Why are taxes withheld from Scholarship Automation payments made to international students, but not payments made to domestic students?
Even though non-qualified scholarship or fellowship payments are taxable to the domestic student, IRS does not require the University to withhold tax or report the payments to the IRS. Students, however, are required to report non-qualified scholarship and fellowship payments to IRS on their individual tax returns. The IRS requirements are different, however, for “non-qualified” payments to international students. IRS generally requires taxes be withheld at the rate of 14% and the scholarship/fellowship amounts be reported to both IRS and the student on IRS Form 1042-S. Only those international students who are eligible for tax treaty benefits are exempted from tax withholding on the non-qualified amounts. For more information, see Scholarship and Fellowship Grants.
Related Questions
- International students aren really eligible for a sizable loan until their second year. Do they qualify for merit-based scholarship aid prior to their second year?
- Why are taxes withheld from Scholarship Automation payments made to international students, but not payments made to domestic students?
- Are there any financial aid or scholarship opportunities for International Students?
