Qualified and Non-qualified Scholarship and Fellowships
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First Published :Thu Jul 27 18:01:04 GMT 2017
Last Modified :Mon Aug 07 16:37:05 GMT 2017
Last Published :Mon Aug 07 16:37:05 GMT 2017
differentiates between the two and describes the tax ramifications
Qualified scholarship/fellowship is amount used to pay tuition and fees required of all individuals in a program. Qualified scholarship/fellowship payments are made through the Office of Financial Aid.
Non-qualified scholarship/fellowship is amounts that exceed tuition and required fees, and are used for travel, room & board, incidental expenses and optional equipment or require services be performed as a condition for receiving the scholarship or fellowship. Payment for a non-qualified scholarship/fellowship is made using a check voucher unless there are required services, and in that case paid through payroll.
The majority of the scholarships awarded at Tufts are considered to be qualified under IRS regulations and processed via the Financial Aid Office. Qualified awards do not exceed stated tuition and fees amounts. Scholarships that exceed tuition and fees and/or support other expenses such as travel or room and board are non-qualified and therefore taxable to the recipient. Taxable scholarships and fellowships are paid through Accounts Payable and are reported and/or taxed according to government guidelines.
Tax Status and Paperwork for Non-Qualified Scholarships, Fellowships, Awards, and Subject Study/Volunteer Subject Stipends
Departments awarding the above should consider the following tax implications of the awards:
Citizenship Paperwork Tax Status and Withholdings
US Citizen and Resident Alien W-9 Taxable, but not reportable.
·Tufts does not deduct taxes from payments and does not issue a 1099.
Non Resident Alien W-8BEN and Alien Payment Form · Reportable and taxable.
·Tufts will withhold tax unless tax status is impacted by a tax treaty. Tax rate is14% for “F” and “J” visa holders, 30% for others visas.
·1042-S will be issued to the recipient
To repeat; scholarships, fellowships, awards, Subject Study/Volunteer Subject Stipends that are used for purposes other than tuition and related fees are taxable. Recipients should consult a tax professional when preparing their IRS tax returns. Subject Study/Volunteer Subject Stipends are not to be confused with a regular Stipend which is given for services provided and should be processed through eReq rather than Check Voucher.