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Payroll Services

Employee Awards

Overview
Monetary awards to university employees that are based on performance must be processed through Payroll Services, as they are considered taxable compensation per IRS regulations, regardless of amount. In order for the appropriate deductions to be taken, employee award payments must be sent to Payroll Services on a Departmental (Manual) Payroll Voucher. This allows payroll to only include withholding and social security deductions, but not retirement, as award payments are not includable compensation for retirement purposes. These payments should not be processed electronically by departments on any OVM document type.

Documentation
Departmental awards for employees must be approved in advance by the dean or vice president of the awarding college or department and submitted to Payroll Services. Award program approval letters sent to deans and vice presidents must contain signature approval and include the following information:

  • Award name
  • Selection criteria
  • Frequency (e.g., one award paid annually in May)
  • Amount per award
  • Account number(s)

After the initial award program approval letter has been submitted to Payroll Services, the letter will be kept on file and does not need to be resubmitted each year.

Processing
When a department is ready to pay an award to a university employee, the manual voucher should be submitted to Payroll Services in MAI 134 no later than noon on the semi-monthly payroll deadline. To avoid the risk of duplication, please do not fax or email a copy of a manual voucher in addition to having it delivered to our office.

Payment
Awards pay out on the semi-monthly paydays. Award payments are subject to 25 percent federal withholding and social security taxes and are disbursed to employees via their regular paycheck distribution. For special handling requests, please contact the Payment Team.

Student Awards
Awards to students that are not related to the student's employment performance should be processed through the Office of Accounting, not Payroll Services, as these awards are not subject to payroll taxes.