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Accounts Payable and Travel

Accounts Payable

Expense Types With Tax Issues

Certain expense types and/or the type of vendor to be paid will have tax implications to the university. In some cases, taxes will have to be immediately withheld from the payment prior to the payment being released. The expense types or vendor types that have possible tax implications can be selected and reviewed via the listing by expense type or vendor type below.

Moving expenses are not processed through Accounts Payable. If you need information please contact Human Resources. ( https://www.tamuk.edu/finance/employee-services/hr/staff.html )

Employee Gifts

Accounts that are not funded by mandatory student fees, contracts or grants, Available University Fund, state appropriations, or restricted by donors may pay for an employee gift. Gifts must comply with Standard Administrative Procedure 31.01.99.M0.01: Taxation of Special Payments and Awards to Employees.

Is an employee gift taxable income to an employee?

  • If infrequent and less than $100 per year, it would not be considered taxable income.
  • Gifts given to an employee due to their retirement is considered taxable income. The taxable income is based on the value of the gift.

An exception to this is gift cards. Gift cards in any dollar amount are tax-reportable income to the employee and would require a Request for Tax Withholding form to be submitted.

Length of Service Awards

  • Length of Service Awards - These awards must be part of a meaningful presentation and given to an employee no more than once every five (5) years. Non-cash awards of $400 or less are not taxable.

  • Retirement Awards - May be excluded from income if the dollar amount of the award relates to the retiree's length of service. Documentation is to be provided describing the relationship between the retiree's length of service and the value of the award.

  • Safety Awards - Non-cash awards (up to $400) given to employees directly involved are not taxable. Any safety awards given to managers, administrators, other professional employees or clerical staff not directly involved with the safety performance will be fully taxable.

Achievement Awards

State accounts may pay for employee gifts considered achievement awards and are limited to $100 in a given year. Any amount above that must be paid on local funds and is considered taxable income to the employee as noted above.

Payment Request or Payment Card documentation at a minimum must include the employee's name and UIN. All employee gifts/awards are coded 5240.

Non-Employee Gifts

  • Accounts that are not funded by mandatory student fees, contracts, or grants, Available University Fund, state appropriations, or restricted by donors may pay for non-employee gifts.
  • The non-employee gift must provide a business benefit to Texas A&M University - Kingsville and the name of the gift recipient must be documented on the payment request or payment card documentation.
  • If the gift is $600 or more, the name, address and social security number of the gift recipient will be required to be documented on the payment request or payment card transaction. This will be considered a 1099 reportable transaction to the gift recipient.
  • If processing a payment request to pay the gift recipient directly, a W-9 will be required.

All non-employee gifts are coded 5241.

TAMUS Employees

As a general rule, payments to individuals for services who are currently TAMUS employees or have been employed by TAMUS within the last 12 months must be processed through Payroll and cannot be paid through Accounts Payable. 

Employee or Independent Contractor?

It is critical that TAMUK correctly determine whether the individuals providing services are employees or independent contractors.

Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.

The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The IRS uses the "Common Law Rules" to gather facts that provide evidence of the degree of control and independence.

  • Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
  • Financial: Are the business aspects of the worker’s job controlled by the payer? (These include things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  • Type of Relationship: Are there written contracts or employee-type benefits (e.g. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

The use of the electronic Employee vs. Independent Contractor Checklist will help gather facts on the three areas mentioned above. This electronic document should be completed and submitted. If you have any questions email payroll@tamuk.ed or ap@tamuk.edu. The document will be reviewed and a determination will be provided to you on processing the payment as an independent contractor through Accounts Payable or as an employee through Payroll.