Taxable Gift Aid
Under the Internal Revenue Code (26 U.S. Code § 1441(b)) [PDF], WVU is required to withhold tax on certain U.S.-source gift aid received by nonresident alien students. Gift aid subject to tax withholding (also referred to as "taxable gift aid") is any gift aid received by a student that exceeds the student's qualified educational expenses (as defined by the Internal Revenue Service (IRS)). Gift aid can be considered taxable even if a student does not receive a refund through their student account.
- Gift aid is any financial assistance a student receives that does not need to be repaid. Examples include (but are not limited to) scholarships, stipends, living allowances, and tuition waivers.
- Qualified education expenses for nonresident aliens are any costs mandatory to attendance at WVU. Examples include (but are not necessarily limited to) university and college tuition, university and college fees, and student health insurance. Room and board (i.e., housing and meal plans) are never considered qualified educational expenses by the IRS.
WVU refers to the tax imposed on taxable gift aid received by nonresident alien students as alien tax or "ATAX." ATAX is charged to students at one of three rates:
- Students who are not in "F," "J," "M," or "Q" nonimmigrant student status, and students who do not respond to Tax Services information requests (regardless of nonimmigrant status), will be taxed at 30%, the current maximum rate under the Internal Revenue Code.
- Students who are in "F," "J," "M," or "Q" nonimmigrant student status who provide WVU Tax Services with the required evidence of their nonimmigrant student status will be taxed at 14%.
- Students in "F," "J," "M," or "Q" nonimmigrant student status and who qualify for tax treaty benefits on gift aid through an agreement between the United States and their country of tax residence will be taxed at 0% once they have signed and returned the required tax treaty documents provided by WVU Tax Services.
WVU conducts a review of the student accounts for all international students no less than four times each calendar year (once during the spring, summer, and fall terms, as well as at calendar year end) to determine if a student has taxable gift aid subject to ATAX. If Tax Services determines that a student owes ATAX, a notification email will be sent to the student's MIX email account. The tax amount due will then be posted as a charge to the student's account.
Tax Services cannot waive ATAX charges for any reason. Students are personally responsible for any tax charges posted to their student account. If a student receives additional gift aid from their department or college to cover ATAX charges, the additional gift aid will be subject to additional ATAX charges.
The total amount of taxable gift aid a student receives in a calendar year, as well as the total ATAX assessed on the student's taxable gift aid, will be reported on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. Form 1042-S will be issued no later than March 15th of the following calendar year and should be used by the student when completing their annual U.S. income tax return. See Form 1042-S Information for additional details on Form 1042-S.
Tax Services cannot waive ATAX charges for any reason. Students are personally responsible for any tax charges posted to their student account. If a student receives additional gift aid from their department or college to cover ATAX charges, the additional gift aid will be subject to additional ATAX charges.
The total amount of taxable gift aid a student receives in a calendar year, as well as the total ATAX assessed on the student's taxable gift aid, will be reported on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. Form 1042-S will be issued no later than March 15th of the following calendar year and should be used by the student when completing their annual U.S. income tax return. See Form 1042-S Information for additional details on Form 1042-S.