Federal Courts have consistently held that “scholarships” are relatively disinterested, “no-strings” educational grants, with no requirement of any substantial services from the recipients. Any amount paid or allowed to, or on behalf of, an individual to enable him/her to pursue studies or research:
- Primarily to further the student’s education and training and provided by the University for such purpose does not represent compensation or payment for services. Merely requiring the recipient to provide periodic progress reports to the University or the fact that the research or study results may provide an incidental benefit to the University is not enough to treat the payment as compensation for services. Such amounts are treated as scholarships, which are not subject to tax withholdings, but are reported as scholarships on IRS Form 1098-T.
- OR Primarily for the benefit of the University is considered to be for services performed and deemed taxable compensation (or depending upon the circumstances, treated as a University business expense reimbursement). Compensation for services is treated as taxable wages, which are subject to the appropriate tax withholding and are reported on IRS Form W-2. In general, University business expense reimbursements are not subject to tax withholdings and are not reported as taxable income.
**International students may be subject to different reporting requirements and withholding rules. Contact Tax Reporting with any questions**
Use this page to determine how to make a payment to a student. For a printable version of this content, Download Student Payment Determination (pdf)