Academic Scholarships
for
Extraordinary International Students

Withholding of Taxes on Scholarships and Grants

Federal policy requires all Colleges and Universities to withhold a designated dollar amount from scholarships and grants awarded to nonresident aliens as anticipated tax payments. The amount withheld may differ based upon the student’s country of origin’s tax treaty with the United States. The descriptions below indicate which nonresident alien scholarships and grants are taxable and which are nontaxable according to federal law.

Non Taxable Scholarships(Qualified Scholarships)

If you are a nonresident alien student or grantee with an *F, *J, *M, or *Q visa, there is no withholding of taxes on a qualified scholarship(tuition and fee scholarships) received by a candidate for a degree. A qualified scholarship is any amount you receive as a scholarship or grant that is used for:

• Tuition and fees required for enrollment or attendance at an educational institution
• Fees, books, supplies, and equipment that the educational institution requires all students for the courses of instruction.

Taxable Scholarships

If you are a nonresident alien student or grantee with an *F, *J, *M, or *Q visa and you receive a U.S source grant or scholarship that is not fully exempt (room and/or board scholarship), the withholding agent (usually the payer of the scholarship) withholds tax at 14% (or lower treaty rate depending on student’s country of origin) of the taxable part of the grant or scholarship. Payments made to nonresident alien individuals in any other immigration status are subject to 30% withholding. An alien student may claim a tax treaty exemption for a scholarship by submitting Internal Revenue Service (IRS) Form W-8BEN to the Payroll Office. The scholarship recipient must provide his or her SS# or Individual Taxpayer Number (ITIN) on Form W- 8BEN if their country of origin has such a treaty with the United States.

This federal taxation policy will reduce the amount that the scholarship covers for room and board expenses beginning December 1, 2005. Students will most likely have an amount owing on their student bill and will be required to pay this remaining balance to the Bursar’s Office.

Please visit the IRS Web site at http://www.irs.gov/publications/p519/index.html for more detailed information regarding this federal policy .