Tax Liability for Graduate Fellowships

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Some or all of any payment you receive as an OSU student may be taxable by the U.S. Internal Revenue Service (IRS), depending on your personal circumstances. OSU has created this website to provide general information about the possible tax consequences of different types of payments students may receive. 

Please note that use of this site does not constitute advisement. Oregon State University employees, while in their official role at the university, are not allowed to act as tax consultants or provide personal tax advice. For personal tax questions, individuals should consult with a professional tax advisor.

Payment Types

Scholarship 

An amount paid to, or for the benefit of, a student at an educational institution to aid in the pursuit of studies. Scholarships and fellowships are often characterized together as they have overlapping characteristics, both being specifically tied to activities at an educational institution.

Scholarship payments are viewed as non-taxable by the IRS if amounts are used for qualified educational expenses. Be aware that amounts received for incidental expenses, such as room and board, travel, and optional equipment are considered taxable income.

Fellowship

A fellowship is an amount paid for the benefit of an individual to aid in the pursuit of study or research. Fellowships and scholarships are often characterized together as they have overlapping characteristics, both being specifically tied to activities at an educational institution. A common fellowship offered at Oregon State University is an appointed Graduate Fellowship.

Fellowship payments are viewed as non-taxable by the IRS if amounts are used for qualified educational expenses. Be aware that amounts received for incidental expenses, such as room and board, travel, and optional equipment are considered taxable income.

Graduate Fellowship Tax Information for U.S. Citizen and Permanent Resident Students

Tax Withholding

Fellowships are not subject to tax withholding at the time of payment. Students are responsible for reporting fellowship payments to the IRS when they file their personal taxes.

Tax Documentation – Student Account Payments (term-by-term stipend)

Some fellowship payments are processed by the OSU Student Accounts Office so the funds can be applied to your OSU billing account. This includes fellowships offered by colleges, academic departments, OSU programs, and a few external fellowships that are posted to your student account. Examples for OSU Graduate Fellowship appointments include Provost Distinguished Fellowships, Prestigious Diversity Fellowships, and graduate fellowships offered through the OSU Foundation-support funds. These payments will be posted on or near the start of the academic term of your fellowship. For all scholarships and fellowships posted to your OSU student billing account, the total amount received in scholarships + fellowships will appear on your 1098-T form. These forms are mailed to students in January.

1098-T Overview

The 1098-T form, also known as the Tuition Statement, is a tax document that colleges and universities in the U.S. provide to students. It helps determine eligibility for education-related tax credits like the American Opportunity Credit or the Lifetime Learning Credit.

  • It is issued by your school if you paid qualified education expenses during the tax year.
  • You will typically receive it by January 31 each year.
  • It reports tuition payments, scholarships, and enrollment status to both you and the IRS.

Tax Documentation – Business Account Payments (monthly stipend)

Some fellowship (stipend) payments are processed through OSU Business Affairs, as direct monthly payments, rather than posting to the student account. These payments are managed by Accounts Payable. These fellowships are typically supported by research grants administered by Oregon State University, or nationally-competitive awards. Examples for OSU Graduate Fellowship appointments include the NSF-Graduate Research Fellowship Program, NASA FINESST, NIH predoctoral fellowships, among others. These payments are issued directly to you as a student in monthly installments, typically near the beginning of the month. OSU does not provide IRS tax documentation for these payments. For the current and upcoming tax years, fellows should contact Accounts Payable after February 1 each year to obtain the amount for tax reporting in the prior tax year. This process may require contacting another person for the information after Accounts Payable, but you must first contact them to determine who is authorized to release the information.

Why You Do Not Get a 1098-T, 1099, or W-2

  • 1098-T: This form reports tuition payments and scholarships/grants. Your monthly stipend is not applied toward tuition, so it will not appear here.
  • 1099-MISC or 1099-NEC: These are used for non-employee compensation, but OSU does not issue these forms for fellowship stipends as these payments are technically not compensation.
  • W-2: If you were employed during the year as a Graduate Assistant (teaching or research), you may expect to get a W-2. Your funding here is from a fellowship with no work requirement, so this cannot appear on a W-2.

If you are receiving monthly stipends and none of these forms show it, you still need to report that income.

Graduate Fellowship Information for Non-Citizen Students 

Tax Withholding (“NRA withholding”)

Tax withholding means that a portion of a student’s payment is set aside by Oregon State University so that it can then be transmitted to the IRS, which is required by law for non-citizen students who receive payments that are classified as taxable income.  

The amount of funds withheld from student payments is calculated based on three primary factors: type of payment, visa type, and country of residence.  

Type of Payment  

Payments for qualified educational expenses are considered non-taxable income. Qualified educational expenses typically include tuition, mandatory fees, course fees, and mandatory health insurance.  
 
Payments for non-qualified educational expenses are items considered indirectly related to the cost of education. These are often highly subjective and dependent on a variety of factors.  Examples of non-qualified educational expenses include meals, lodging, non-mandatory medical insurance, medical charges, travel, personal living expenses, and stipends. 
 
Visa Type 
Certain visa types automatically qualify for a reduced rate of tax withholding on income received by students. The default tax rate for non-citizen students is 30%, but students with an F, J, M, or Q visa usually are taxed at 14%.  
  
Country of Residence
The United States has established agreements with some foreign countries on how specific activities within the U.S. will be taxed.  Those agreements are referred to as tax treaties.  Tax treaties usually benefit a student and can provide an opportunity to either exempt the payment entirely from tax withholding or reduce the tax withholding rate to an amount less than the default 30%.  

  1. Click to View a List of Countries with Tax Treaties
  2. A U.S. issued social security number (SSN) or individual taxpayer identification number (ITIN) is required to claim tax treaty benefits. For instructions and forms, review here. 

Tax Calculation 


The default rate of tax withholding for non-citizen students is 30%. Tax withholding will only be applicable to the portion of the payment attributable to non-qualified educational expenses.  

Qualified Educational Expenses Example: If you receive a $10,000 scholarship and your qualified educational expenses are $8,000, your non-qualified educational expenses are $2,000.  You would have tax withholding applied to the $2,000, instead of the full amount ($10,000) of the scholarship.

  • 14% Tax Withholding Example: During the academic term, your tuition and mandatory fees are $5,640.12, and the total sum of your U.S. source funding is $14,432.00.  As the funding exceeds the tuition and mandatory fees by $8,791.88, the IRS considers that $8,791.88 to be taxable income.  Therefore, a tax withholding (“NRA Withholding”) of $1,230.87 will be placed on your account (14% of the amount of funding greater than tuition and fees), and you will receive a $7,561.01 refund.
  • 30% Tax Withholding Example: During the academic term, your tuition and mandatory fees are $5,640.12, and the total sum of your U.S. source funding is $14,432.00.  As the funding exceeds the tuition and mandatory fees by $8,791.88, the IRS considers that $8,791.88 to be taxable income.  Therefore, a tax withholding (“NRA Withholding”” of $2,637.57 will be placed on your account (30% of the amount of funding greater than tuition and fees), and you will receive a $6,154.31 refund.

Tax Documentation – Student Account Payments (term-by-term)

Some fellowship payments are processed by the OSU Student Accounts Office so the funds can be applied to your OSU billing account. This includes fellowships offered by colleges, academic departments, OSU programs, and a few external fellowships that are posted to your student account. Examples for OSU Graduate Fellowship appointments include Provost Distinguished Fellowships, Prestigious Diversity Fellowships, and graduate fellowships offered through the OSU Foundation-support funds. These payments will be posted on or near the start of the academic term of your fellowship. For all scholarships and fellowships posted to your OSU student billing account, the total amount received in scholarships + fellowships will appear on your 1098-T form. These forms are mailed to students in January.

1098-T Overview

The 1098-T form, also known as the Tuition Statement, is a tax document that colleges and universities in the U.S. provide to students.

  • It is issued by your school if you paid qualified education expenses during the tax year.
  • You will typically receive it by January 31 each year.
  • It reports tuition payments, scholarships, and enrollment status to both you and the IRS.

Tax Documentation – Business Account Payments (monthly stipend)

Some fellowship (stipend) payments are processed through OSU Business Affairs, as direct monthly payments, rather than posting to the student account. These payments are managed by Accounts Payable. These fellowships are typically supported by research grants administered by Oregon State University, or nationally-competitive awards. Examples for OSU Graduate Fellowship appointments include the NSF-Graduate Research Fellowship Program, NASA FINESST, NIH predoctoral fellowships, among others. These payments are issued directly to you as a student in monthly installments, typically near the beginning of the month. OSU does not provide IRS tax documentation for these payments. For the current and upcoming tax years, fellows should contact Accounts Payable after February 1 each year to obtain the amount for tax reporting in the prior tax year. This process may require contacting another person for the information after Accounts Payable, but you must first contact them to determine who is authorized to release the information.

Why You Do Not Get a 1098-T, 1099, or W-2

  • 1098-T: This form reports tuition payments and scholarships/grants. Your monthly stipend is not applied toward tuition, so it will not appear here.
  • 1099-MISC or 1099-NEC: These are used for non-employee compensation, but OSU does not issue these forms for fellowship stipends as these payments are technically not compensation.
  • W-2: If you were employed during the year as a Graduate Assistant (teaching or research), you may expect to get a W-2. Your funding here is from a fellowship with no work requirement, so this cannot appear on a W-2.

If you are receiving monthly stipends and none of these forms show it, you still need to report that income.

Tax Documentation – All Non-Citizens

Non-Citizen students receiving fellowship income not applied directly to tuition and fees will also receive a 1042-S. Fellowship income includes both payments issued to the student account and direct payments managed by Accounts Payable. Form 1042-S will be mailed to employees, students and scholars around March 15, each year. Please verify your postal mailing addresses are up to date in Online services or myOSU. Please wait until you receive the 1042-S to file your tax return even if you have a 1098-T and/or W-2 (remember, some students may get both).

1042-S Overview

Form 1042-S is a U.S. tax document used to report U.S. source income paid to nonresident aliens (typically international students or scholars). It’s issued by universities or other U.S. institutions when:

  • You receive scholarships, fellowships, or grants that exceed qualified education expenses.
  • You earn compensation for services (like research or teaching) under a tax treaty.
  • You receive royalties, prizes, or awards as a nonresident.

It is not issued to U.S. citizens or permanent residents.

Why Graduate Students Receive It

As a graduate student, you might receive a 1042-S if:
  • You are an international student on an F-1 or J-1 visa.
  • You received fellowship stipends or scholarships that cover non-qualified expenses (like room, board, or travel).
  • You earned income exempt from tax under a U.S. tax treaty between your home country and the U.S.
How to Use It
  • File your U.S. tax return (usually Form 1040-NR) using the information on your 1042-S.
  • If tax was withheld (Box 7), you may be eligible for a refund.
  • If you qualify for a tax treaty benefit, it will be reflected in the form and reduce your tax liability.
Important Notes
  • You may receive both a W-2 and a 1042-S if you had employment income and also received scholarships or treaty-exempt income.
  • The form is typically issued by March 15 each year.
  • Use Sprintax to file your taxes correctly as a nonresident.

Tax Forms Basics (IRS External Links)

  1. 1098-T statements are mailed to students by January 31st. The dollar amounts may assist you in completing IRS Form 8863 - (the form used for calculating the education tax credits that a taxpayer may claim as part of your tax return).
  2. 1042-S statements are mailed to students by March 15th. The dollar amounts may assist you in completing your US Tax Return. Amounts reflected on individual form 1042-S statements are also reported to the IRS on a summary return 1042.  The statements are generated by the Accounts Payable department.  Prior year forms or current year copies can be requested by contacting [email protected]. These forms are not currently available online through MyOSU or BeaverHub.
  3. 1099-MISC & 1099-NEC statements are mailed to students by January 31st.  The dollar amounts reported may assist you in completing your US Tax Return.  1099 tax statements are less common for students, but are generated in some cases where payments are made for non-qualified educational expenses. Stipends provided to defray the cost-of-living expenses during summer academic programs are a common example. Awards and Prizes are also reported on a 1099.