Description
Per POL 05.15.03 for Non-Salary and Deferred Compensation, any other form of non-salary compensation or benefit not specifically detailed in the policy, must be authorized in advance on a case-by-case basis by the Board of Trustees (BOT). If approved, the non-salary compensation is treated as taxable income. The Non-Salary Compensation Form must be completed, approved and submitted prior to payment for the following miscellaneous categories of non-salary compensation:
- Cash
- Gifts or gift certificates (Note: Gift cards/certificates should not be purchased using a departmental PCard.)
- Prizes: Prizes do require advance BOT approval with one exception. As an established practice during the State Employees’ Combined Campaign (SECC), a university program’s use of recognition prizes to promote annual enrollment is considered authorized. Whether authorized by policy or by BOT approval, the value of the associated cash award, gift certificate or prize is reportable as compensation and taxed appropriately.
- Additional time off
- Parking fee waivers
- Payment of visa-related fees for family members of a non-resident foreign national employee
- Access to special campus services or benefits
- Compensation paid through Financials (post-payment review concludes payment was to employee and should be treated as compensation in the HR System)
- Awards: Established, one-time programs administered at the college/division, university, or UNC level, such as those listed on Awards and Honors are generally considered authorized; other awards may require advance BOT approval (and submission of the Non-Salary Compensation Form). Whether authorized by policy or by BOT approval, the value of the associated cash award, gift certificate or prize is reportable as compensation and taxed appropriately. Note: Length-of-service and safety awards that do not exceed $400 per employee per year are tax exempt when awarded in a meaningful presentation.
Taxation of Payment
The value of cash awards, gift certificates, prizes, etc. is treated as taxable compensation and included in the taxable grosses for social security, Medicare, federal, and state tax reporting. Social security (OASDI) and Medicare taxes (Fed-Med) are withheld on the paycheck. Cash awards, gift certificates, and compensation paid through Financials are also subject to federal and state tax withholding on the paycheck.
Responsible People
Employee: The employee has no reporting responsibility
College or Department: The college or department must appropriately idenify the payment type as it is submitted through the Financials System.
University Controller’s Office or Foundation Accounting and Investment Office: Payments for one of the miscellaneous non-salary compensation items must be compiled onto a spreadsheet by the University Controller’s Office or Foundations Accounting and Investment Office and reported to University Payroll by the 5th of each month for the previous month. The spreadsheet should include:
- Employee name
- Employee ID number
- Dollar amount/value of payment
- Reason for payment/gift/prize
- Pay Cycle of employee (Bi-weekly or Monthly)
- Voucher Number
University Payroll: Based on the information submitted by the University Controller’s or Foundations Accounting and Investment Offices, University Payroll will enter the taxable value into the HR System using the appropriate earnings code:
- CA1: Compensation Paid by Accounting
- GC1: Gift Certificate
- GP1: Gift/Prize
- RA1: Recognition Award UNC System
- RA2: Recognition Award NCSU
- RA3: Recognition Award College/Division
- RA4: Recognition Award Department approved by Board of Trustees
- RA5: Recognition Award Other approved by Board of Trustees