Student Officer/Committee Chair Payments
Student Officer/Committee Chair Payments
Elected Student Officers (ESOs)
These officers are not considered employees of the University, because the University does not hire/fire ESOs or exercise control by directing or supervising their activities. If they are to receive an honorarium for their service, such payment is generally made through A/P.
NOTE: Non resident alien (NRA) ESOs may be required to be paid through Payroll to comply with IRS tax regulations. Even when paid through Payroll, ESOs are not considered employees. See section below entitled NRA ESO Payments for further information/instructions applicable to NRA payments.
Paid Committee Chairs (CC)
These positions are not considered employees of the University, because the University does not hire/fire CCs or exercise control by directing or supervising their activities. If they are to receive an honorarium for their service, such payment is generally made through A/P. NOTE: Non resident alien (NRA) CCs may be required to be paid through Payroll to comply with IRS tax regulations. Even when paid through Payroll, CCs are not considered employees. See section below entitled NRA ESO or CC Payments for further information/instructions applicable to NRA payments.
Appointed Student Officers (ASOs)
These officers are considered employees of the University, because the University has the authority to hire and fire ASOs and exercises control by directing or supervising their activities. Payments to ASOs are considered compensation and must be paid through Payroll as wages.
PROCESS
Payment through AP:
- Department completes ‘Student Honorarium Agreement.’
NOTE: The agreement references a document describing the tax obligations to ensure student officers and/or committee chairs are aware of the potential tax consequences of receiving an honorarium. (See section titled “Tax Obligations for Payments Made to Elected Student Officers or Committee Chairs.”) - The ESO or CC signs two copies of the agreement.
- The Department forwards both copies of the agreement to Business Services for review and signature on behalf of the University.
- Business Services retains one copy of the agreement for the university’s official contract files and returns student’s copy of fully signed agreement to Department for distribution to student.
- Department prepares voucher, referencing MU contract # in comments section of non
- PO voucher and forwards to Accounting Services for payment through AP.
Payment through Payroll:
- Department completes PAF.
- Student officer completes new hire paperwork (if applicable.)
- Department forwards paperwork (PAF, etc.) to Human Resource Services for review and approval.
- Students enter hours worked in T&L where they are approved by the Student Government Advisor.
NRA ESO or CC PAYMENTS:
Departments should contact MU’s NRA Taxation Specialist prior to making payment to ensure compliance with IRS regulations. It is possible that an NRA may be a resident for tax purposes and, if so, the NRA Taxation Specialist will advise the payment can be made through AP. In such event, even though the payment is made through AP, it may still be subject to income tax.
FOR ESO or CC payments that the NRA Taxation Specialist determines must be paid through Payroll, there are several additional steps that must be taken to comply with IRS regulations:
- The student must see the NRA Taxation Specialist in person to complete treaty information prior to the payment
- The department must supply the NRA Taxation Specialist with form UM 376A (PAF For Nonresident)
- Job Code should be 9888
- Empl Class is 9-Non Employee
- The department must supply the NRA Taxation Specialist with form UM 149 (On-Line Check Request) for payment
- Earnings Code should be AIC (Alien Independent Contractor)
- Account should be 708000
- NRA Taxation Specialist will notate the 30% withholding and submit to Payroll for processing
- The NRA Taxation Specialist will inform the individual how the check will be disbursed, either direct deposit or paper check available, based on factors determined during the visit.
Tax Obligations for Payments Made to Elected Student Officers (ESOs) or Committee Chairs (CCs)
Since ESOs and CCs are not considered employees, any honorarium they receive is paid through AP. The IRS does not require that the University withhold income tax from these payments, but if the income received is greater than $600.00 for the tax year, it will be reported to the student and IRS on a Form 1099-MISC, and has potential tax consequences for the student.
Since the University is not withholding income tax from the student’s payment, the student may find it beneficial to make Estimated Tax payments to the Federal Government and State of Missouri to prevent additional tax liability and possible penalties at the end of the tax year. Further guidance for students on this subject is provided below.
Federal Income Tax
Under Federal law, a taxpayer does not have to pay estimated tax for the current tax year if all three of the following conditions are met:
- You had no tax liability for the prior tax year (You had no tax liability if your total tax was zero or you did not have to file an income tax return.)
- You were a U.S. citizen or resident for the whole year.
- Your prior tax year covered a 12-month period.
Underpayment penalty: If you do not meet the above requirements and do not pay enough tax during the year (either through withholding or by making sufficient estimated tax payments) you may have to pay a penalty.
IRS Publication 17, chapter 4, page 40-42 (http://www.irs.gov/pub/irs-pdf/p17.pdf) gives additional information on Federal Estimated Tax, including who must pay, how to figure the tax, when to pay it and how to pay it.
Missouri Income Tax
Under Missouri law, a taxpayer must file Form MO-1040ES, Estimated Tax Declaration for Individuals, if their tax liability is expected to be $100 or more and Missouri tax is not withheld. The Missouri Income Tax Reference Guide, page 13 (http://dor.mo.gov/pdf/refguide.pdf) can provide more information on this topic.