Transcript FELLOWSHIP TAX INFORMATION Tax-Free Fellowships US Persons- Fellowships are tax free only if: 1.

FELLOWSHIP TAX
INFORMATION
Tax-Free Fellowships
US Persons- Fellowships are tax free
only if:
1. You are a candidate for a degree at
an eligible educational institution,
and
2. You use the fellowship to pay
qualified education expenses.
Nonresident aliens – Taxable at 14%
unless from a Tax Treaty country.
Qualified Education Expenses
Expenses for US Persons:
 Tuition and fees required to enroll at
or attend the eligible institution, and
 Course-related expenses, such as
fees, books, supplies, and equipment
that are required for all students in
your course of study.
Non-qualifying
Expenses-US Persons
Expenses that do not qualify:
 Room and board,
 Travel,
 Research,
 Clerical help, or
 Equipment or other expenses not
required for enrollment.
Fellowship Chart-US Persons
Fellowship Worksheet-US
Example 1
 You
received a fellowship of $10,000.
You are not a candidate for a degree.
The $10,000 you received is taxable.
Example 2
 You
receive a fellowship for $10,000
and a $2,000 scholarship required to
be used for room and board. You are
a candidate for a degree at an
eligible educational institution.
Tuition, books, and other required
fees total $8,000.
Example 2 – cont
1. Total Scholarship/Fellowship:
$12,000
2. Amt. paid for teaching, etc.:
$0
3. Subtract line 2 from 1
$12,000
4. Amt. required for non-qualified exp.: $2,000
5. Subtract 4 from 3
$10,000
6. Amount used for qualified ed. exp:
$8,000
7. Subtract 6 from 5
$2,000
8. Taxable Part: Add 2,4, and 7.
$4,000
______________
_______ __
Reporting Requirements
 For
US persons, it is the taxpayer’s
responsibility to report taxable
fellowships.
– Fellowship statement
 For
Nonresident Aliens, it is the
responsibility of Purdue to report
taxable and nontaxable amounts of
fellowships.
– 1042S that you print from Glacier
Example of Fellowship Statement
To: Purdue Pete
Department:
From:
SS #: 111-11-1111
Aero and Astro Engineering
Tax Department
Subject: FELLOWSHIP PAYMENTS
For your information, you were paid a total of
$1,869.00 as a fellowship by Purdue University
during calendar year 2007. This amount has not
been reported on Form W-2, Wage and Tax
Statement.
Federal Estimated Tax Payments
US persons - Required if owe $1,000
in taxes and the amount you have
withheld is less than the smaller of:
1. 90% of taxes shown on your 2007 tax
return, or
2. The tax shown on your 2006 return.
Use IRS form 1040-ES to determine 2007
tax liability
Federal Estimated Tax Payments –
cont.
Nonresident Aliens – Purdue will
withhold taxes from fellowship, if
required, at the rate of 14%
The actual amount of taxed owed on
the fellowship may differ from the
14% and will be determined based
on all income reported on the
1040NR Federal Tax Return
State and County Tax
State and County Taxes apply to the
taxable amount of any fellowship
For information on making estimated
payments, refer to the Indiana
Department of Revenue website:
http://www.in.gov/dor/individual/estimated.html
Glacier for Non-Resident Aliens
 Your
Business Office will set-up a
Glacier account for you.
 You will receive an email from
[email protected] with your
login instructions.
 Log into Glacier and key in your
immigration information and details
of prior visits to the US.
Glacier – cont.
 Glacier
will determine the taxability
of your fellowship.
 Print out from Glacier your:
– Tax Summary Report
– Required IRS tax forms
 Mail
or deliver above forms and
copies of required immigration
documents to Trent Watkins in
Freehafer Hall.
Helpful Websites
 Publication
970 -
http://www.irs.gov/publications/p970/index.html
 Form
1040-ES – Estimated Tax
Payment Instructions –
http://www.irs.gov/pub/irs-pdf/f1040es.pdf
 IRS
Website’s Frequently Asked
Questions –
http://www.irs.gov/faqs/faq9-3.html
Contact Information
Lauren Lacy
(765) 494-1697
[email protected]