FELLOWSHIP TAX INFORMATION

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FELLOWSHIP TAX INFORMATION
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Tax-Free Fellowships

• US Persons- Fellowships are tax free only if
• You are a candidate for a degree at an eligible
  educational institution, and
• You use the fellowship to pay qualified education
  expenses.
• Nonresident aliens Taxable at 14 unless from a
  Tax Treaty country.

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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.

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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.

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Fellowship Chart-US Persons
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Fellowship Worksheet-US
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Example 1

• You received a fellowship of 10,000. You are
  not a candidate for a degree. The 10,000 you
  received is taxable.

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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.

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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
• ______________ _______ __

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Reporting Requirements

• For US persons, it is the taxpayers
  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

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Example of Fellowship Statement

• To Purdue Pete SS 111-11-1111
• Department Aero and Astro Engineering
  
• From 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.

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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
• 90 of taxes shown on your 2007 tax return, or
• The tax shown on your 2006 return.
• Use IRS form 1040-ES to determine 2007 tax
  liability

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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

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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

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Glacier for Non-Resident Aliens

• Your Business Office will set-up a Glacier
  account for you.
• You will receive an email from support_at_online-tax.
  net with your login instructions.
• Log into Glacier and key in your immigration
  information and details of prior visits to the US.

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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.

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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 Websites Frequently Asked Questions
• http//www.irs.gov/faqs/faq9-3.html

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Contact Information

• Trent Watkins
• [phone]
• watkinst_at_purdue.edu