Taxation of Graduate School Financial Aid Awards

Georgetown University financial aid awards that require a service component are paid through the University Payroll System and are considered compensation for services rendered. The Graduate School refers to these as Graduate Assistantship awards. If you are a US citizen, this income will be reported to you on a Form W-2. If you are not a US citizen, this income could be reported to you on a Form W-2 and/or on a Form 1042-S. You should complete withholding allowance forms in order to ensure proper withholding against this income. If you are not a US citizen, contact the University's Tax Department to determine whether you are a resident for tax purposes, and to discuss possible tax treaty exemptions and possible exemption from Social Security and Medicare tax.  Names and phone numbers of Tax Department staff are provided below.

Definition of a scholarship: A scholarship is a payment that is made to, or on behalf of, a student for educational expenses, and that is not conditioned upon services being rendered. Georgetown University financial aid awards that require no service component are considered scholarships. Graduate School Tuition Scholarships and non-service Fellowships both meet the definition of a scholarship, provided the recipient is enrolled in a for-credit academic program. They are either credited to your student account or paid through the Georgetown University accounts payable system.  If you are not a US citizen, contact the University Tax Department to determine whether you are a resident for tax purposes, and to discuss possible tax treaty exemptions.

A scholarship may be deemed qualified for tax exemption or not qualified for tax exemption, depending upon what the scholarship is used for. Scholarships, or portions of scholarships, that are used to pay for tuition, books or required fees are considered qualified for tax exemption (Qualified Scholarships). Qualified Scholarships are nontaxable to both US citizens and non-US citizens. When Georgetown issues a tuition scholarship, we generally transfer the funds directly to your student account as a credit toward present or future tuition. Georgetown deems these funds qualified scholarships. Georgetown may treat certain scholarships as not qualifying for tax exemption (Non-Qualified Scholarships), because the use of such scholarships can not be determined. You, however, will make the final determination of its taxability when and if you file a tax return.

If you are required to file an income tax return, you must determine what portion of the scholarship is qualified for tax exemption (used to pay for tuition, books or required fees) and what is not. Therefore you should keep track of how you spend the scholarship. Your student account record will show your credits for tuition and certain required fees. You should, however, keep a separate record of the portion of the scholarship that you use to pay for books or other required fees.

If Georgetown University can determine that you are either a US citizen, a resident alien, or a resident for tax purposes, scholarships, whether qualified for tax exemption or not, will not be reported to the Internal Revenue Service. This does not eliminate your requirement to report the taxable portion of your scholarship on your tax return. Make sure you keep adequate records of both your Graduate Tuition Scholarship and non-service Fellowship.

If Georgetown University has knowledge that you are not a US citizen, your scholarship, whether qualified for tax exemption or not, may be reported to the IRS. The requirements for reporting scholarships are not the same for non-US citizens who are non-residents for tax purposes. You may have Federal taxes withheld against the scholarships that Georgetown University has not determined as qualified for tax exemption (non-service Fellowships). Therefore your documentation for expenditures on tuition, books, and required fees may very well entitle you to a refund.

For more information on scholarships, see IRS publication 970 (Scholarships and Fellowships) or contact Shannal Sullivan at (202) 687-1158 or Lawrence Smith at (202) 687-5448.