Policy: Scholarship/Fellowship Payments to Foreign Nationals
|Date: 03/02/05||Policy ID: FIN-012||Status: Final|
|Contact Office:||Compliance and Immigration Services (UHR)|
|Oversight Executive:||Vice President and Chief Human Resources Officer|
|Applies To:||Academic Division and the College at Wise.|
|Table of Contents:|
|Reason for Policy:||
To provide guidance for applying taxes to scholarship/fellowship payments made to foreign national students and fellows, in order to comply with U.S. Immigration and Tax laws.(Note: Compliance and Immigration Services is prohibited from providing tax or legal advice. Students are encouraged to consult their own tax advisor.)
|Definition of Terms in Statement:||
Scholarship: For tax purposes, an amount given to aid in the pursuit of study or training for which there is no obligation to perform services by the recipient as a condition of receiving the funds. "Scholarships," "Fellowships," or "Stipends" have interchangeable meaning in this policy. Any payments paid to or on behalf of foreign nationals requiring the performance of services past, present, or future, in exchange for the payments, are taxable wages subject to withholding regulations.
Foreign National: An individual not a U.S. citizen or U.S. national (8 USC 1401 et seq).
Resident Alien: A foreign national temporarily or permanently present in the U.S. Resident aliens are taxed in the same manner as U.S. citizens on their worldwide income. (26 USC 7701(b).)
Nonresident Alien: A foreign national temporarily present in the U.S. who is not a resident alien. Nonresident aliens are taxed according to special rules contained in certain parts of the Internal Revenue Code. A “nonresident alien” will become a “resident alien” in one of two ways: (1) by being admitted to the U.S. as, or changing status to, a Lawful Permanent Resident under the Immigration Laws (the Green Card test); or (2) by passing the Substantial Presence Test (a numerical formula which measures days of presence in the U.S.). (26 USC 7701(b).)
The University (those departments that process payments to foreign national students and fellows) will adhere to U.S. tax laws as they relate to scholarship and fellowship payments made to foreign nationals. This policy is intended for guidance only and not to supersede applicable U.S. laws.
To claim the tax exemption benefits of a tax treaty, nonresident or resident alien foreign nationals must contact Compliance and Immigration Services, appear in person with necessary documentation, and fill out Form 8233 (Exemption From Withholding on Compensation for Independent and Certain Dependent Personal Services of a Nonresident Alien Individual) or in the case of resident aliens, Form W8-BEN.
|Related Information:||Academic Honorarium Payments to Short-term, Non-Immigrant Alien Visitors|
|Policy Background:||Issued 6/23/1997.|
|Major Category:||Finance and Business Operations|
|Category Cross Reference:|
|Next Scheduled Review:||03/02/14|
|Approved By, Date:||Policy Review Committee, 03/02/05|
|Revision History:||Updated 7/7/11, 2/29/09. Previous version in effect from 3/2/05 to 2/28/08; 6/23/1997 to 3/01/2005.|
|Supersedes (previous policy):||Taxation Instructions for Foreign National Recipients of Scholarships/Fellowships IV.G.2|