Scholarships/Fellowships to Foreign National Students

Foreign national students present in the U.S. who receive scholarships or fellowships from UNM or disbursed by the University from other U.S. sources are subject to the same rules as U.S. citizens or legal permanent residents as to whether or not the award is taxable. IRS regulations define a "scholarship" or a "fellowship" as an amount paid or allowed to, or for the benefit of an individual to enable that person to pursue studies or research. Also, the individual must not be required to perform services in order to receive the scholarship or fellowship.

Qualified scholarships or fellowships can be excluded from taxable income if:

1. the individual is a candidate for a degree, broadly defined to include any full- or part-time student who attends an accredited institution that grants a bachelor’s or higher degree and
2. the funds are used to pay for tuition and fees required for attendance or other mandatory fees, books, supplies, and equipment required of all students in a particular course of study.

Portions of awards used for room and board, meals, lodging, non-mandatory medical insurance, travel, research services, personal living expenses, non-mandatory course expenses or other non-course related expenses must be included in the recipient’s taxable income unless excluded by tax treaty.

Students who are nonresident aliens for tax purposes are subject to income tax withholding on the taxable portion of awards unless the student is eligible for reduced withholding on or exemption of the payment under an income tax treaty between the U.S. and the student’s country of tax residency. Extension of treaty benefits requires that, prior to disbursement or credit to the student’s account with the University, the student must:

• Obtain a U.S. tax identification number (either Social Security Number or Individual Taxpayer Identification Number);
• Comply with Taxation Department requirements to establish that the individual is a nonresident alien for tax purposes and is eligible for tax treaty benefits.

The University will issue by March 15 of the following year Form 1042-S to report to the recipient and the Internal Revenue Service the amount of the scholarship or fellowship and any withholding.