FREQUENTLY ASKED QUESTIONS

Comply with Tax Requirements FAQs

Purchases made through RFCUNY are exempt from sales and use tax in New York, New Jersey, Florida, Illinois, Missouri, Ohio, Pennsylvania, Rhode Island and Tennessee; RFCUNY is exempt from NYC Hotel Occupancy Taxes as well. 

Any individual who performed work for a company, but was not an actual employee of that company is required to complete W-9 federal income tax forms for every company for which they performed non-employee work.

Any individual who is not eligible to obtain a Social Security Number, but must furnish a taxpayer identification number must apply for an ITIN on Form W-7.

An individual is responsible for their own taxes. IRS publications 519 (U.S. Tax Guide for Aliens) and 901 (U.S. Tax Treaties) may be helpful.

A foreign student will need to file a tax return if they have income that is subject to tax, such as wages, tips, scholarships that exceed tuition and required fees, dividends, etc. The foreign student must file their tax return using a Form 1040NR, the Federal Tax Return for Nonresidents. If a foreign student has any earned income, the tax return is due by April 15. If not, the filing deadline is June 15. If a foreign student owes more tax than was withheld, the foreign student must pay what is owed by the appropriate date. If more tax than what was owed is withheld, the foreign student should file a tax return to claim a refund for the excess amount.

If the individual is a U.S. citizen, RFCUNY will not withhold taxes from a taxable scholarship or stipend. If the individual is a foreign student, the taxable portion of their award will be taxed at a rate of 14% or 30%. Some foreign students may come from countries that have a tax treaty with the U.S. and may claim exemption from U.S. taxes.

A list of treaty countries is available in IRS Publication 901. Not all treaties are the same; individuals should review their country's treaty. 

The taxable amount is calculated based on the amount of time a student has been in the U.S., the country of citizenship, visa type, and the portion of the scholarship paid to the student that should be taxable. 

U.S. tax law divides scholarships received into two parts. Scholarship that is used for tuition is not taxable, but scholarship that is used for living expenses is taxable. Expenses that are considered tuition include all tuition and fees required for enrollment, books, fees, supplies, and equipment for courses of instruction. Additional amounts, such as amounts provided for room and board or for travel expenses, are taxable.

If the individual is a U.S. citizen or a resident alien, RFCUNY will not withhold taxes on the scholarship or monthly graduate stipend. Part of the individual’s scholarship may be considered taxable income. Permanent residents are treated like U.S. citizens for tax purposes. If an individual meets the tests for residency based on Internal Revenue Service Publication 519, notify any RFCUNY staff in Key Contacts.

All amounts paid to nonresident aliens in the form of scholarships, fellowships, grants, and financial aid, which are not excludible from gross income as a "qualified scholarship" under I.R.C. 117 must be reported to the IRS, regardless of the amount paid, unless the grant is from sources outside the U.S.

IRS Publication 970, Tax Benefits for your Education, explains how these items should be reported on the tax form. The recipient should retain any receipts necessary to support their reporting position, although the receipts are not filed with the return. The recipient may or may not receive a tax form from RFCUNY (such as a W-2, 1042-S or 1099-MISC) for their taxable scholarship or stipend income. It is the recipient’s responsibility to include this income when filing their tax return.