Tax Forms and Reporting

Form-1042

Form 1042 is used to report (to the IRS) withholdings of US source income paid to foreign persons. Form 1042-S is used to report (to the payee and the IRS) amounts paid to foreign persons from US sources, that are subject to withholding even if no amount is deducted and withheld from the payment.
 
Income payments made to non US persons/entities (foreign persons) from US sources must be reduced by the appropriate withholding amount of US tax and remitted to the IRS.  The withholding rate on such payments is 30% which can be reduced by exceptions outlined in the statute or by a tax treaty between the US and the payee’s country of residence.  Payees who make a request for treaty benefits must present a certificate which includes the payee’s US tax identification number. Amounts paid to foreign persons are subject to withholding.
 
Foreign persons who are nonresidents are subject to US tax on income from or connected to the United States. No foreign person/entity is allowed to begin work or provide services at N.C. A&T prior to receiving the proper authorization.

 

IRS Form-1099

1099-MISC or 1099-NEC form are used to report non-employment payments to an individual or a business to the IRS. This form is used for:
  • Income earned by an independent contractor (not an employee)
  • Fees, commissions, rents, or royalties paid
  • Payment for prizes, awards, or legal services
  • Medical and health care payments

Non-North Carolina residents who perform specific services for the university, in North Carolina, are subject to 4% withholding on payments in excess of $1,500 during a tax year. The state tax withholding is reflected on the 1099-NEC or 1099-MISC.  

1099 Reporting

U.S. vendors who have not furnished their tax identification number (TIN) on a W-9 form are subject to withholding at a 24% rate* on reportable payments. Any federal income tax withheld and reported on a 1099-MISC or 1099-NEC must be reported on form 945. For federal tax purposes, a U.S. vendor is defined as a U.S. person who is a U.S. citizen or a U.S. resident alien, a partnership, corporation, company, or association created or organized in the United States or under the laws of the United States, an estate (other than a foreign estate), or a domestic trust.

 
* per IRS rules for the 2024 tax year

N.C. A&T State University is accountable to the Internal Revenue Service and the North Carolina Department of Revenue for payments made for services by non-University employees. For the University to comply with this obligation, disbursements charged against certain expenditure object codes are reviewed annually. Expenditure object codes reviewed are:
  • 615xx Workers Compensation (payments to doctors, hospitals, etc.) 
  • 617xx Board Member Compensation 
  • 619xx Legal and Accounting Fees 
  • Consultant Fees 
  • Medical Fees (all forms of health care providers, etc.)  
  • Honoraria 
  • Exception: 61922 & 61992 (documented travel reimbursements) 
  • 734xx Printing and Binding Services 
  • 735xx Repairs and Maintenance 
  • 737xx Advertising  
  • 739xx Other Current Services  
  • 741xx Rental of Real Property  
  • 742xx Rental of EDP Equipment  
  • 743xx Rental of Other Equipment  
  • 74903 Memberships  
  • 74904 Royalties  
  • 75800 Buildings  
  • 75900 Other Capital Outlay  
  • 769xx Other Aids & Grants  

In the case of travel expenses, if a consultant's original receipts are submitted to the University for reimbursement, those receipts should be included with the purchase request and coded to object 61922. For "Other Contracted Services" travel receipts, the code is 61992. In addition, the Professional Service Agreement or contract must include the reimbursement of travel or out-of-pocket expenses with specific amounts. The amount for travel expenses will then be excluded from 1099 reporting.

Disbursements may be charged against any expenditure object code listed above and still be excluded from 1099 reporting if any of the following conditions exist:
  • Payments made to a corporation (except health care providers, which are included). 
  • Payments made to non-profit activities, governmental agencies, etc. 
  • Rental payments made to real estate agents. 
  • Payments made for the purchase of tangible merchandise. 

Invoices for services rendered include the costs of travel or materials necessary to provide the service. Under these circumstances, the University has followed the practice of including the total amount of the contract/invoice in its 1099 reporting process.

Questions? Contact General Disbursements.

Bivian Ejimakor
boejimak@ncat.edu 
336.334.7684