Service Free Stipend Payments
The word 'stipend' is used in a variety of ways in the Vanderbilt community. The word stipend simply means a fixed and regular payment or allowance. A service free stipend is a form of payment whereby the person is not required to do any kind of work (past, present, or future) as a condition of receiving the payment. Service free stipends are given as a means of assisting an individual to pursue academic study or research. From a tax perspective, this type of payment to a nonresident alien is considered a scholarship subject to 14% tax with one exception. If you have a U.S. issued tax ID number (ITIN) AND you are from a country that has a tax treaty with the U.S. that allows a tax exemption on scholarship payments, you will not be subject to taxation. However, this income is reported on a 1042-S year-end form for you in the following calendar year in February. To receive this exemption, you must have completed and signed a W-8BEN form via your Glacier record with your U.S. issued tax ID number (ITIN) and provide this to the International Tax Office.
Your department representative will request Glacier access on your behalf. You will receive two emails, one from the International Tax office and the other from Glacier that will provide instructions on how to complete your Glacier record and where to send your required documents to. It is important to complete this step in order to avoid delaying your payment.
To apply for an ITIN, please read the following IRS instructions. If you will be working and receiving a stipend, you will apply for a Social Security instead of an ITIN. See SSN application instructions under Employment Topics under Wages and Salary for International Employees on the International Tax main page.