| Scholarship/Fellowships? |
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Paid to study, or
paid to work?
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| The threshold question
that must be answered before a payment may be considered
a non-taxable scholarship, fellowship or grant is
this - is the student being paid to study or paid
to work? |
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| The answer to this question
depends on each individual situation, but hinges
on whether the student's activities are primarily
to further the student's education and training,
or whether the University is the primary beneficiary
of the student's activities. Some key questions
to ask are: |
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- Does the University control or direct the
student's activities?
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- Is the payment consideration for past, present
or future services of the student?
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- What are the benefits
derived by both the student and the University
as a result of the student's activities?
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- Is the student doing work that an employee
would be doing if the student was not?
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| The answers to
these questions will determine the treatment of
the payment. It may be all scholarship, fellowship
or grant; all compensation for services; or some
combination. |
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Nonresident Alien Recipients
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| Nonresident alien recipients
of scholarships, fellowships or grants may be subject
to federal income tax withholding on the portion
that is taxable. The tax rate is generally 14%,
but may be reduced under an income tax treaty. Contact
the Payroll Department for further information. |
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| Additional Information |
| For more information on Scholarships
and Fellowships, please review IRS Publication 520
at www.irs.gov/pub/irs-pdf/p520.pdf
(PDF). |
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| Official
reports and documents for the University of
South Alabama faculty and staff are available
in Adobe .PDF format. If you already have
the Adobe Acrobat Reader you're all set to
download. If not, you can download the FREE
Acrobat Reader by clicking the graphic below:
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