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Scholarships/Fellowships Awards to Foreign National Students

UNM sponsored foreign national students present in the U.S. who receive scholarships or fellowships awards from UNM or disbursed by the University from other U.S. sources are subject to additional rules regarding whether or not the award is taxable.  IRS regulations define a "scholarship" or a "fellowship" as an amount paid or allowed to, or for the benefit of an individual to enable that person to pursue studies or research.  Also, the individual must not be required to perform services in order to receive the scholarship or fellowship.


Qualified scholarships or fellowships can be excluded from taxable income, and no 1042-S will be issued, for UNM foreign national students if:

  • the individual is a candidate for a degree, broadly defined to include any full- or part-time student who attends an accredited institution that grants a bachelor’s or higher degree and
  • the funds are used to pay for qualified expenses: tuition and fees required for attendance or other mandatory fees, books, supplies, and equipment required of all students in a particular course of study.

Portions of any awards used for the following unqualified expenses - room and board, meals, lodging, non-mandatory medical insurance, travel, research services, personal living expenses, non-mandatory course expenses or other non-course related expenses must be included in the recipient’s taxable income subject to 14% foreign tax withholding.

Foreign national students, who are nonresident aliens for tax purposes, are subject to foreign income tax withholding on the portion of awards that exceed qualified, course related expenses.

The University will issue, by March 15 of the following year, Form 1042-S to report to the recipient and the Internal Revenue Service the amount of the scholarship or fellowship that was used for unqualified expenses and any corresponding withholding.

Email
tax@unm.edu