Financial Support

2007 Tax Information and Resources

Note: The information provided below is not a substitute for professional/government tax counseling or for reading Internal Revenue Service and California Tax Board publications. The University is unable to provide tax advice to individuals.

Key Reference: Tax Benefits for Education (IRS Publication 970) http://www.irs.gov/publications/p970/index.html

Fellowship Support

The Internal Revenue Service (IRS) and the California Franchise Tax Board (FTB) consider graduate fellowships taxable income. A portion of the fellowship may be excludable from your gross income. Generally stated, fellowship support may be excludable if (1) you are a candidate for a degree at an eligible institution, and (2) you use the fellowship to pay qualified education expenses. IRS Publication 970, updated for 2007 returns, provides detailed information, http://www.irs.gov/publications/p970/index.html .
Please view the publications listed in order to receive complete instructions and regulations on the calculation of taxable fellowship income and qualified education expense tax deductions.

Visit the 1098-T web site to view your own 1098-T information that will be reported by UCSB to the IRS. The 1098-T reflects a summary of the qualified educational expenses, as well as fellowship support processed through the University system on your behalf, based on information on file at the University. This information may be of use to you in determining the qualified educational expense. In addition, the site also provides information about the Hope Scholarship and Lifetime Learning Tax Credits.

Students are advised to retain fellowship award letters, fellowship stipend information, payroll wage information, as well as receipts and documents that show the total amount of your support and qualifying educational expenses. UCSB students may refer to the "mybarc" web site, https://mybarc.ucsb.edu , for relevant data.

Note that the tax year (calendar year) and the academic year are different.
Income received during the calendar year should be reported on that year's tax return.

Domestic Graduate Students: US citizens, permanent residents, refugee, asylees, or residents for tax purposes do not have Federal or State income taxes withheld from their stipends by the University. If you are a US citizen, permanent resident, refugee, asylee, or resident for tax purposes you may have to make estimated quarterly tax payments , as needed, directly to the IRS/FTB on your stipend income. Please obtain the estimated tax publications listed below in order to assess whether or not you will need to make estimated quarterly tax payments.

International Graduate Students: The University is required to withhold federal tax at a flat 14% rate on fellowship stipends for all nonresident aliens unless the international graduate student's country of origin has a tax treaty with the United States that excludes US-sourced fellowship stipend income from US federal tax. Refer to the IRS Publication 901 on " US Tax Treaties with Other Countries".

For all international students, whether there is withholding by the University or not, U.S. fellowship stipend income is reported to the IRS on Form 1042S and to the FTB on Form 592B. The Accounting Office provides a copy of both forms to the student by mid-March.

Employment

All earnings are taxable income and are reported to both the IRS and the State of California . You should receive a W-2 form, Statement of Earnings, from the UCSB Payroll Office by January 31 st .

For annual income tax information returns issued by the University see
http://accounting.ucsb.edu/Memos/?Subject=IncomeTaxInfo08

Resources

Internal Revenue Service: 1-800-Tax-Form

U.S. Tax Forms and Publications
http://www.irs.gov/formspubs/index.html

Tax Benefits for Higher Education, IRS Publication 970
http://www.irs.gov/pub/irs-pdf/p970.pdf

Tax Withholding & Estimated Tax, IRS Publication 505
http://www.irs.gov/pub/irs-pdf/p505.pdf

Tax Guide for U.S. Citizens & Resident Aliens Abroad, IRS Publication 54
http://www.irs.gov/pub/irs-pdf/p54.pdf

Your Federal Income Tax (For Individuals), IRS Publication 17
http://www.irs.gov/pub/irs-pdf/p17.pdf

Estimated Tax for Individuals, IRS Form 1040-ES
http://www.irs.ustreas.gov/pub/irs-pdf/f1040es .

U.S. Individual Income Tax Return, IRS Form 1040
http://www.irs.gov/pub/irs-pdf/f1040.pdf

Education Credits, IRS Form 8863
http://www.irs.gov/pub/irs-pdf/f8863.pdf

Underpayment of Estimated Tax for Individuals, IRS Form 2210
http://www.irs.gov/pub/irs-pdf/f2210.pdf

California Franchise Tax Board: 1-800-852-5711

Tax Forms and Information
http://www.ftb.ca.gov/index.shtml

Guidelines for Determining Resident Status, FTB Publication 1031
http://www.ftb.ca.gov/forms/07_forms/07_1031.pdf

Instructions for Estimated Tax for Individuals, FTB Form 540-ES
http://www.ftb.ca.gov/forms/2008/08_540esins.pdf

California Resident Income Tax Return, FTB Form 540 and 540A
http://www.ftb.ca.gov/forms/07_forms/07_540bk.pdf

Additional Resources for International Students

U.S. Taxation of International Students and Scholars
http://www.irs.gov/businesses/small/international/article/0,,id=96431,00.html

U.S. Tax Guide for Aliens (IRS Publication 519)
http://www.irs.gov/publications/p519/index.html

U.S. Withholding of Tax on Nonresident Aliens and Foreign Entities (IRS Publication 515)
http://www.irs.gov/pub/irs-pdf/p515.pdf

U.S. Tax Treaties with Other Countries (IRS Publication 901)
http://www.irs.gov/publications/p901/index.html

U.S. Estimated Tax for Nonresident Alien Individuals (IRS Form 1040ES (NR)
http://www.irs.gov/pub/irs-pdf/f1040esn.pdf

U.S. Nonresident Alien Income Tax Return (IRS Form 1040-NR)
http://www.irs.gov/pub/irs-pdf/f1040nr.pdf

For Nonresident Alien Payments by UCSB
http://accounting.ucsb.edu/Memos/?Subject=AP-NRA-Payment

Disclaimer
Although every effort has been made to provide accurate information,
the University of California is not responsible for any tax liability or penalty
students may incur because of the information provided by our office.
The information we have provided is general and should not replace professional, Internal Revenue Service or State Franchise Tax Board advice and assistance.