The National Academies of Sciences, Engineering, and Medicine are not able to provide tax advice to NRC Research Associates; however, 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. We strongly suggest that you review your individual tax situation with a tax advisor or an IRS representative to determine the proper tax treatment for your fellowship 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 NRC Research Associateship Programs are conducted under contract with various federal sponsors, and fellowship 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 Academies of Sciences, Engineering, and Medicine or the laboratories to which they are assigned. They are guest investigators residing in host laboratories and conducting research on topics of their own choice. Accordingly, the National Academies characterize fellowship awards under the NRC Research Associateship Programs as non-compensatory grants.
Fellowship stipends and benefits are generally taxable where:
- Amounts are used for room, board, travel, clerical help, equipment, incidental living expenses and other expenses not required for enrollment in or attendance at an educational institution;
- Amounts are given to non-degree candidates, such as post-doctoral students or researchers.
Refer to Section 117(a) of the Internal Revenue Code for additional information.
When personal services are not provided as a condition for a fellowship award, such as is the case with the NRC Research Associateship Programs, 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 a permanent resident, the National Academies will send you a Statement of Stipends Paid Memorandum by mid-March 2020. This Memorandum includes an end-of-year summary of stipend payments, contributions to health insurance made on your behalf, and all relocation and travel expenses. The National Academies will not withhold taxes or 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 by the IRS for non-compensatory scholarship or fellowship payments.
It is the responsibility of each NRC Research Associate to determine whether it is taxable and whether he or she must report it on a relevant income tax return. We strongly suggest that you review your individual tax situation with a tax advisor or an IRS representative to determine the proper tax treatment for your specific award and any obligation for payment of estimated taxes.
Reporting and Withholding Procedures for Nonresident Aliens
If you are a nonresident alien in J-1 or F-1 visa status, the National Academies are required to withhold 14% from payments made to you and on your behalf as described below, and to report that 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 paid directly by the National Academies. 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 mid-March 2020 and you should use this form to complete Form 1040-NR by June 15, 2020. 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 tax filing date of April 15, 2020 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 Leonard Blevins 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.
NRC Research Associateship Programs | 500 Fifth St. NW | Washington, DC 20001 | 202.334.2760 | email@example.com