(PARTICIPANT SUPPORT /STUDENT FINANCIAL ASSISTANCE / SCHOLARSHIPS / FELLOWSHIPS)
For the purpose of sponsored programs at TUC and CSUN, the term "Stipend" is used to describe a payment to a CSUN Student or to a Non-CSUN Student for class participation and/or general support as aid in the pursuit of their studies.
Sponsoring agencies and faculty commonly use the terms "Stipend" or Participant Support" to describe this student financial assistance. Federal and State tax regulations do not define the term 'stipend' but use the terms 'scholarship' and 'fellowship':
A scholarship generally is an amount paid for the benefit of a student at an educational institution to aid in the pursuit of studies. The student may be in either a graduate or an undergraduate program.
A fellowship grant generally is an amount paid for the benefit of an individual to aid in the pursuit of study or research.
Note: The term "stipend" is sometimes misused to describe minor payments for services. However, these payments constitute an employer relationship and are considered taxable wages.
2. CONDITIONAL STIPENDS
The amount awarded by the stipend, either in total or incrementally, is not performance-based and generally cannot be adjusted or suspended by the PI as a result of performance.
However, stipends may have accompanying terms and conditions and the stipend may be gradually adjusted or completely suspended by the PI if those terms and conditions are not met. Terms and conditions may include enrollment in a particular degree program, participation in program activities, or maintaining a minimum Grade Point Average. Any such terms and conditions will generally be stipulated in the award agreement issued by the sponsor; it is the PI’s responsibility to convey such stipend terms and conditions/stipulations to the student/stipend recipient.
3. STIPENDS VS. WAGES
A stipend payment can only be used for training and educational purposes related to a sponsored program. A stipend cannot be used to pay an individual for work or services performed, or as incentive pay.
In some instances the stipend recipient may be required to attend certain classes or perform certain activities, as a condition of receiving the stipend. These can still be considered stipends and not considered services (wages), as long as the (educational) benefit of the activities lays clearly with the recipient and the paying institution does not derive any benefit from the activities.
No 'Quid Pro Quo':
Stipends cannot be paid for any services rendered. Any amount paid for a service rendered is considered a "wage" under the IRS regulations and must therefore be processed and taxed as a salary or wage. This includes payment for teaching, research or other services rendered as a condition for receiving the scholarship or tuition reduction. These payments are considered compensation even if the services are a condition of receiving the grant or are required of all candidates for the degree.
It is the responsibility of the Principal Investigator to ensure that the payment requested constitutes a true 'stipend' payment and is not a taxable fee for service.
Stipends are requested through the Principal Investigator or authorized signer, approved by TUC's Financial Services and Sponsored Programs departments, processed through TUC's Financial Services Department and reported to CSUN Financial Aid.
a) Request Form
Payments of stipends are requested by completing the Check Request Form, attaching the required supporting documentation and sending them to The University Corporation.
b) Required Supporting Documentation
- Payment requests for stipends require the following supporting documentation to be submitted with the Check Request:
Stipends to CSUN Students
- Copy of the student's CSUN I.D. card
Proof of Enrollment at CSUN via one of the following:
- CSUN 'Sims' query advisement report
- Class schedule from the CSUN web service portal
- Class schedule from the self-service study list
Stipends to Non-CSUN Students
Stipends to Students at the Tseng College of Extended Learning
- Same as CSUN Students
- (Note: Students of the Tseng College of Extended Learning are considered regular CSUN students. Depending on the program they are enrolled in, only few of the student's financial aid may be affected by the reporting of stipends. As a consequence, The University Corporation will report all stipends of Extended Learning students to the CSUN Financial Aid Office.)
Stipends to Minors
- Parental Informed Consent, Waiver & Release
Statement of Participation
c) Approval TUC-Financial Services
TUC's Financial Services Dept. approves the payment request based on the completeness and correctness of the Check Request form and the supporting documentation.
d) Approval TUC-SP
TUC's Sponsored Programs Dept. approves the payment request based on the allowability of the expenses, the timeframe of expenses within the project period and the availability of funds in the budget,
e) Processing TUC-Financial Services
TUC's Financial Services Dept. processes the payment request and generates the checks to the recipients.
f) Distribution of Stipend Checks to Recipients
In order to prevent fraud, stipend checks are generally distributed directly to the recipients, only. Stipend checks are held at TUC's front desk for pick-up. Recipients must come to The University Corporation, identify themselves with a government issued ID and sign for the receipt of the check. If explicitly requested by the Principal Investigator, stipend checks may be mailed to the recipients.
In a few exceptional circumstances, Principal Investigators or their designees may pick up the checks at The University Corporation and deliver them to the recipients directly. The University Corporation will then provide the Principal Investigator with the checks and a sign-off sheet. Before handing the check to the recipient, it is the responsibility of the Principal Investigator to verify the identity of the recipient via a government issued ID and have the recipient sign the sign-off sheet. The completed sign-off sheet must be returned to The University Corporation. The Principal Investigator assumes full responsibility that the checks are delivered to the recipients of the stipends.
g) Reporting to CSUN Financial Aid
On a monthly basis, TUC Financial Services Dept. will report stipend payments made to CSUN Students to the CSUN Financial Aid Dept. CSUN Financial Aid will then determine, if the stipend payments will impact students financial aid.
h) Reporting to IRS
The University Corporation will report any stipend payments made to Non-CSUN students as taxable income on form 1099-MISC.
i) Stipends to Non-Resident Aliens
Depending on their country of origin, their visa type and their length of stay, non-resident aliens may be subject to tax withholding and tax reporting. Prior to any payments, all non-resident aliens must complete a 'Glacier' tax assessment at TUC to determine their tax status. TUC may report a form 1042S to the IRS for these payments.
The material contained herein is for informational purposes only and does not constitute tax advice. Stipend recipients should consult with their own tax advisor or attorney with regard to their personal tax situation.
Responsibility to Determine Taxability
It is the recipient's responsibility to determine whether a stipend in whole or in part must be included as gross income under the Internal Revenue Service (IRS) Code section 117. The University Corporation will, but is legally not responsible to report any scholarship, fellowship, grant or stipend on Form 1099-MISC.
A scholarship, fellowship, or stipend, in all or part may be taxable, even if the recipient did not receive a W-2 or 1099-MISC form.
Generally the entire amount is taxable if the recipient is not a candidate for a degree.
- Qualified Educational Expenses
- If the recipient is a candidate for a degree, he/she generally can exclude from income that part of the stipend used for:
- fees required for enrollment
- books, supplies and equipment required for courses
- other expenses required for enrollment or attendance
- Non-Qualified Expenses
- The recipient cannot exclude from income any part of the stipend not required by the institution and used for other purposes, such as:
- living allowances
- non-required supplies (computers, etc)
- clerical assistance
Services vs. Stipends
Exemptions from income does not apply to any amount which represents payment for teaching, research or other services rendered as a condition for receiving the scholarship or tuition reduction. Any payment for services are considered compensation and are not excludable from gross income under Section 117.
This rule applies even if the services are a condition of receiving the grant or are required of all candidates for the degree.
In some instances the stipend recipient may be required to attend certain classes or perform certain activities, as a condition of receiving the stipend. These are not considered services, as long as the (educational) benefit of the activities lays clearly with the recipient and the paying institution does not derive any benefit from the activities.
Reporting to IRS
The University Corporation will report any non-exempt stipends to you as taxable wage on Form W-2 (if you are an employee of the Corporation) or on form 1099-MISC (if you are not an employee of the Corporation)
Taxation of Non-Resident Aliens
The above requirements and exclusion pertain equally to U.S. citizens, resident aliens and non-resident aliens. However, the tax reporting requirements for non-resident aliens may be different. The unqualified portion is subject to withholding and reporting for nonresident aliens (unless a tax treaty benefit is available). Any direct payments for stipends to non-resident aliens are subject to withholding and reporting.
Stipends to Non-CSUN Students
Stipends to non-CSUN students will be reported on IRS form 1099-MISC
Stipends to Minors
Stipends to minors will be reported on IRS form 1099-MISC
Questions / Tax Advice
If you have any questions regarding the taxable portion you will need to consult a tax professional, as The University Corporation cannot extend tax advice.
Further Tax Information
For additional information please refer to IRS Publication 970, Tax Benefits for Education, section 1.