According to the Taxation of Gifts, Prizes and Awards guidelines,
Discretionary funds (mainly projects 35xxxx, 6xxxxx, 7xxxxx) are used for prizes and awards. No state, federal, trust funds unless disclosed in the appropriation or trust fund authority. For account coding purposes, gifts and awards paid to employees should be coded to account code 51593-Employee Recognition.
For non-employees/students-gifts, gift cards and awards should be coded to account 56905 (Non-employee awards) /56590 (State Aid-Educational award).
In addition, please note that:
The Internal Revenue Code stipulates that the value of some awards must be included in an employee’s income and provides exclusions for other awards.
Employees who are given cash and non-cash items as gifts, prizes, and awards that are paid with University funds (including state funds, grant funds, contract funds, gift funds) are subject to federal and state income tax and The Federal Insurance Contributions Act (FICA) tax.
Awards such as the NC State University Awards for Excellence that have a cash prize of up to $250 are an example of this. Any cash gift, as a check or a gift card is reportable as income and subject to tax reporting.
To learn more about recognizing employees or nonemployees with gifts or awards, please review the Controller’s Office webpages: