SECTION 23: Fellowship and Traineeship Appointments

The options of Percent of Tuition Charges to Pay and Percent of Fees to Pay are called Charge Based Awards.  These awards pay a percent (whole percentages only) of tuition and fee charges that are on a student's account based upon the percent indicated on the fellowship form.

Excess fellowship and scholarship funds are distributed to students just prior to the start of classes.  Students must be registered for the semester in order to be eligible for the excess funds.  The excess funds are processed either in the form of a refund check that is mailed to the student, or can be directly deposited into the student's checking or savings account.  If the student has not signed up for the direct deposit program, a refund check will be mailed.  Students can sign up for the direct deposit program in STUINFO or by contacting the Student Accounts Office- Fees, Sponsored Aid & Fellowships, 140 Administration Bldg., 355-8380.

EXAMPLE:
A Department would like to pay 100 percent of tuition and related fees for an out-of-state student.  The amount approximating the in-state portion of tuition and related fees can be charged to one account.  The amount approximating the out-of-state portion of tuition can be charged to a second account.

The department would review the costs for the student to enroll as an in-state student verses an out-of-state student.

For example:
(Rates are examples only and do not reflect current tuition rates.)

The department would then indicate on the fellowship form that for this student with out-of-state residency it would pay 51 percent of tuition and 100 percent of fees from Account A and the remainder of the student's charges would be paid from Account B.

Account A would be charged $4,794.26 ($9,400.50 x .51 = $4,794.26) and Account B would be charged $4,606.24 ($9,400.50 - $4,794.26 = $4,606.24).

To the extent that these award payments to enrolled students exceed tuition, fees and other direct educational expenses, such payments are gross income subject to taxation.  The University does not provide personal tax advice or consultation.  Individual tax questions should be directed to a personal tax advisor or the IRS.

1. U.S. Citizens and Resident Aliens

   MSU is not required to withhold tax for U.S. citizens and resident aliens.  Post Doctoral Fellowship recipients other than nonresident aliens will receive IRS Form 1099 MISC for tax reporting purposes. (However, if Post Doctoral Fellow is enrolled for any MSU courses during the calendar year, IRS Form 1098-T will be provided instead.)   Post Doctoral Fellowship Award payments should be treated by the recipients as gross income subject to taxation.  Generally, such payments do not constitute income from a trade or business and are not subject to the Self-Employment Tax (FICA for self-employed individuals).

2. Nonresident Aliens

   MSU is required to withhold income tax on fellowships awarded to nonresident aliens. Students will be asked to provide the following documents to the Student Accounts Office - Fees, Sponsored Aid & Fellowships: (1) copy of social security card; (2) completed W-4 form; (3) Tax Certification form, where applicable; and (4) Treaty form, where applicable.  Any credit balance on a student account will not be refunded to the student until the appropriate documents have been received.

   IRS Form 1042S, Foreign Person's U.S. Source Income Subject to Withholding, is issued annually to each nonresident alien fellowship recipient (including Post Doctoral Fellowship awards), whether or not the individual has taxes withheld. Form 1042S, which is issued by the Payroll Department no later than March 15, reports all award payments made during the previous calendar year.  Questions concerning information reported on Form 1042S should be addressed to the Student Accounts Office - Fees, Sponsored Aid & Fellowships, 355-8380.