Taxation of Prizes and Awards
Learn how gifts, prizes, and awards that are paid with university funds are considered part of an employee’s income.
Departments often wish to recognize the contributions of their employees to the University. The Internal Revenue Code stipulates that the value of some awards must be included in an employee’s income and provides exclusions for other awards.
Employees who are given cash and non-cash items as gifts, prizes, and awards that are paid with University funds (including state funds, grant funds, contract funds, and gift funds) are subject to federal and state income tax and The Federal Insurance Contributions Act (FICA) tax.
Awards such as the NC State University Awards for Excellence which have a cash prize of up to $250 are an example of this.
Any cash gift, such as a check or a gift card is reportable as income and subject to tax reporting.
Prizes and Awards-Taxation of Gifts, Prizes and Awards (guideline and procedures)