If you have been awarded a scholarship from sources in the United States, including the University of Northern Iowa, please read this important communication about U.S. tax law.
Pursuant to U.S. tax law, the total of scholarships you receive from US sources that exceed tuition and required fees, books, equipment, and supplies are taxable. If the scholarship recipient is not employed, UNI may further reduce the taxable amount of the scholarship by the Internal Revenue Service (IRS) personal exemption amount ( $3900 in 2013). Any remaining taxable amount would result in UNI having to reduce that portion of your cumulative award that exceeds tuition and mandatory fees by a 14% tax charge on your U-bill labeled “1042-s tax withholding.”
However, certain countries have treaties with the U.S. under which you may avoid this tax withholding. You are eligible to claim a tax treaty benefit if you are a non-resident alien, present in the U.S. on a F-1 or J-1 visa, and were a resident of one the following countries immediately preceding your arrival in the U.S.:
- China (does not include residents of Hong Kong or Taiwan)
- Czech Republic
- Korea, South
- Slovak Republic
- Trinidad & Tobago
*Note: Commonwealth of Independent States (C.I.S.)countries include Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan and Uzbekistan.
Thus, if you receive a scholarship or several scholarships that together exceed tuition and mandatory fees, and you are from one of the countries listed above you may be eligible for tax treaty benefits. You will need first to secure either a US Social Security Number or Individual Taxpayer Identification Number (ITIN) to request treaty benefits. You can only secure a Social Security Number if you have an offer of employment from the University of Northern Iowa or from an approved provider of internships. If you do not have a Social Security Number and are not planning to seek employment while studying at UNI, you should apply for an ITIN. To request a Social Security Number, please complete a Social Security Administration SS-5 Form available online at http://ssa.gov/online/ss-5.pdf, and send it to Mr. Ross Schupbach, International Students and Scholars Office, 113 Maucker Union, University of Northern Iowa, Cedar Falls, IA 50614. To request an ITIN, please contact Mr. Ross Schupbach at the above address or firstname.lastname@example.org to obtain a letter stating that you will not be securing employment in the U.S. or receiving any type of income from personal services. You will then make an appointment with Linda Gruetzmacher at email@example.com, 103 Gilchrist Hall, for assistance in completing IRS Form W-7 (Application for IRS Individual Taxpayer Identification Number). You may obtain this form online at http://www.irs.gov/pub/irs-pdf/fw7.pdf to submit it to the IRS yourself but it will require also sending in your documents such as a passport. It is recommended you make an appointment with Linda Gruetzmacher to apply for an ITIN. The IRS ITIN office timeline for issuing an ITIN is approximately 8 weeks. The ITIN application process is not a guarantee of the issuance of an ITIN as it is not unusual for there to be delays or rejections of applications. Any questions about securing a Social Security Number or an Individual Taxpayer Identification Number should be addressed to Mr. Schupbach at firstname.lastname@example.org or 319-273-6421, questions about applying for an ITIN should be addressed to Linda Gruetzmacher at email@example.com
Once you have secured a Social Security Number or an Individual Taxpayer Identification Number, you will need to complete the IRS Form W-8BEN available on-line at http://www.irs.gov/pub/irs-pdf/fw8ben.pdf.
Complete the following fields on Part I of the form:
Field 1- Enter your full name
Field 2- Enter N/A
Field 3- Check Individual
Field 4- Enter your permanent address in your country of residence
Field 5- Enter your U.S. address
Field 6- Enter your Social Security NumberORIndividual Taxpayer Identification Number (ITIN)(required to claim a tax treaty)
Complete the following fields onPart II of the form:
Field 9a- Check the box and enter your country of residence
Field 9b- Check the box
Complete Certification section in Part IV:
Read certification statement.
Sign and date the form.
Send the completed W-8BEN to Linda Gruetzmacher in the Office of Business Operations, 103 Gilchrist Hall, University of Northern Iowa, Cedar Falls, Iowa 50614-0008. After receiving your properly completed form, your scholarship payments will be exempt from tax withholding.