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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:
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 |