Information for Independent Contractors
Independent contractors are not subject to the same withholding requirements as employees. Due to this difference, the IRS has placed significant importance on the proper classification of workers. The UW requires departments to provide appropriate documentation to ensure that workers are properly classified as employees or as independent contractors.
Factors that the IRS considers in reviewing classification are Behavioral Control, Financial Control and Relationship of the Parties. For additional information please see the IRS website.
Generally, employees will always be paid through the payroll system even if the duties they perform are unrelated to their primary role.
Current UW policy is that an individual who has been classified as an employee in the UW payroll system cannot be hired as an independent contractor in the same calendar year that the individual was an employee with the University, unless the independent contractor work is not in any way the same or similar to the work performed as an employee. Individuals should work with the Department wishing to hire them to complete the Form 1631 or Form 1632 to determine their eligibility to work for the UW as an independent contractor.
The University is required to issue a Form 1099 MISC for payments over $600, with limited exceptions. It is used to report most non-employee compensation, rents, royalties, prizes and awards, services, and certain other vendor payments.
Payments reportable on a 1099-Misc. (If the vendor is not incorporated or tax-exempt):
1. Compensation for personal and/or professional “services” (including parts & materials used in performing service)
2. Rental fees (e.g., equipment, building space, lodging, banquet rooms, booth space, etc.)
3. Copyright, license, and royalty fees
5. Registration fees for conferences, training, workshops, etc.
6. Membership dues
7. Honorariums, speaker fees, entertainment, etc.(see Travel Expenses relating to honorariums below)
8. Transportation (e.g., airfare, taxi, motor coach, etc.)
9. Merchandise that is custom-made or contains UW logo
10. Advertising – where the ads are “created” by the vendor (e.g., display ads, billboards, etc.)
11. Payments for medical/healthcare and legal services regardless of whether or not the entity is incorporated
12. Gross proceeds paid to an attorney or law firm regardless of whether or not they are incorporated (e.g., legal settlement or garnishment payment)
Exceptions to issuing Form 1099 exist for certain types of vendors and for certain types of payments. Some exceptions include travel expenses for honorariums, most payments to corporations and payments to non-resident aliens. For more information contact the 1099 desk at Ten99@u.washington.edu. Payments to non-employee non-resident aliens may be reported on a 1042-s. Click here for more information on Form 1042-S.
Note: The University of Washington no longer removes associated expenses from the 1099 forms that are issued. Suppliers are responsible for deducting associated business expenses on their tax return, if applicable.
Suppliers need to retain all original receipts in order to deduct their expenses. If your agreements require suppliers to provide receipts to document reimbursed travel, they should provide copies and retain originals for their own tax filing activities. Any original receipts submitted to a department should be returned to the supplier.