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Use IRS form 1040-ES to determine 2007 tax liability

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Title: Use IRS form 1040-ES to determine 2007 tax liability


1
FELLOWSHIP TAX INFORMATION
2
Tax-Free Fellowships
  • US Persons- Fellowships are tax free only if
  • You are a candidate for a degree at an eligible
    educational institution, and
  • You use the fellowship to pay qualified education
    expenses.
  • Nonresident aliens Taxable at 14 unless from a
    Tax Treaty country.

3
Qualified Education Expenses
  • Expenses for US Persons
  • Tuition and fees required to enroll at or attend
    the eligible institution, and
  • Course-related expenses, such as fees, books,
    supplies, and equipment that are required for all
    students in your course of study.

4
Non-qualifying Expenses-US Persons
  • Expenses that do not qualify
  • Room and board,
  • Travel,
  • Research,
  • Clerical help, or
  • Equipment or other expenses not required for
    enrollment.

5
Fellowship Chart-US Persons
6
Fellowship Worksheet-US
7
Example 1
  • You received a fellowship of 10,000. You are
    not a candidate for a degree. The 10,000 you
    received is taxable.

8
Example 2
  • You receive a fellowship for 10,000 and a 2,000
    scholarship required to be used for room and
    board. You are a candidate for a degree at an
    eligible educational institution. Tuition,
    books, and other required fees total 8,000.

9
Example 2 cont
  • 1. Total Scholarship/Fellowship 12,000
  • 2. Amt. paid for teaching, etc. 0
  • 3. Subtract line 2 from 1 12,000
  • 4. Amt. required for non-qualified exp. 2,000
  • 5. Subtract 4 from 3 10,000
  • 6. Amount used for qualified ed. exp 8,000
  • 7. Subtract 6 from 5 2,000
  • 8. Taxable Part Add 2,4, and 7. 4,000
  • ______________ _______ __

10
Reporting Requirements
  • For US persons, it is the taxpayers
    responsibility to report taxable fellowships.
  • Fellowship statement
  • For Nonresident Aliens, it is the responsibility
    of Purdue to report taxable and nontaxable
    amounts of fellowships.
  • 1042S that you print from Glacier

11
Example of Fellowship Statement
  • To Purdue Pete SS 111-11-1111
  • Department Aero and Astro Engineering
  • From Tax Department
  • Subject FELLOWSHIP PAYMENTS
  • For your information, you were paid a total of
    1,869.00 as a fellowship by Purdue University
    during calendar year 2007. This amount has not
    been reported on Form W-2, Wage and Tax
    Statement.

12
Federal Estimated Tax Payments
  • US persons - Required if owe 1,000 in taxes and
    the amount you have withheld is less than the
    smaller of
  • 90 of taxes shown on your 2007 tax return, or
  • The tax shown on your 2006 return.
  • Use IRS form 1040-ES to determine 2007 tax
    liability

13
Federal Estimated Tax Payments cont.
  • Nonresident Aliens Purdue will withhold taxes
    from fellowship, if required, at the rate of 14
  • The actual amount of taxed owed on the fellowship
    may differ from the 14 and will be determined
    based on all income reported on the 1040NR
    Federal Tax Return

14
State and County Tax
  • State and County Taxes apply to the taxable
    amount of any fellowship
  • For information on making estimated payments,
    refer to the Indiana Department of Revenue
    website
  • http//www.in.gov/dor/individual/estimated.html

15
Glacier for Non-Resident Aliens
  • Your Business Office will set-up a Glacier
    account for you.
  • You will receive an email from support_at_online-tax.
    net with your login instructions.
  • Log into Glacier and key in your immigration
    information and details of prior visits to the US.

16
Glacier cont.
  • Glacier will determine the taxability of your
    fellowship.
  • Print out from Glacier your
  • Tax Summary Report
  • Required IRS tax forms
  • Mail or deliver above forms and copies of
    required immigration documents to Trent Watkins
    in Freehafer Hall.

17
Helpful Websites
  • Publication 970 - http//www.irs.gov/publications/
    p970/index.html
  • Form 1040-ES Estimated Tax Payment Instructions
  • http//www.irs.gov/pub/irs-pdf/f1040es.pdf
  • IRS Websites Frequently Asked Questions
  • http//www.irs.gov/faqs/faq9-3.html

18
Contact Information
  • Lauren Lacy
  • (765) 494-1697
  • lemaxwell_at_purdue.edu
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