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.
U.S. Citizen and Permanent Resident Students
Scholarships are not subject to tax withholding at the time of payment. Students are responsible for reporting scholarship payments to the IRS when they file their personal taxes.
Most scholarship payments are processed by the OSU Student Accounts Office so the funds can be applied to your OSU billing account. This includes scholarships offered by colleges, academic departments, OSU programs, and external scholarships that are posted to your student account. For all scholarships posted to your OSU student billing account, the total amount received in scholarships will appear on your 1098-T form. These forms are mailed to students in January.
Non-Citizen Students
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.
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.
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%.
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%.
Click Here to View a List of Countries with Tax Treaties
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, please click Here.
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 Winter 2024 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 Winter 2024 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.
Most scholarship payments are processed by the OSU Student Accounts Office so the funds can be applied to your OSU billing account. This includes scholarships offered by colleges, academic departments, OSU programs, and external scholarships that are posted to your student account. For all scholarships posted to your OSU student billing account, the total amount received in scholarships will appear on your 1098-T form. These forms are mailed to students in January.
Non-Citizen students receiving scholarship income not applied directly to tuition and fees will also receive a 1042-S. 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).
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.