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Foreign students who are
receiving certain types of payments subject to taxation under federal
law may also be
subject to tax withholding on those scholarships.
Tax withholding is not required for qualified
scholarships from U.S. sources paid to a candidate for a degree.
A qualified scholarship
means any amount paid to an individual as a scholarship or fellowship
grant
to the extent that, in accordance with the conditions of the grant, the
amount
is to be used for the following expenses:
1) Tuition and fees required for enrollment or attendance at an
educational organization.
2) Fees, books, supplies, and equipment required for courses of instruction at the educational organization.
Tax withholding is required on the portion of a scholarship or fellowship paid to a nonresident alien which does not constitute a qualified scholarship. For example, those portions of a scholarship devoted to room and board are subject to withholding. The withholding rate is 14% on taxable scholarship and fellowship grants paid to nonresident aliens temporarily present in the United States in "F," "J," "M," or "Q" nonimmigrant status. Payments made to nonresident alien individuals in any other immigration status are subject to 30% withholding.
Tax Treaties may provide exemption from taxation and withholding. To claim exemption from withholding on scholarships and fellowships, the alien student, trainee, or researcher must submit Form W-8BEN or Form 8233, and provide their Taxpayer Identification Number (TIN), before the treaty can be recognized. Form 8233 may also be used to document exemption from withholding on wages.
(PDF files--requires Adobe Acrobat Reader to view or print)
| Withholding of Tax on Nonresident Aliens and Foreign Entities | Publication
515 |
| U. S. Tax Guide for Aliens |
Publication
519 |
| U. S. Tax Treaties |
Publication
901 |
| Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding |
|
|
Exemption From Withholding on
Compensation
for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual |
|
| Application
for
a Taxpayer Identification Number (TIN) |
Form W-7 |
| U. S. Internal Revenue
Service
Forms and Publications Website |
IRS Forms |