Scholarships/Fellowships

Foreign National Information Form (FNIF) Hold

To comply with federal tax laws regarding payments made to nonresident aliens (NRAs), the Office of Financial Aid and Scholarships automatically places a FNIF hold on scholarships/fellowships when recipients are not U.S. citizens or permanent resident aliens (i.e. green card holders) and advises recipients via AidLink that only Audit & Tax staff can remove the FNIF hold.

Audit & Tax staff reviews scholarships/fellowships with the FNIF hold to determine whether there is a taxable portion. If there is no taxable portion, the FNIF hold will be removed without a tax appointment. If there is a taxable portion, a tax appointment is necessary before the FNIF hold is removed.

General Rule

A scholarship/fellowship is not taxable if it is used for the following:

  • Tuition and fees required for enrollment
  • Books, supplies, and equipment required for courses

A scholarship/fellowship used for any other purpose is taxable (e.g. room and board, living allowance, travel payments, etc.).

The taxable portion of a scholarship/fellowship is subject to withholding at the following rates:

  • 14 percent for NRA recipients in F, J, M, or Q visa status
  • 30 percent for NRA recipients in all other status

There will be no withholding under the following circumstances:

  • Scholarship is paid for study abroad
  • Scholarship is paid by a foreign grantor (e.g. foreign government)
  • Recipient is eligible to claim an income tax treaty benefit

Income Tax Treaty

Residents (not always citizens) of certain foreign countries may be exempt from (i.e. not subject to) withholding under the applicable income tax treaty between the U.S. and their country of residency.

To claim a tax treaty benefit, recipients must:

  • Be eligible, and
  • Sign Form W-8BEN at the tax appointment

Audit & Tax staff will determine whether recipients are eligible for the tax treaty benefit at the tax appointment.