Nonresident Scholarships and Fellowships

Scholarships and fellowships awarded to international students who are nonresident aliens for tax purposes are taxable when used to pay for nonqualified educational expenses such as room and board and health insurance. If the student is present under a F-1 or J-1 immigration status, the taxation rate on nonqualified scholarship funds is 14%.  In some cases, the scholarship recipient may be eligible to claim a tax treaty benefit that can reduce or eliminate the tax withholding. Only scholarship recipients with a U.S. tax identification number will qualify for a tax treaty benefit.