The Graduate School Advance to a Higher Degree

Implications for Fellowship versus Assistantship Appointments

There are different tax and financial aid implications for graduate fellows and graduate assistants. There are also different implications for domestic and international students. Details of these implications are addressed below.

Tax Implications

The interpretation and implementation of the tax laws is the domain of the Internal Revenue Service (IRS). The Graduate School takes no position on the status of a particular taxpayer, nor does it have the authority to dispense tax advice. Students should consult a tax expert for advice. That stated, modest guidance on stipend taxability is provided here.

Part of the payment (stipends that are used for meals, lodging, nonmandatory medical insurance, travel, personal living expenses or other non-course-related expenses) made to a graduate fellow is taxable income. Other parts of the payment (portions used for tuition and fees required for enrollment or attendance at the University and/or other mandatory fees, such as books, supplies, and equipment required to be used by all students in a particular course of study) are not taxable.

U.S. Citizens

  • According to the IRS, a portion of fellowship payments may be subject to income tax.
  • Students who are pursuing a degree may exclude from taxable income the part of the fellowship applied to tuition and fees required for enrollment or attendance or for the purchase of books, supplies, and equipment required for courses.
  • The portion of the fellowship used for room and board or personal items must be reported as taxable income.
  • The IRS does not allow the University to withhold income tax on fellowships. Therefore, a Form W-2 Wage and Tax Statement will not be issued at year end. Consequently, taxes may be owed when a tax return is filed.
  • Additional information about the taxability of fellowships is provided in Internal Revenue Service Publication 970, Tax Benefits for Education.
  • According to the IRS, the University must withhold 14 percent federal income tax from fellowship payments, unless the student is exempt from tax because of a treaty between his or her country of residence and the United States. The Purdue University Payroll Department will notify international students of the procedures to obtain this exemption.
  • A nonresident alien is required to complete Form 1040NR and return it to the IRS, even if his or her fellowship is exempt from tax.
  • More information about the taxability of fellowship payments to nonresident aliens is provided in IRS Publication #519, U.S. Tax Guide for Aliens.

International Students

  • According to the IRS, the University must withhold 14 percent federal income tax from fellowship payments, unless the student is exempt from tax because of a treaty between his or her country of residence and the United States. The Purdue University Payroll Department will notify international students of the procedures to obtain this exemption.
  • A nonresident alien is required to complete Form 1040NR and return it to the IRS, even if his or her fellowship is exempt from tax.
  • More information about the taxability of fellowship payments to nonresident aliens is provided in IRS Publication #519, U.S. Tax Guide for Aliens.

Financial Aid Eligibility

Many fellowships are merit-based. However, some fellowships are need-based and require that the student demonstrate financial need. The Division of Financial Aid (DFA) is the administrative unit responsible for determining financial need of students at Purdue.

In determining financial need, DFA adheres to the policies and guidelines set forth in Part F of Title IV of the Higher Education Act of 1965, as amended (34 CFR 648.2, CFR 65). Students must complete and file a FAFSA form. A FAFSA form demonstrating financial need must be on file before a need-based fellowship is awarded.

DFA conducts a survey of Purdue students each year to determine the estimated Cost of Education at Purdue. DFA then calculates loan eligibility, utilizing Title IV Congressional Methodology. The estimated cost of education is measured against aid (including fellowships), fee remissions and scholarships to determine the student’s loan eligibility.

Additional Appointments

Awards

Recipients of fellowships should report information about any additional awards received to their department head, the department business office and The Graduate School Fellowship Office.

The general policy of The Graduate School is that students may not receive compensation concurrently from multiple fellowships, and many sponsors do not allow students to hold additional fellowships. Before an arrangement of this type can be approved by The Graduate School, documentation is needed of the specific details, including monthly stipend amounts, tenure, tuition and fee allowances, etc., for each fellowship.

The Graduate School does not allow a student to use two fellowships concurrently without a justification for an exception to the policy. Consult with The Graduate School Fellowship Office for guidance in utilizing multiple awards. Students are only eligible for one Graduate School recruitment fellowship.

Assistantships

Eligibility for additional assistantships depends on each scholar’s allowable capacity utilization level (CUL). Fellowships have no CUL associated with them. Fellowships administered as assistantships have a 50.00 CUL.

Fellows wanting to accept additional appointments must consult sponsor guidelines. Generally, Graduate School fellows may accept a 25.00 CUL assistantship. When classes are in session, international students (F-1 and J-1 visas) are limited by law to working 20 hours per week (i.e., 50.00 CUL). The 20-hour limit applies to all appointments, including combination monthly and biweekly appointments. Consult International Students and Scholars (ISS) for questions regarding international student employment eligibility.

Ernest C. Young Hall, Room 170 | 155  S. Grant Street, West Lafayette, IN 47907-2114 | 765-494-2600

© 2017 Purdue University | An equal access/equal opportunity university | Copyright Complaints | Maintained by The Purdue University Graduate School

If you have trouble accessing this page because of a disability, please contact The Purdue University Graduate School.