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Types of Payments, Methods of Payments, and Tax Reporting to the IRS

The table below illustrates types of payments to foreign nationals, AU's methods of payments, and tax reporting requirements to the IRS:

Types of Payments and Tax Reporting
Type of Payment Recipient AU Method of Payment Taxation Reporting to the IRS
Teaching Faculty Faculty appointment letter; contract Taxable compensation with graduated withholding rates; Exempt under treaty W-2; 1042-S
Part-time wages Student Personnel action form and e-timesheets Taxable compensation with graduated withholding rates; Exempt under treaty W-2; 1042-S
Graduate scholarship/fellowship: stipend without work/learning component Student Financial aid data entered by teaching unit; stipend payments through the HR system.Submitted on GFA stipend authorization or GATR forms Taxable at 14% provided recipient is an F, J, M or Q immigration status, unless exempt under treaty 1042-S
Graduate scholarship/fellowship: remitted tuition without work/learning component Student Financial aid data entered by teaching unit; remitted tuition credited to student account. Submitted on GFA stipend authorization or GATR forms. Qualified portion not taxable under IRC section 117 No Reporting Required
Graduate scholarship/fellowship: stipend with work/learning component Student Financial aid data entered by teaching unit, stipend payments through the HR system.Submitted on GFA stipend authorization or GATR forms Taxable for a work component as compensation with graduated withholding rates; Non-qualified scholarship table at 14% provided recipient is an F, J, M or Q immigration status, unless exempt under treaty. W-2; 1042-S
Graduate scholarship/fellowship: remitted tuition with work/learning component Student Financial aid data entered by teaching unit; remitted tuition credited to student account.Submitted on GFA stipend authorization form or GATR forms Taxable for a work component as compensation with graduated withholding rates. W-2
Athletic room and board Student Athlete Room and board payments by student account Non-qualified scholarship taxable at 14% provided recipient is an F, J, M or Q immigration status, unless exempt under treaty 1042-S
Prizes Student, faculty, employee Employee - submitted on Hiring Form; Non-employee - submitted onDisbursement Requests Taxable at 30% to nonresident aliens; No tax treaty available. No tax withheld for resident aliens 1042-S; 1099 Misc (over $600)
Independent personal services Contractor Professional service agreement and disbursement request form Taxable at 30%; Exempt under treaty 1042-S
Expense Reimbursements Faculty, employees, foreign guest speakers Disbursement Request Non taxable provided reimbursement is processed under the "accountable plan" rules No Reporting Required