Qualified Education Expenses (tuition, fees, books, supplies)
Scholarship/fellowship grants to nonresident aliens who are a candidate for degree for qualified educational expenses are NOT subject to withholding (U.S. Source).
Nonqualified Education Expenses (room and board)
Scholarship/fellowship grants to nonresident aliens who are a candidate for degree for nonqualified educational expenses ARE subject to withholding unless the individual chooses to claim tax treaty benefits (if eligible).
- If the recipient has eligible tax treaty and an ITIN, the individual may claim withholding exemption by completing Form W-4 and the Certification of U.S. Tax Return Filing. The individual may also claim personal exemption rates at the daily prorated rate for the number of days in the U.S. during the year.
- If the recipient DOES NOT have an eligible tax treaty, the individual may still claim a personal exemption at the daily prorated rate for the number of days in the U.S. during the year by completing Form W-4 and Certification of U.S. Tax Return Filing. The remaining grant is subject to 19% tax withholding (14% Federal, 5% State). Submit 19% withholding to KSU Division of Financial Services.
- If the recipient does not wish to claim a tax treaty benefit or a personal exemption, withholding of 19% of the gross scholarship/fellowship will apply.