SCHOLARSHIP/FELLOWSHIP PAYMENTS TO NONRESIDENT ALIENS STATE AND UBF FUNDED

1. SCHOLARSHIP/FELLOWSHIP PAYMENTS TO NONRESIDENT ALIENSSTATE AND UBF FUNDED

2. NONRESIDENT ALIEN • This term is used for Tax purposes not Immigration • As a general rule F-1 and J-1 students who have been in the U.S. 5 calendar years or less. • J-1 non-students who have been in the U.S. no more than 2 out of the last 6 years.

3. DEFINITIONS Types of Payments Scholarship/Fellowship: Amount given to an individual to aid in study, training, or research and which does not require work to be performed to receive the money. Prizes and Awards: Amount received primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement or received as the result of entering a contest.

4. DEFINITIONS Qualified Expenses: Tuition, comprehensive fees, student activity fees, and direct billed course and program fees. Required books, supplies, and equipment: Qualified expenses for student athletes, EMBA, PMBA, and dental school students . No tax withholding or reporting for qualified expenses as long as payments are not made directly to the individual.

5. DEFINITIONS Nonqualified Expenses: Room and board, travel and any payments made above and beyond the cost of the qualified expenses. This includes state fellowships paid directly to the student. Subject to federal tax withholding of 14%, unless there is an applicable tax treaty exemption.

6. INTRODUCTION • IRS regulations state that nonqualified scholarship payments to nonresident aliens must be taxed. • The tax rate is 14% for students on F-1 and J-1 visas. • Nonresident aliens should be issued a 1042-S statement at year end. • The 1042-S is a statement issued to nonresident aliens which reports various income and tax withholdings.

7. CURRENTLY • State funded- no tax withholding or reporting • Payments are paid from various areas (e.g. Accounts Payable, Financial Services, UBF, etc). • Qualified and nonqualified expenses are treated the same.

8. NONRESIDENT ALIEN SCHOLARSHIP/FELLOWSHIP VOUCHER • SEPARATE instructions for completing and MAILING forms • Scholarship/Fellowship Voucher • Request for Information • Voucher for State and UBF scholarships can be found at the SRC office website: http://src.buffalo.edu/office/officeforms/generalforms.shtml or on the UBBusiness website: www.ubbusiness.buffalo.edu under “Administrator” > “Payments” > “State Scholarship Voucher” • Information regarding State fellowships can also be found at the Financial Services website: http://ubbusiness.buffalo.edu/ubb/cfm/policies/ or on the UBBusiness website: www.ubbusiness.buffalo.edu under “Administrator” > “Payments” > “State Fellowship Voucher”

9. INSTRUCTIONS FOR COMPLETING FORMS • Forms should be used for scholarships/fellowships paid with State or UBF funds to nonresident aliens. • Research Foundation will continue to follow their current procedures. • Both the voucher and request for information must be completed. • State fellowship forms ONLY should be sent directly to Amanda Maines at 120 Crofts Hall. • All other vouchers should be sent directly to Student Academic Records and Financial Services (SARFS). • Refunds will be issued by SARFS, the student must complete the “Request for Refund Form” found at the SRC student website: http://src.buffalo.edu/pdf/requestforrefund.pdf.

10. NONRESIDENT ALIEN SCHOLARSHIP/FELLOWSHIP VOUCHER

11. NONRESIDENT ALIEN SCHOLARSHIP/FELLOWSHIP VOUCHER

12. REQUEST FOR INFORMATION

13. REQUEST FOR INFORMATION

14. REQUEST FOR INFORMATION

15. TAX TREATIES • There are 41 countries that have tax treaties for scholarship income. • Treaty eligibility (W-8BEN) • SSN or ITIN (Individual Taxpayer Identification Number)

16. ITIN • Applying for an ITIN • Social security numbers are only issued for employment. • No ITIN = 14% tax • Treaty Eligible + SSN/ITIN = 0% tax

17. STATE FELLOWSHIP PROCEDURE • Complete voucher for state nonresident alien fellowships. Process all others through fellowship application. • All State fellowship payments will be made biweekly. • Additional information required • Begin and end check date • Check sort code • Forward completed voucher and request for information to Amanda Maines, 120 Crofts Hall. • Please see the following website for more information http://ubbusiness.buffalo.edu/ubb/cfm/policies/

18. SCHOLARSHIP PROCEDURE • Department completes -Scholarship/ Fellowship Voucher • Student completes - Request for Information and must sign the student certification on the voucher • All vouchers will be sent to Student Academic Records and Financial Services (SARFS). • If the form is sent to Financial Services or UBF first it will be forwarded to SARFS and further delay the processing.

19. SCHOLARSHIP PROCEDURE • SARFS will determine the qualified and nonqualified amounts based on the student’s account. • The voucher and request for information will then be sent to either UBF or the State payroll department.

20. STATE SCHOLARSHIP PROCEDURE • SARFS State Payroll/Financial Services • Qualified Amount Financial Services SARFS • Nonqualified Amount Net Taxes State Payroll SARFS • Students with a credit balance on their account can complete a “Request for Refund Form”, which can be found at http://src.buffalo.edu/pdf/requestforrefund.pdf

21. UBF SCHOLARSHIP PROCEDURES • SARFS UBF • Qualified Amount UBF SARFS • Nonqualified Amount Net Taxes UBF SARFS • Students with a credit balance on their account can complete a “Request for Refund Form”, which can be found at http://src.buffalo.edu/pdf/requestforrefund.pdf

22. RF PROCEDURES • The process for utilizing RF funds for payments to nonresident alien’s has not changed. • The RF does not pay students directly. • All payments for tuition remission are remitted directly to SARFS. • Tuition remission is requested by completing and submitting a Grant Billing Form. • Salary and fellowship payments are processed through the payroll mechanism and are therefore taxed accordingly.

23. TIPS • IRS Publication No. 515, “Withholding of tax on Nonresident Aliens and Foreign Entities” at http://www.irs.gov/pub/irs-pdf/p515.pdf • State processing may take 4-6 weeks to complete from the start of the semester due to the State payroll cycle • Multiple awards- First come, first serve • Notification of changes to student’s registration after the award has been processed should be done immediately

24. TIPS • Receipts • Income Tax Return • ISSS website http://wings.buffalo.edu/intlservices/index.html

25. CONTACTS Foreign National Tax Unit SARFS Amanda Maines Kellie Kostek amaines@business.buffalo.edukkostek@buffalo.edu 645-5000 ext. 1286 645-5683 UBF Financial Services Elaine Schaffer Carrie Grimshaw eschaffe@buffalo.educgrimshaw@business.buffalo.edu 645-3013 645-5000 ext. 1338

26. QUESTIONS?

27. THANK YOU!