CERTIFICATE CLASSIFICATION PAYROLL PROCEDURE
I.
Purpose and Scope:
The purpose of this procedure is to provide guidance to University departments on
individuals who are classified as “Certificates”, including related taxation issues. This
classification is for students or researchers receiving payment through grants or
fellowship awards. Appointees assigned with these classifications (Certificate Post Doc
Scholar, Certificate Pre Doc Fellow or Certificate Trainee) are not considered to be
employees of the University.
II.
Responsibility for implementing procedure:
The Payroll Department and University department payroll administrators have the
responsibility to ensure that Certificate classifications are properly recorded on the
Oracle HR/Payroll system, and that these individuals are notified that they may have a
tax obligation.
The policies for Certificate classifications are administered by the Provost Office and
Research Accounting. Guidance to determine proper classification can be found via the
following websites:
Provost Office - http://www.provost.pitt.edu/information-on/guidelines.html
Research Accounting - http://www.cfo.pitt.edu/rca/ra_traininggrants.html
III.
Procedure:
A. Appointment and Employee Record Coding
It is of critical importance that accurate classifications be used. Appointment and
Employee Records for individuals who have the job type of Certificate are completed
the same as other faculty or staff except for the following information:
1. The “Salary” amount must be entered as zero.
2. The “Earning Element” is completed with the corresponding element based on
Family and Classification. Set up the element with the amount to be paid and for
the period of time (start date and end date) it is to be paid.
3. Certificate earning elements do not prorate for partial months and therefore
must always be end dated at the end of a pay period. If partial payment is
required, the partial amount should be added as a separate element for the
applicable period.
4. Earnings elements must be consistently used for various job types, as follows:
JOB
EARNING ELEMENT
Certificate.Certificate.Trainee
Certificate.Post Doctoral.Scholar
Certificate.Certificate.PreDoctoral Fellow
Training Grant
Post Doc Scholar
Pre Doc Fellowship
5. An employee, designated by another job type, can receive a training grant or pre
doc fellowship payment in addition to their regular earnings. When this occurs,
the person would have an employee designated job type, a regular salary, and
one of the certificate earnings elements set up. The SPAR should indicate the
account numbers to be charged with the applicable subcode. This generally
splits the SPAR into two accounts – one for the regular salary to be distributed
and one for the additional earning element distribution.
B. Taxation
1. Federal Tax
Taxation and reporting at the federal level depends on the employee
classification and citizenship status.
a. US Citizens, Permanent Residents, & Resident Aliens:
The IRS does not require the University to withhold taxes or report these
payments for US citizens, permanent residents, and resident aliens;
however, departments should make recipients aware that these
payments are taxable for Post-Doctoral Scholars, and may be taxable to
Pre-Doctoral Fellows and Trainees. The individual may be required to
make estimated tax payments.
To qualify for tax exemption, the recipient must be a candidate for a
degree for the purpose of studying or conducting research at an
educational institution, and the payment must be used for tuition, fees,
books, supplies, or equipment required for a course of instruction. Any
other grant, including grants to pay for room and board, medical
insurance, or grants paid to non-degree candidates are taxable income to
the recipient. If a recipient receives additional benefits; i.e. medical
insurance, bus passes, etc., the value of those benefits is an additional
grant and is taxable income. An exception may apply to resident aliens if
covered by a tax treaty.
Certificate recipients can find further guidance in IRS publication 970
b. Non-Resident Aliens:
All certificate payments provided to non-resident aliens are considered
income and are subject to federal income tax withholding unless covered
by a tax treaty. Annual reporting is required by the University on form
1042S.
2. State and Local Tax
The state of Pennsylvania does not require the University to withhold taxes or
report these payments. However, Departments should make recipients aware
that these payments may be taxable to the individual. Certificate recipients can
find further guidance Under 61 Pa. Code §101.6(b)(5). The section can be found
at the following link:
http://www.pacode.com/secure/data/061/chapter101/s101.6.htmlin