Under IRS rules, payments for participating in a research or scientific study are taxable to the recipient. Aggregate taxable payments to recipients of $600 or more are reportable on the Form 1099-MISC as “other income” to the payee.
Human subject/patient payments generally take one of three forms:
1. Cash
2. Gift card
3. Direct payment from the university’s accounting system (by check)
Cash and Gift Card Payments
- For the first two payment methods, requested recipient information for tax reporting purposes includes: name, SSN, mailing address, payment date and amount (or value) of payment. Departments must remit recipient information for all cash payments or gift cards of $100 or greater to the Tax Department. For payments under $100, department must retain the tax information in their records. This information must be retained according to the university’s Records Management Policy.
- Expenses associated with gift card purchases for Study Participants & Blood Donors should be charged to Gift Cards – Study Participants & Blood Donors. Departments must maintain an internal reconciliation of gift cards purchased, distributed, and on-hand.
Tax Reporting Requirements
- All recipients of cash payments or gift cards for participation in a study greater than $100 must be reported to the Tax Department for proper tax reporting via the Human Subject Payment Log. The template should not be altered. Other forms for reporting this information are discouraged.
- Email completed log as an Excel file to taxdepartment@wustl.edu. Because the log will contain sensitive personal data, the completed log should be password-protected. Passwords should be sent in a separate email.
- The completed log should be sent electronically within 15 days after all gift cards purchased on a specific transaction have been distributed. In the event that all gift cards have not been distributed by December 31, provide the Tax Department with the current log through December 31 and start a new log for the calendar year beginning January 1.
- Please note that if payments are made to study participants using the Advarra system, you do not need to provide a separate payment log to the tax department. We are able to obtain the necessary information for tax reporting directly from Advarra. For more information on Advarra, please visit the website for the Center for Clinical Studies.
Direct Payments from the Accounting System
- For direct payment of study participation fees and patient or participant travel, departments must use the Miscellaneous Payee in Workday. See additional in-system information for guidance on setting up a Miscellaneous Payee.
- Once a Miscellaneous Payee has been set up, study participants/patients may be paid incentives for participation using spend category SC191 Study Participant/Human Subject or travel/commuting expenses using spend category SC459 Patient Related Travel Expenses.
Tax Reporting Requirements
- There are no special reporting requirements when making direct payments in Workday. Workday captures all taxable payments for reporting purposes.
Foreign National Patients/Study Participants
- Taxable payments made to non-resident alien individuals are subject to tax withholding of 30% under Section 1441 of the Internal Revenue Code. This does not include allowable travel expenses paid in accordance with the university’s Business Expense Policy.
- When providing foreign recipients with cash, gift cards or non-cash remuneration, a gross up of tax liability may be required. The gross up will be charged to a departmental account.
- When compensating a foreign study participant for activities in the US via a Miscellaneous Payment in Workday, the 30% withholding may be deducted from the payment or the department may choose to gross up the payment.
- Note that gross ups of taxes may not be charged to a sponsored fund.
- For additional questions about tax reporting related to patient/study participant payments, please contact taxdepartment@wustl.edu.