Community Exchange

We treat gas cards given to students as 1099 income.

We also treat all payments to students a 1099 income. There are very few exception on taxable income. The only one I encountered is a fellowship grant.

We just started use Tremendous to distribute our gift cards. This tool allows us to set the 1099 indicators. If payment to a single email reach the new IRS threshold of $2000, it will stop the distribution for a w-9.

Kisha,

1098-T is for tuition and fees payments.  Being cash gift card, there would not be a way for a student to use that to pay their tuition balance.  In my mind, this would NOT be something reportable on 1098-T.  May want to confirm with institution legal group.  Now, could this be income to the student and reportable on 1099?  There is a $600 reporting threshhold for filing 1099 form for miscellaneous income, so if below that, would not have to do 1099 forms.  Again discussion with institution legal group may be helpful.  Most of us here are not tax experts.

Sounds like the only reason the gas card is given is because the person is a student and in need. That is aid and needs to count toward the students Cost of Attendance so needs to be coordinated with Student Financial Aid Office and/or Bursar's Office, depending on the institution.

Would not disagree about may count as Financial Aid.  The question though was about the 1098T.

Here is what the IRS says is reportable on 1098T -

Qualified tuition and related expenses.

Qualified tuition and related expenses are tuition, fees, and course materials required for a student to be enrolled at or attend an eligible educational institution.

The following are not qualified tuition and related expenses.

Hi all:

Agree with both Ken and John.  question was about 1098T.  However, to Ken's great point, many of these well intentioned sidebar efforts to help students in need count as aid and, from an org structure and compliance perspective, should be centralized in FA.  i think of things like book grants (at one institution houses in student life), a graduate waiver (housed in the school of engineering and administered through student accounts), or a reduced tuition grant given to students from a local high school (administered outside of the financial aid office). all things I learned about by digging or just asking questions over time that were of institutional lore...

Good morning all,

Transportation (gas) is a line item within Cost of Attendance so per IRS regulations, scholarships, grants or other money provided to students for CoA are reportable in Box 5 of the 1098T. However, I would agree that funds routed directly from AP and that are not part of the student account may instead be reported on the 1099. Either way, free money is usually taxable money so I would just make sure it is reported somewhere. 

I agree that this should be done through the Financial Aid office and count against their cost of attendance. It would not be reported in box 1 because it isn't paying towards qualified expenses. However, it should be reported in box 5 as financial aid. 

Just adding in some information for thought

Gas Cards given to students: 

• As a Prize, Award, or Compensation: If the gas cards were given to students for completing tasks (e.g., participating in a focus group, completing surveys, or as a competition prize), they are reportable as income. The reporting threshold for the 1099-MISC is $2,000. If the total combined value of the gas cards meets or exceeds this limit for the calendar year, the school or organization must issue a 1099-MISC.
• As Financial Aid or a Scholarship: If the gas cards were awarded directly as financial aid, a fellowship, or a qualified educational grant to assist with travel to campus, they are usually subject to the rules for scholarships (1098T) rather than Form 1099-MISC.