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The following is a summary of tax guidelines that pertain to National Research Council (NRC) Resident Research Associates. Although the NRC is not able to provide tax advice, the following is general information to help you comply with U.S. Internal Revenue Service requirements. As discussed below, the forms and procedures may be different depending on whether you are a U.S. citizen or nonresident alien.
It is your responsibility to determine your individual tax liability. Please note that you may be subject to state and local taxes in addition to the federal income tax discussed in this memo. We strongly suggest that you review your individual tax situation with your tax advisor or an IRS representative to determine the proper tax treatment for your award and any obligation for payment of quarterly estimated taxes. Depending on your tax status, you may be eligible for a tax refund, or, in some cases, you may owe additional taxes.
Tax Status of Awards under the NRC Research Associateship Program
The Resident Research Associateship Programs of the NRC are unique. They are conducted under contract with various federal and private sponsors, and awards are offered to selected scholars at the doctoral level on the basis of a national competition. NRC Research Associates are not employees of the National Academy of Sciences (NAS), the NRC, or the laboratories to which they are assigned. They are guest investigators residing in host laboratories and conduct research on issues of their own choice. Accordingly, the NAS characterizes fellowship awards to postdoctoral researchers under the NRC Research Associateship Program as non-compensatory grants.
When personal services are not provided as a condition for an award, the IRS generally takes the position that grant awards are not subject to social security self-employment taxes.
Reporting and Withholding Procedures for U.S. Citizens and Resident Aliens
If you are a U.S. citizen or permanent resident, the NAS will send you a Statement of Stipends Paid Memorandum by the end of February 2014. This memo includes an end-of-year summary of stipend payments, contributions to health insurance made on your behalf, and all relocation and professional travel expenses. The amount of the fellowship award that is subject to reporting will include stipends, the sponsor-paid portion of health insurance, and all travel and relocation expenses, including airfare and moving expenses paid directly by the NAS. Travel and relocation expenses are considered benefits of the award, and cannot be excluded from IRS reporting and withholding requirements. The NAS will not report fellowship award payments made to U.S. citizens and permanent residents for tax purposes on IRS form 1099-MISC, or form W2, as this is not required for non-compensatory scholarship or fellowship payments.
The NAS will not withhold any portion of payments made to or on behalf of U.S. citizens or permanent residents for tax purposes, and it is your responsibility to determine your individual tax liability. We strongly suggest that you review your individual tax situation with your tax advisor or an IRS representative to determine the proper tax treatment for your specific award and any obligation for payment of quarterly estimated taxes.
Reporting and Withholding Procedures for Nonresident Aliens
If you are a nonresident alien in J-1 or F-1 visa status, the NAS is required to withhold 14% from payments made to you and on your behalf as described below, and to report this amount to the IRS at the end of the tax year. The 14% withholding rate applies to awards paid to nonresident aliens as a scholarship or a fellowship to support study, training, or research in the United States.
The amount of the fellowship award that is subject to reporting and income tax withholding will include stipends, the sponsor paid portion of health insurance, and all travel and relocation expenses, including airfare and moving expenses paid directly by the NAS. Travel and relocation expenses are considered benefits of the award, and cannot be excluded from IRS reporting and withholding requirements. These amounts will be reported to the Internal Revenue Service (IRS) at the end of the tax year on IRS Form 1042-S.
You will be sent Form 1042-S by March 1, 2014, and you should use this form to complete Form 1040-NR by June 15, 2014. If you have spent a significant amount of time in the U.S., you may be considered a resident alien for tax purposes, and would be subject to an earlier reporting date of April 15, 2014 if you pass the IRS Substantial Presence Test. Please review the IRS website or consult a tax professional for specific regulations regarding tax requirements for nonresident aliens, including any applicable state or local taxes.
When preparing your annual income tax return, you should follow the instructions for each form. You can get forms and further information from your local IRS office or by downloading PDF files from the IRS website (www.irs.gov). Please contact Landus Robertson at firstname.lastname@example.org if you have any questions.
It is important that our office has your current mailing address and email address to ensure that the forms are delivered to you in a timely manner; please contact your Program Coordinator to provide us any updated information.