Revised 7/27/17
Reporting Prizes, Gifts & Awards
Key Steps / Controls
When purchasing a prize/gift/award or gift card, always retain the receipt. According to University Policy, receipts for
prizes/gifts/awards or gift cards are required for purchases valued at $75 or greater. Some departments may have stricter policies
regarding receipts. Please check with your department for additional questions. Gift cards require additional steps and are therefore
shown in bold text in this section.
1. Gift card(s) should always be secured in a locked drawer or cash box, etc. Only purchase the number of cards required during
time of purchase to mitigate risk associated with unused cards.
2. When processing a prize/gift/award through Concur, always obtain the recipient(s) name(s) for inclusion in the comment
field.
3. If the item is a gift card, maintain evidence of distribution, such as a signature, to validate distribution. If the gift card is
purchased on one employee's PCard for another employee or faculty member to present, some units obtain the employee
or faculty member’s signature on the receipt, stating gift card(s) were received and the date, although this is not a Concur
requirement.
4. Make sure to mark gift card purchases as “yes” in the IRC Exempt field (as with alcohol).
5. Following the guidelines in this document, report the distribution of the prize/gift/award or gift card using PeoplePay or the
Office of Financial Aid as appropriate (see below).
6. Record/log all gift card purchases, distributions, recipients and dates to ensure all gift cards are properly accounted for at
the unit level.
7. Further internal control guidance for use of gift cards can be found on the Internal Controls website at
http://www.finance.umich.edu/controls
RULES & REGULATIONS
Non-Employee Recipients
The University is required to report income of prizes/gifts/awards/gift cards presented to non-employee individuals who are U.S.
individuals for tax purposes on Form 1099 MISC, provided all income paid to the individual by University of Michigan meets the
reporting threshold amount in aggregate for the entire calendar reporting year. Gifts to non-University recipients should be reported
to SSC Supplier Reporting for central tracking at value $25 and above.
Items of Note:
● Total income paid must reach $600 within the calendar year for Form 1099 MISC to be issued to the recipient and reported
to the IRS.
●
If prizes/gifts/awards/gift cards equal to or greater than $25 in value are given to the recipient outside of the Accounts
Payable voucher system:
o
The University of Michigan Tax Department has established a de minimus threshold of $25 for process, gifts and
awards to non-employee U.S. persons
o
Any gift below the $25 threshold does not need to be tracked for tax reporting purposes
●
If a Form 1099 MISC is issued the income amount will be reported in box 03 “Other Income”
●
No taxes will be withheld from payment
●
1099 MISC reporting is for U.S. persons for tax purposes only
● Individuals handling/distributing gift cards must complete MyLinc Cash Handling training class TME103.
Revised 7/27/17
Employees & Student Employees
When presenting a student who is also an employee with a prize/gift/award or gift card, first decide if the item relates to the
individual’s employment (continue here) or academic pursuits (go to section on “Prize, Gift or Award Related to Academic Pursuit”).
EXAMPLES
Prize, gift or award related to employment
Prize, gift or award related to academic pursuit
Student working as an office aid is awarded
an Employee of the Month gift.
Student presented with a gift card for winning a
competition in a class.
Prize, Gift or Award Related to Employment
All Employees (including students who are employees):
● Employees are allowed a total of $99 in prizes/gifts/awards, including gift cards, during the IRS award year (Jan 1 – Dec 31).
● Single-vendor gift cards (usable at one specific vendor: Starbucks, Target) up to $50, or multiple single-vendor gift cards that do not
total more than $50 ($30 Target + $15 Starbucks) are not taxable on their own, HOWEVER, if recipient has accumulated other non-
gift card prizes/gifts/awards and the grand total is greater than $99, it becomes taxable. Report it using PeoplePay.
See Appendix
for examples.
● Multiple vendor gift cards (Amazon, Visa, MasterCard, Briarwood Mall) are always reportable. The amount of these cards does not
matter, there is no limit to reach; even a $5 Amazon gift card is reportable and needs to be reported using PeoplePay. See
Appendix for examples.
● Exceptions are a bereavement gift, length of service award, or traditional retirement gift. Each of these is non-taxable up to $400
and are treated as a separate transaction from the items mentioned above. If an employee received 2 of these gifts and the total
of the two together was greater than $400, it becomes taxable. Report it using PeoplePay. See Appendix for examples and also the
“Policy on Taxation of Gifts, Prizes and Awards to Employees” as referenced in SPG 501.12.
Revised 7/27/17
APPENDIX
Reporting Examples: employee situations only
For general questions related to gifts, contact giftstoemployees@umich.edu
$20 gift card to Speedway
$40 gift card to Target
$60 single-vendor gift cards
Each single vendor gift card is less than
$50 but the total combined value is
greater than $50 so it is all
reportable.
Must be reported via PeoplePay
$20 gift card to Speedway
$40 gift card to Target
$30 non-gift card items
$90 assorted prizes/gifts/awards
Value of the single vendor gift cards
combined is greater than $50 but the
total value of gifts is not greater than $99
so only the gift cards are reportable.
Must be reported via PeoplePay
$275 Years of Service Award (keep
separate; service, retirement & bereavement gifts are
only added together, never combined with other gifts.)
$45 gift card to Target
$90 non-gift card items
$135 total
Two separate transactions: combined
value of gift card and gifts is $135 which
is greater than $99 so everything is
reportable. The $275 Service Award is
less than $400 so it is not reportable.
Must be reported via PeoplePay
$20 gift card to Speedway
$40 gift card to Target
$50 non-gift card items
$110 assorted prizes/gifts/awards
Value of the single vendor gift cards
combined is greater than $50 and the
total value of gifts is greater than $99
so everything is reportable.
Must be reported via PeoplePay
$20 gift card to Speedway
$20 gift card to Target
$30 non-gift card items
$70 assorted prizes/gifts/awards
Value of the single vendor gift cards
combined is less than $50 and the total
value of gifts is not greater than $99 so
nothing is reportable.
$275 bereavement gift basket
$400 retirement watch
$675
Value of combined items is greater than
$400. Only $275 is reportable.
Must be reported via PeoplePay
Revised 7/27/17
Students - Prizes, Gifts or Awards Related to Academic Pursuits
(Affects Student Financial Aid)
Any student-related travel should be discussed with the individual unit or Student Financial Aid before travel takes place as it may
affect the student’s financial aid package.
Reimbursements after the Fact
For any part of a student’s travel that was covered by another source within UM, or any other purchase related to their academic
pursuit such as software, a society membership, or data set, follow the respective reporting procedure below.
Any/All Students
1. Expenses that are pre-paid by the unit using:
a. P-Card: When a purchase is made on a P-Card for a student, include the student’s name and UMID in the Concur
business purpose for each transaction related to the student educational expense. The documentation attached to the
Concur Expense Report should include the receipts and the Student Payment Request Form,
if available. Email a PDF
copy of the approved Concur expense report to OFA-reimburse@umich.edu noting that student reimbursements for
educational expenses are included in the attached Concur Expense report.
b. Purchase Order (or ePro requisition): When processing purchase orders that include expense lines supporting a
student’s educational expense (i.e. housing/accommodations, conference registrations, site tours, vehicle rentals), note
the student(s) name and UMID(s) in the line item expense description. After purchase is completed, email a PDF copy of
the invoice to OFA-reimburse@umich.edu noting that student reimbursements for educational expenses are included in
the attached report.
2. Expenses that are reimbursed to the student: Include the student name and UMID. The documentation attached to the expense
report should include the receipts and the Student Payment Request Form.
Send a PDF copy of the approved expense report to
OFA-reimburse@umich.edu noting that reimbursement is for educational expenses and is included in the attached expense
report.
3. Journal entries or recharges associated with a student’s educational pursuit (i.e. supplies from unit inventory, recharges for
copies, inter-unit journal entries to share student expenses): Include the student name and UMID in the long description of the
journal line and send a PDF copy of the journal entry and supporting documentation to OFA-reimburse@umich.edu noting that
the attached journal is for the student’s educational expenses.
4. Gift cards given as an award/prize must be reported to OFA via an email to SFPS@umich.edu for tax implications. Generally,
gift cards are purchased on a Pcard or personal credit card. Either way a Concur expense report will need to be created to
reimburse the purchaser. Follow the procedure in #1a above to report the award/prize substituting this email
SFPS@umich.edu for the one listed.
Monetary Awards/Prizes Processed via Student Financial Aid
Monetary awards and prizes given to students that relate to their academic pursuits should, when possible, be processed through the
Office of Financial Aid with a FAIT. Please notify students and faculty or staff who give students gifts, awards, and prizes that any
gift/award/prizes accepted may affect their financial aid package. Students should check with the Office of Financial Aid before accepting
any gifts/awards/prizes as a best practice. Follow the student financial aid procedures to process these types of monetary awards/prizes.
