Scholarships and allowances from Yale may have tax implications for international students as determined by the Internal Revenue Service (IRS) of the United States.
The U.S. government considers the amount of scholarship you receive in excess of tuition as taxable income. This means that Yale may be required to withhold up to 14% of the amount of your scholarship that exceeds the amount of tuition. The withholding amount depends on your tax status and whether the U.S. has a tax treaty with your home country. By federal guidelines, both scholarships (such as Yale Scholarship) and allowances (such as the International Travel Allowance) are considered scholarships.
In cases where this tax withholding is required, you will see the taxes withheld appear as a charge on your monthly eBill-ePay statement. For students with a qualifying tax status, Student Financial Services will also revise your financial aid award to show the additional expense of this tax withholding in your Cost of Attendance, and will increase the scholarship portion of your first-year financial aid package accordingly to offset this tax expense. These revisions will be completed when the tax is reflected on your account—once in the fall and once in the spring.
Because the International Tax Office on campus determines each individual’s tax status, it is important that all students who will receive financial aid complete the required tax paperwork with them. For more information, visit Yale’s International Tax Office website or contact Daysi Cardona in the tax office.
When spring comes, you will need to submit a nonresident tax return by April 15 in order to receive a refund of tax withheld from the Internal Revenue Service (IRS). The Office of International Student and Scholars (OISS) can assist with this process. For more information about filing a U.S. tax return, visit the OISS Personal Taxes website.
For students who qualify for the scholarship adjustment to cover U.S. tax withholding, remember that this adjustment happens in your first year only. You must reserve and put aside the funds you receive in your tax refund, because you will need those funds to offset or pay the tax withholding from your sophomore year aid award. Each year you will be responsible for filing taxes and saving your refund to help cover taxes in the following year.
We know that the tax situation for international students can be confusing. If you have any questions about U.S. taxes and your financial aid award, please do not hesitate to contact us.