight and sales tax included when determining whether it is reportable on Form 1099-MISC in Box 3 under the $600 threshold?

Answer:

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Research Scholar Stipend Prize Award Program: How to Report?

Question:

We have the Family Owned Business Institute that has a program called the Research Scholar.  People prepare a proposal that underwent a blind review process.  The winners of the program are awarded a $5,000 "stipend" that is paid out now for the participant to convert the research into a publishable, refereed article with appropriate references to the Family Owned Business Institute.  In addition, they are expected to disseminate the results of the research to members of the business community, students and other constituencies as appropriate through meetings, seminars, publications and the classroom.  Also, the finished paper needs to be turned in for consideration as a prensentation at the 2012 Family Enterprise Research Conference.

Could we consider this as a fellowship type payment or is it more of a prize and treated as a 1099 reportable payment?

Does the decision change if both employees and non employees were awarded stipends?

Answer:
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