PAYMENTS DO NOT HAVE TO BE MADE IN CASH OR MADE DIRECTLY TO THE INDIVIDUAL TO BE CONSIDERED INCOME

Scholarships/Fellowships

• A scholarship/fellowship may have both non-taxable (qualified) and taxable (non-qualified) items.
  
  
  • Nontaxable items typically include:

    Tuition
    Book Allowance
    Mandatory University Fees and Technology Fees
    Mandatory Health Insurance

  • Taxable items typically include:
    
    

    Room and Board
    Fellowship Stipend (which does not require a service to be performed)
    Living Allowance
    Cash Award
    Travel Payment/Reimbursement
    Compensation (include a fellowship stipend which does require a service to be performed)

• The taxable portion of a scholarship is subject to 14% withholding tax unless exempt by a tax treaty.
  
  
• Even if a scholarship or fellowship is not paid directly to the individual, tax is still applied to the total non-qualified amount.
  
  
• For students with taxable non-qualified scholarship amounts, Towson University will charge the amount of tax due to the student’s account.
  
  
• For more comprehensive information see IRS Publication 970 – Tax Benefits for Education: www.irs.gov.