HBP Part 14.5. Taxes

Date published: July 12, 2011
Last revised: July 12, 2011
Issued by: Scholarship and Fellowship Services

14.5. TAXES

A. U.S. Citizens

Scholarship/fellowship income for U.S. citizens will be reported on a 1098-T form only if the recipient paid any tuition during that same calendar year. If no tuition was paid during that calendar year, the recipient must track any scholarship/fellowship funds received and report them as income when filing a tax return with the Internal Revenue Service (IRS). The recipient has two options for tracking scholarship/fellowship funds:

  • A student recipient with an upgraded UT EID can track scholarship/fellowship payments by month in Where’s My Check.
  • A non-student recipient without an upgraded UT EID may refer to the transactions on his or her bank statements.

B. Nonresidents

1. Withholding Tax
Scholarships/fellowship payments for nonresidents are subject to a withholding tax that is dependent upon the recipient’s visa status.

  • Recipients with a J-1 or F-1 visa are subject to 14 percent withholding.
  • Recipients with any other type of visa are subject to 30 percent withholding.

2. Tax Exemptions
Certain tax exemptions are available to nonresidents. Those who want to apply for available tax exemptions should contact International Student and Scholar Services for assistance with the GLACIER tax system. If the recipient is eligible for any tax exemptions, the recipient must bring the GLACIER tax system paperwork to Accounting and Financial Management in MAI 132 between the hours of 9 a.m. to 4 p.m. The following tax exemptions may be available to nonresidents:

  • Tax Treaty with Scholarship Article
    If the nonresident’s country of origin has a tax treaty with the U.S., no taxes will be withheld. Scholarship/fellowship income will be reported on a 1042-S form.
  • Resident for Tax Purposes
    If the nonresident has resided within the U.S. for a certain period of time, the individual may be considered a resident for tax purposes. If so, no taxes will be withheld from scholarship/fellowship payments. If the recipient paid tuition in the year the scholarship/fellowship payment was received, the scholarship/fellowship income will be reported on a 1098-T form.

3. Tax Forms

  • IRS 1042-S Form (For Nonresidents)
    Scholarship/fellowship income and taxes withheld for nonresidents are reported on a 1042-S tax form.
  • IRS 1098-T Form (For Residents for Tax Purposes)
    Scholarship/fellowship income is reported on a 1098-T form only if the recipient also paid tuition in the calendar year in which the scholarship/fellowship payment was received.



Part 14. Scholarships, Fellowships, and Cash Prizes - Table of Contents