U.S. Tax Withholding on SMU Student Accounts
According to the United States Internal Revenue Code, the amount of financial aid provided to a non-resident alien student that exceedsqualified tuition and fees is scholarship/fellowship income and subject to mandatory 14% tax withholding. The tax due on the scholarship/fellowship income is recorded on the SMU student account as “U.S. Tax Withholding.”
The scholarship/fellowship income and related tax withholding will be reported at the end of each calendar year on Form 1042-S. The recipient will use that form to complete a personal income tax return.
Students who are issued a Form 1042-S, Form W-2, and other U.S. tax documents from SMU are encouraged to seek assistance from a tax advisor/preparer, tax software, or Internal Revenue Service resources. SMU employees are not permitted to provide tax advice but may guide individuals to available resources such as the IRS website, tax-filing software made accessible via SMU’s International Student and Scholar Services, etc.
Income Tax Treaties
The United States has income tax treaties with a number of foreign countries under which residents of those countries are taxed at a reduced rate or are exempt from U.S. income taxes on certain income from sources within the U.S. A nonresident alien student may be eligible to claim tax treaty benefits directly through SMU but, unless/until that process is completed, scholarship/fellowship income must be taxed at 14%. An SMU student can inquire about tax treaty benefits through SMU’s Foreign Nationals Office. Additional information is available from the IRS website:
Income Tax Treaties from A to Z