Understanding Tax Implications for Fellowships, Scholarships, and Traineeships
The Office of Scholarships and Financial Aid (OSFA) understands that students have questions concerning their tax liabilities associated with funds they may receive while a student at Georgia Tech. The information provided below is for general use only and may not cover all possible tax circumstances.
This website last reviewed/updated on 12/20/11
Who has tax liabilities?
In essence, anyone who receives funds from any entity may have tax implications with regards to those funds received. In the case of students receiving scholarship or fellowship awards, the following information is being provided to help you understand the possible implications.
U.S. Citizens and Resident Aliens
United States citizens or Resident Aliens have an obligation to the U.S. government and the IRS to report any scholarships or fellowships received. The amount of tax liability is based in part upon the amount of qualified tuition and fees you incurred and your income level for that tax year. Georgia Tech is not responsible for filing any information to the IRS concerning these amounts. This responsibility remains with the taxpayer/student.
Georgia Tech is required to withhold 14 percent tax and file the corresponding IRS 1042-S form for all international students receiving scholarships or fellowships for any amounts greater than qualified tuition and fees allowable under the IRS code. The withholding requirement is waived in the case a valid tax treaty exists with the student's tax country. To determine if a student would qualify for such a waiver they need to complete IRS form W-8BEN with the Bursar's Office. At the point the Bursar's Office confirms the existence of such a treaty the withholding requirement is waived and the student will receive a 1042-S as required by IRS code.
Understanding Your Responsibility
The Internal Revenue Code has provisions that address the tax status of fellowships, scholarships, traineeships, grants, student loans, and work recipients. The information provided on this web page is for general information only. Each recipient of funds is responsible for determining how the tax law applies to their particular circumstances.
Georgia Tech considers the payments for which you have been notified to be student financial aid and not payment for services. Therefore, you will not receive a W-2 form nor will you be covered by workers compensation insurance. If you believe these payments are for services rather than student aid, please immediately contact the Accounting Services Department at 404.894.4681 or 404.385.2736.
Calendar Year vs Academic Year
Keep in mind that the Internal Revenue Service needs your calendar year information, where most of your awards occur across an academic year to include parts of two calendar years. Georgia Tech's academic calendar runs from August – July as opposed to the IRS calendar year, which runs from January – December.
Tool to Assist
View a list of tools to help with the process.