2016 Federal and State of CT Tax Treatment of Certain Payments Made by Yale University to U.S. Citizens and U.S. Resident Aliens for Tax Purposes

Type of Payment Tax Document Issued by the University7 Federal & State of CT Income Tax Withholding3 Social Security & Medicare (FICA) Tax Withholding4 Tax Treatment to Student1
Qualified Scholarship None No No Not Taxable
Graduate School Stipend (incl. Summer Study Fellowships) None No No Taxable 1,2,5
Other Stipends Form 1099-MISC No No Taxable 1,5
Postdoctoral Fellowship Form 1099-MISC No No Taxable 1,5,6
Postdoctoral Fellow Funded Healthcare Form 1099-MISC No No Taxable 5,6
Prizes and Awards Form 1099-MISC No No Taxable
Graduate Teaching Fellowship Form W-2 Yes No Taxable
Research Assistantship Form W-2 Yes No Taxable
Other Wages (Academic Year) Form W-2 Yes No Taxable
Other Wages (Summer) Form W-2 Yes Yes Taxable
  1. A scholarship or fellowship provided to a student in a degree granting program is generally taxable.  If you are a candidate for a degree, however, you can exclude from taxable income, that part of the award used to pay the costs of tuition, required fees, books, equipment and supplies (required fees, books, equipment and supplies are limited to those specifically required of all students in a course).  You cannot exclude from taxable income, any part of the grant used for other purposes, such as room and board.  Please refer to IRS Publication 970, Tax Benefits for Education, Chapter 1, Scholarships, Fellowships, Grants and Tuition Reductions and the IRS web page for students, Student’s Page - Higher Education.
  2. Graduate School stipends are generally taxable to the recipient (see footnote (1), above). The fact that the University is not required to report the stipend on a federal or state Form 1099 or W-2 does NOT relieve the recipient from the obligation of reporting these amounts on his/her individual income tax returns and paying the tax liability on the taxable portion of the stipend. The amount of the stipend is reported on your final pay stub for the calendar year. This information can also be obtained from your business office.
  3. Federal Income Tax (FIT):  Federal income tax is withheld at a graduated rate based on your Form W-4 filed with the Payroll Office.  In addition to the Form W-4 instructions, the IRS provides a withholding calculator tool in order to assist you in determining the appropriate amount of federal income tax withholding. State Income Tax (SIT): State of CT income tax withholding is based on your Form CT W-4 filed with the Payroll Office. Please refer to the instructions to the form for guidance with respect to completing this form. For further guidance, refer to Connecticut IP 2016(7), “Is My Connecticut Withholding Correct?”. Note: Your current W-4 and CT W-4 statuses are included on your Statement of Earnings and Deductions (i.e., your weekly or semi-monthly paystub).  You can change the W-4 and CT W-4 withholding status prospectively by completing and submitting new forms to the Payroll Office.
  4. Social Security and Medicare (FICA) Tax: FICA tax is withheld at a combined tax rate of 7.65% (6.2% social security and 1.45% Medicare) subject to certain thresholds. Payments for services performed by an undergraduate, graduate or professional school student who is enrolled at the University at least half time during an academic term are generally exempt from FICA tax.
  5. Estimated Tax Payments: You may be required to make federal and/or state quarterly estimated income tax payments. Please refer to the federal quarterly estimated tax payments and State of Connecticut quarterly estimated tax payments sections of this site for the payment requirements.
  6. Note: Postdoctoral fellowships and postdoctoral fellow funded healthcare are not wages and, therefore, are not subject to FICA tax.  Although these payments are generally taxable, they are not considered income from a trade or business and, thus, do not constitute net earnings from self employment. Accordingly, these payments are not subject to the corresponding FICA tax imposed on self employment income.
  7. Note: If you are a U.S. resident alien for tax purposes and you have claimed a reduced rate of withholding through the University pursuant to a tax treaty for the calendar year 2016, the University will issue you a Form 1042-S which may be in addition to or in lieu of the tax documents listed above.  The Form 1042-S must be submitted with your individual income tax return. If you have any questions, please contact internationaltax@yale.edu.