THE UNIVERSITY OF ALABAMA GRADUATE SCHOOL
|Graduate School > Publications > Administration of Graduate Assistantships|
|Taxes and FICA|
|For state and federal tax purposes, the university is required to withhold
amounts from payments to students for FICA where the payments are
made for work performed by the students. However, if the student is
enrolled at least ďhalf-timeĒ then deductions are zero.
The definition of half time for tax purposes is different from the academic definition. A student is classified as half time if they are enrolled in classes in the semester during their appointment for at least 3 hours. This means that any GA enrolled for less than 3 hours will have deductions taken from their stipend. For any further queries relating to a studentís FICA situation please refer to the Payroll department of Human Resources.
The impact of other taxes will depend upon the type of support received by the student, their nationality, and their residency status. The Graduate School cannot give any specific advice concerning individual studentís tax affairs and the student should be referred to their own tax office.
Generally, Graduate assistantship wages are taxable income subject to tax withholding. For U.S. citizens and resident aliens, these earnings will be reported on Form W-2 at year-end. If the student is a nonresident alien and a treaty exists between their home country and the U.S., they may qualify for an exemption from federal tax withholding on all or a portion of their wages. Any treaty-exempt amounts will be reported on Form 1042-S at year-end. Taxable amounts will be reported on Form W-2.
Tuition awards associated with graduate assistantships are not taxable income, due to exclusion under Internal Revenue Code Section 117 for amounts used for tuition, fees, or books. For U.S. citizens and resident aliens, the University is not required to issue a tax reporting statement on tuition waivers. For nonresident aliens, such amounts are reported on Form 1042-S at year-end as nontaxable amounts.
Graduate fellowships are taxable income to the extent that the moneys received exceed tuition, required fees and book allowance. This includes excess moneys on the student account as well as monthly payments received. For U.S. citizens and resident aliens, the University is not required to issue a tax reporting statement on fellowship income. It is the studentís responsibility to determine the taxable portion of their fellowship and report this income on their individual tax return. They should refer to IRS Publications 4 and 520 for more information. For nonresident aliens, the University is required to withhold tax on fellowship moneys, which exceed tuition, required fees and book allowance. If a treaty exists between the studentís home country and the U.S., they may qualify for an exemption from federal tax withholding on all or a portion of their fellowship. Fellowships for nonresident aliens are reported on Form 1042-S at year-end. Students should refer to IRS Publications 515, 519, 520, and 901 for further information.
All nonresident aliens receiving moneys from the University should make an appointment with Sommer Hatfield-Nelson, NRA Tax Accountant, for a tax analysis to determine if any treaty exemptions apply and to make sure the proper tax withholding, if any, is taken. She can be reached at 348-8865,or by email: email@example.com.
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