Income tax considerations
This information is provided for the purpose of making fellowship recipients aware of their individual US income tax reporting responsibility. It is not intended as legal or tax advice, or as a definitive interpretation of the law. Each fellow is personally responsible for his/her individual tax preparation and payment. Specific questions regarding the tax treatment of this award should be directed to a tax advisor or the Internal Revenue Service.
All awards, scholarships, fellowships, grants, and stipends to ASU students for which no services are required, whether paid through Student Financial Assistance or directly by a department, are taxable non-employee income to the recipient, except for the portion of these funds used for tuition, registration, other university fees, books, supplies, and equipment required for the course(s) being taken. Scholarship/Fellowship support payments may be taxable to the recipient in full or in part. The recipient is responsible for determining the value of tuition, registration, other university fees, books, supplies, and equipment.
For scholarship stipends, ASU has no tax reporting or tax withholding responsibilities unless the student is a nonresident for US tax reporting purposes. Therefore, fellowship recipients who are residents for US tax purposes should give consideration to filing Form 1040 ES Estimated Tax for Individuals irs.gov/pub/irs-pdf/f1040es.pdf on a quarterly basis and paying estimated taxes to avoid late payment penalties. Fellowship recipients will not receive a Form W2 from ASU for fellowship income; employers issue IRS Form W-2 to report payroll wages and payroll tax withholdings.
Although the university is not required to provide reporting to the US Internal Revenue Service (IRS) on non-compensatory student financial support, students are encouraged to collect relevant information on their awards (and eligible expenses for offset) on an ongoing basis throughout the year in order to be able to easily evaluate the potential for taxable income. You can review your student account in ASU Interactive for fellowship award amounts posted to pay for tuition and health insurance. For information about IRS Form 1098-T, "Tuition Statement", please go to the Student Business Services site at students.asu.edu/form1098t
ASU is required by US tax law to withhold 14% federal income tax from fellowship payments to individuals who are nonresidents for US tax purposes, unless the recipient can claim an exemption by US tax treaty. In March, the university reports taxable scholarship/fellowship income and tax withholdings for the previous tax year to individuals who are nonresidents for US tax purposes and to the Internal Revenue Services on IRS Form 1042-S.
Foreign students, faculty, and staff with tax questions or problems are advised to seek assistance from the IRS, a CPA, or attorney. In the U.S., the individual taxpayer is responsible for filing an appropriate and accurate tax return and negotiating all tax matters with the IRS. Taxpayer assistance is available from your local IRS office or by calling the IRS toll free taxpayer assistance number, 1-800-829-1040.
Supplemental resources may be found at the IRS website. See Tax Information for Studentsirs.gov/individuals/students/index.html, How To Get Tax Help irs.gov/publications/p970/ch13.html, and IRS Publication 970 Tax Benefits for Education irs.gov/pub/irs-pdf/p970.pdf.
Additional information on the taxability of scholarships can be obtained from the following IRS publications and forms:
- Publication 519—U.S. Tax Guide for Aliens
- Form 1040EZ and Instructions—Income Tax Return for Single and Joint Filers with no Dependents
- Form 1040NR and instructions—U.S. Nonresident Alien Income Tax Return.
These publications and forms can be obtained from the Internal Revenue Service at a toll free number, 1–800–827–FORM, or the Web site at irs.gov/formspubs/index.html.
Additional guidance and requirements
For additional guidance on university and IRS requirements relating to fellowships, scholarships, and student cash awards, including tuition waivers, access the Financial Services website, asu.edu/fs.