Taxation for International Students

Taxation for International Students

International students who are recipients of a Brown University Scholarship and/or any outside scholarships should review this important information regarding the potential tax implications. Section 117 of the Internal Revenue Code exempts scholarships from taxation as long as the scholarship does not exceed the amount of eligible tuition charges.  

To comply with federal regulations, Brown University is required to withhold tax on excess scholarship amounts equal to any scholarships, fellowships, grants, and financial aid in excess of eligible tuition charges. Eligible tuition charges include tuition and fees, books, supplies, and equipment (not room and board).  International students are subject to a 14% federal and 3.75% state withholding rate on the taxable portion of the scholarship/fellowship/grant.   Taxation may be avoided if the student's country of ​residence has a tax treaty with the U.S which exempts their scholarship from taxation (reference Publication 901 for U.S. Tax Treaties).  Students who claim that part or all of the scholarship is exempt from taxation because of a tax treaty must enter their specific data pertaining their immigration and tax status into a computerized database, Foreign National Information System (FNIS).  Unless this information is entered and submitted in FNIS, an accurate assessment of a student's tax status and possible tax treaty eligibility cannot be made and taxes will be assessed.   

What is Excess Scholarship Tax? 
U.S. tax laws require that the University withhold tax on excess scholarship equal to any scholarships, fellowships, grants, and financial aid in excess of eligible tuition charges.

Transactions described as Excess Scholarship Federal and State Withholding Tax MAY appear on your student account during the academic year. The transactions represent the tax charged on the scholarship amounts that exceed your eligible charges.

Tax is calculated based on:
Total of Scholarships, Fellowships, Grants
Less: Required Tuition & Fees Charged to Your Student Account (room, meals, or travel are not included)
Equals:  Taxable Portion of Your Award

How will the tax impact my student account?
Excess Scholarship Tax is assessed at the beginning of each semester and monthly for any adjustments to required tuition and fees or scholarships. Students are required to pay the tax liability as soon as the charge appears on their account.  

Tax postings and any potential refund of student account overpayments will be delayed for students who do not complete the FNIS process in a timely manner.

Tax Documents
Excess Scholarship Tax will be reported to the student on a 1042-S – Foreign Person’s U.S. Source Income Subject to Withholding Statement. Brown University is also required to report the excess to the Internal Revenue Service (IRS) on Form 1042-S.  International students who receive taxable income while in the United States may need to file a 1040NR or a 1040NR-EZ.  Please visit the IRS website for details.

Questions?

Visit the taxation resources available at Taxes or FNIS Requirements.
Contact [email protected] or [email protected] with questions about taxation or FNIS.
Contact [email protected] with student account questions.