Non-Compensatory Stipend Payments to Non-WVU Students

Non-compensatory stipend payments made to non-WVU students may be paid through Procurement, Contracting & Payment Services (PCPS) and charged to the following expense line item:

5010401 – Gen Exp – Awards, Educational Scholarships, Loans, Tuition & Fees

Non-compensatory payments made in this manner should be limited to non-WVU students and non-WVU employees. Non-WVU students include anyone not enrolled during the current academic term for which the payment applies.

Examples of non-compensatory stipend payments that would be paid through PCPS would include non-WVU students who are participating in summer internship and/or research opportunities where the primary beneficiary is the student with the payment being non-compensatory in nature and the primary basis for the payment is to further the individual student’s education. As a reminder, compensatory stipend payments should always be paid through the payroll system regardless of the individual’s student status.

Non-compensatory stipend payments provided to individuals as aid in their educational pursuit are considered by the IRS as potentially taxable income to the student dependent upon their individual tax situation and their related qualified educational expenses as defined by the IRS. Non-compensatory stipend payments paid through PCPS will be reported on the student’s Form 1098-T in Box 5 as gift aid if the payment was paid to an individual who was considered a non-WVU student at the time the payment was made, but who was enrolled in an academic term at some point during the calendar year and who was issued a Form 1098-T for that calendar year by the University.

For non-WVU students who were not enrolled for any academic term during the calendar year and/or for whom the University is not required to issue a Form 1098-T, the University does not have a reporting requirement in this situation and no tax documents will be issued. However, the individual student is still responsible for reporting on their personal tax return all taxable non-compensatory stipend payments received.

Non-compensatory stipend payments to any foreign national student are potentially subject to Alien Tax (“ATAX”) for those who are considered a non-resident alien for income tax purposes. Additionally, payments to foreign national individuals who are non-WVU students can be considered a violation of status depending upon the nature of the payment. Departments should contact Tax Services before awarding a non-WVU student foreign national individual a non-compensatory stipend to ensure that the individual is eligible to receive the payment without violation of their nonimmigrant status and/or to determine if the payment would be subject to ATAX.

In cases where the payment is subject to ATAX, ATAX will be withheld from the payment before it is paid to the student. Tax Services will notify the department in instances where ATAX must be withheld. If grant or donor restrictions do not permit reductions in payments for tax withholding and/or if the payment is made without the appropriate ATAX withholding, the payment amount will be grossed up and the department will be required to provide Tax Services with an alternate funding source that will be charged for the ATAX amount due.