Scholarships/Fellowships to Non Resident Aliens (NRA's)
IRS regulations require that NRA's, (generally students on an F-1 or J-1 visa who have been in the United States for less than five years), who are receiving a scholarship/fellowship payment, may be subject to 14% federal withholding on the payment. Scholarships/fellowships are amounts given to an individual to aid in study, training or research which does not require services to be performed to receive the money.
If the payment will cover qualified expenses (i.e. tuition, comprehensive fees, student activity fees and direct billed course and program fees), no tax withholding or reporting will be required so long as the payment is NOT made directly to the individual. If the payment is made directly to the individual, the payment will be subject to 14% federal tax withholding unless there is a tax treaty exemption available.
If the payment will cover non-qualified expenses (i.e. room and board, travel or other costs above and beyond the cost of qualified expenses), the payment will be subject to 14% federal tax withholding unless there is a tax treaty exemption available.
In conjunction with the State, a form has been created to process requests for payment of scholarships/fellowships to NRA's. The Nonresident Alien Scholarship/Fellowship Voucher has been created and is available at the following Student Response Center (SRC) link http://sarfs.buffalo.edu/office/forms/general.php. This form should be completed and sent to the Student Academic Records and Financial Services (SARFS) office. SARFS will make the determination as to what portion of the payment is covering qualified expenses and what portion is covering non-qualified expenses. SARFS will then forward the voucher to the UBF offices to process a check.
For qualified amounts, UBF will issue a check directly to SARFS to be applied to the student's account.
For nonqualified amounts, UBF will review the paperwork for application of a tax treaty.
- If no tax treaty exists, 14% federal tax withholding will be withheld and remitted to the IRS. The remainder will be issued in a check payable to SARFS to be applied to the student's account.
- If a tax treaty is available, the department will be contacted to obtain a completed W-8BEN form from the student to submit to UBF. This form will require a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
- If no SSN or ITIN is available, 14% federal tax withholding will be withheld and remitted to the IRS. The remainder will be issued in a check payable to SARFS to be applied to the student's account.
- If the W-8 BEN includes an SSN or ITIN, UBF will issue a check payable to SARFS to be applied to the student's account.
If any of the payments result in a credit balance on a student's account, they can follow the instructions on the Student Response Center website for obtaining a refund.
At the end of the calendar year, an appropriate 1042-S tax reporting form will be prepared by UBF and sent to the student.