If you receive a fellowship or a stipend, you must consider your federal tax liability. Federal government agencies require students to determine taxation of scholarships and fellowships when filing annual income tax returns. IUPUI does not issue 1099s to scholarship holders.
All stipends are taxable income. For tax purposes, you must keep copies of all award notices and announcements.
The general rule is that any income is subject to federal taxation. All stipends are taxable income; depending on how your department processes your stipend it may be considered a fellowship and taxes are not withheld, which does not mean you are not responsible for paying taxes.
You will not receive a 1099 IRS tax form at the end of the year.
Graduate students are responsible for paying all income taxes that may become due as a consequence of receiving graduate fellowship stipend payments.
The IRS provides general information through the IRS Live Telephone Assistance live at 800-829-1040 or you can visit IRS Tax Publication 970 for more details.
All students must file federal income tax and state income tax. If you reside or have worked in another state, you may have to file in those states, also.
Most graduate students are exempt from FICA, social security, and Medicare.
Special rules apply to international students, visiting scholars and non-resident aliens. The IRS requires educational institutions to report scholarship and fellowship grants to non-resident aliens on form 1042S-Foreign Person's US Sourced Income Subject to Withholding.
It is your responsibility to determine that the withheld amount is correct, e.g., whether a tax treaty exemption applies, whether the reduced withholding rate applies, etc.
The IU Office of International Services’ (OIS) tax site has more information for international students.
Students must file estimated taxes quarterly. Those waiting until the end of the year to file may be subject to penalties.
Estimated taxes for the calendar year are due in four installments:
- April 15
- June 16
- September 15
- January 15
Payments should accompany a form 1040-ES with the student's social security number listed on the form. Failure to make these payments on time may result in the assessment of underpayment penalties.
To avoid this penalty, you may:
- Pay at least 90 percent of the tax shown on the current year's return
- Pay 100 percent of the tax shown on the prior year's return, assuming that the return represents a 12-month period
- Make payments on a current basis using annualized income installment methods.