Related Tax Information
Prizes and awards
Prizes and awards can be included in the gross income of the recipient unless they are for:
- Civic achievement
The payer issues the check in the name of a governmental unit or a charity at the recipient's request.
When processing an IEEE award, it would be a good idea to notify the award recipient that his or her award will be taxable income unless he or she requests that payment be made to a governmental unit or a charity.
IEEE is required to issue an IRS Form 1099MISC to individuals paid amounts representing a prize or award. 1099s are not required when the individuals assigns the payment of the prize or award to a charity or governmental unit.
Scholarships and fellowships
- In the United States, qualified scholarships and fellowships are tax-free to the recipient if used for "qualified tuition and related expenses," which include studies or research that would further the education and training of the recipient.
- The recipient must be a candidate for a degree at an accredited college or university.
- When paying an individual a qualified scholarship or fellowship, you must require in writing that the recipient use the funds for payment of "qualified tuition and related expenses" in pursuit of study or research at an accredited college or university.
- Room and board do not qualify as qualified tuition and related expenses.
- The IRS recommends that the recipient be formally advised in writing that "scholarships and fellowships are included in income to the extent that they exceed qualified tuition and related expenses."
- The recipient is responsible for determining whether the grant was used for those expenses.
- IEEE is not required to issue IRS Form 1099MISC for qualified Scholarships and Fellowships.
In the US, research grants may qualify as tax-free payments if they meet the requirements of scholarships and fellowships above.
- Travel grants are taxable income to the recipient unless the recipient provides IEEE with original travel receipts that equal or exceed the grant amount.
- US recipients that do not provide travel receipts will receive Form 1099MISC.
- IEEE requires all travel grant recipients to complete either a W-8 or W-9 Form.
W-8 and W-9 forms
- Individuals receiving payment from IEEE must complete either a W-8 form or a W-9 form.
- Generally, a foreign person that is a beneficial owner of the income should give you a W-8 form.
- There are four new forms in the W-8 series.
- The form to use depends on the type of certification being made.
- The W-9 form is completed by individuals who have either a U.s. Social Security Number or a U.S. Employer Identification Number.
- Please use tax forms W-8 (individuals), W-8 (entities), and W-9.
Gift receipt regulations
- In the US, a donor is not allowed to take a charitable deduction for a single donation of US$250 or more, unless he or she has obtained a receipt from the charitable organization.
- Separate payments are regarded as independent contributions and are not combined for purposes of measuring the US$250 threshold.
- IEEE is a charitable organization as described in Section 501(c)(3) of the Internal Revenue Code and must issue receipts (which can be in the form of a letter or postcard) when required. IEEE Letterhead is recommended, and the full legal name of the IEEE, "The Institute of Electrical and Electronics Engineers, Incorporated.", must be present.
- On the receipt, you must include:
- The amount of cash contributed
- A description of any property other than cash contributed (do not include the value of the property)
- Whether any goods or services were provided in exchange for the contribution
- A description and good faith estimate of the value of those goods or services.
- You should keep copies of all gift acknowledgments/receipts. In some cases, a donor may lose his or her receipt and request a copy. Also, should the IRS question a donor's contribution or audit the IEEE, these copies may have to be presented to the IRS.
- There are penalties imposed by the IRS on charities that do not provide required receipts and disclosure statements.
Joint activities with for-profit entities
When IEEE co-sponsors a conference with a for-profit-entity, IEEE must ensure that:
- Its assets are being used to further its educational and scientific purposes
- All transactions with the for-profit-entity must be at arm's-length. In other words, the for-profit-entity must not receive any excess benefits. (It is acceptable for IEEE to receive excess benefits).
- Allocation of profit and loss must be in direct proportion to respective capital contributions.
- If IEEE is a financial co-sponsor, IEEE must have sufficient control (more control than the for-profit-entity).
- If IEEE is a technical co-sponsor, the benefits received by IEEE must meet or exceed the benefits that are received by the for-profit-entity as a result of IEEE's involvement. This must be calculated and documented. Is there an agreement with the for-profit-entity? If so, it should be reviewed by IEEE's attorney.
For more information on these or other tax related subjects, please contact the IEEE Tax Department: email@example.com.