Non US Citizen scholarships and fellowships
Scholarships and fellowships given to students who are nonresident aliens require tax reporting and withholding when they are not used to pay qualifying expenses such as tuition and fees and course-related expenses such as fees, books, supplies, and equipment required for the courses at the eligible institution. These items must be required of all students in your course of instruction. Room, board, health insurance, legal fee, international activity fee, travel expense reimbursements and amounts available for living expenses are examples of non qualifying uses that result in reporting.
All non-US citizens scholarships and fellowships are subject to nonresident alien reporting unless the recipient documents that he or she is a permanent resident or resident alien for the tax year that the scholarship or fellowship is received.
The withholding rate for students present under a F-1 or J-1 immigration status is 14%. Scholarships and fellowships paid to recipients under any other immigration status are subject to 30% withholding. When the scholarship is paid through your student account, the tax is charged to your student account. In the event that a payment treated as a scholarship or fellowship is made through accounts payable, the tax is deducted from the payment. In some cases, the recipient may be able to claim a tax treaty that can reduce or eliminate tax withholding by completing IRS form W-8BEN. A U.S. tax identification number is required In order to claim a tax treaty.
Students with F, J, M or Q immigration status are automatically under the nonresident alien tax status for the first five years of presence in the United States. Use the decision tree Are you an exempt individual? to determine if you are automatically considered a nonresident alien. Being exempt does not mean you do not pay taxes in the U.S. If you are not automatically exempt, then use the Substantial Presence Test (SPT) to determine your residency status. The residency status is determined on a calendar year basis and documentation of your status as a resident alien will be needed every calendar year.
Kent State requires resident aliens to provide forms from the Glacier Online Nonresident Alien Tax Compliance System or if you do not have a Glacier account, you can use the Awards-International Student Tax Information Form to show that you are not subject to the tax reporting as a nonresident alien. Resident aliens must self report taxable scholarships even though reporting and withholding is not required on IRS Form 1042-S. Office of Global Education International Student & Scholar Services may help you with the International Student Tax Information Form during normal advising hours.
Students who have US Tax Identification numbers (Social security number or ITIN) may be able to reduce the tax withholding if there is a tax treaty between the U.S. and the country of tax residence. Page 5 of IRS Publication 4011 lists the countries with tax treaty benefits on scholarships. You need to provide information in the Glacier Online Nonresident Alien Tax Compliance System in order to claim the benefit of treaty. Please contact firstname.lastname@example.org for assistance with the Glacier Online account.
Form 1042-S is required to be issued to report scholarships and fellowships to recipients who are considered nonresident aliens. The form is issued no later than March 15 for the previous calendar year. If you have a Glacier account, you will be able to print the Form 1042-S or if you do not have a glacier account but expect a Form 1042-S, please contact email@example.com for further assistance.