The purpose of this policy is to ensure that all Georgia Tech Student payments (fellowships, stipends and awards) processed through Accounts Payable are in compliance with the taxation rules and regulations of Internal Revenue Service (IRS).
All payments to Georgia Tech students for research training grants, participant support, and scholarship/fellowships must be approved by Accounting Services Financial Aid Team prior to payment by Accounts Payable. Payment requests for students will be forwarded to the Office of Scholarships & Financial Aid prior to payment by the Accounts Payable Team. Accounts payable process payments to students for awards or activities that are unrelated to employment.
The Internal Revenue Service (IRS) Publication 970: Tax Benefits for Education covers the rules for the taxation of student scholarships and fellowships. The publication states that the part of any grant, scholarship, or fellowship that represents payment for teaching, research or any other service is taxable to the student. Colleges and universities are obligated to withhold taxes on any award that represents compensation for services. Nonresident alien students may have taxes withheld on awards that do not represent compensation for services. Their tax obligations are governed by their visa status, United States (US) tax laws, and/or the tax treaty between the US and their country of residence. The Institute is required by federal law to withhold taxes on fellowships that require the student to perform services (past, present or future) to receive the award. Students that are required to perform a service as part of the fellowship agreement, must be classified as employees and payments are processed through the Payroll process. The consequences of not properly withholding the taxes may cause the Institute to incur serious financial penalties. The department is responsible for determining if a student’s fellowship/trainee award requires that a service be performed. The Office of Human Resources can assist departments that need clarification regarding proper employee classification.
All Georgia Tech employees, (includes faculty, staff, students and employees) submitting student payment requests.
| 4.1 Student Payments | |
Student Payments – Georgia Tech Students
| Students are to be set up as suppliers in the Institute’s Financial System in order for their payment request to be processed via Accounts Payable. Payment requests for student payments are to be submitted as Supplier Invoice Request via and submitted via the Institute’s Financial System. Accounts Payable will report payment to the Office of Scholarships and Financial Aid appropriate for compliance review and approval before processing for payment. This additional review should be taken in to consideration as it may increase the turnaround time for processing the payment. Allow 10 business days before contacting AP to inquire on the status of payment |
| Stipends for Participant Support – Georgia Tech Students | Accounts Payable will process the following student payments:
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| Payment via Payroll | Students who perform any of the following type of services for Georgia Tech are to be on boarded as employees, and the payments are to be routed to Payroll:
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| Foreign Student Payments |
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| Tax Implications | Student payments are reportable to the Internal Revenue Service (IRS) as non-employee compensation. This compensation will be reported on Form 1099-misc box 3 or 1042-s (non-US tax residents), where required. Students should consult a tax professional for advice and counsel to ensure these payments are reported correctly when taxes are filed. |
The student is responsible for providing sufficient information to the department to enable a determination of status. The student is also ultimately responsible for determining his/her tax liability and filing his/her individual income tax return with the IRS.
The department is responsible for determining if a student's scholarship, fellowship or other award requires services to be rendered before receipt of payment.
Accounts Payable is responsible for ensuring appropriate taxes are withheld prior to payments processed for students through Accounts Payable.
| Revision Date | Author | Description |
| 12/2020 | Accounts Payable | Updated to align with Workday |
| 04/2011 | Accounts Payable | New Policy |