Financial Services Manual (FIN)

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Effective: 11/1/2000

Revised: 9/12/2012

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FIN 422–03: Postdoctoral Fellow Financial Support

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Purpose

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To describe the payment of postdoctoral fellow financial support

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Sources

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Internal Revenue Service
University policy

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Policy

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Support payments made from National Institute of Health (NIH) through National Research Service Awards (NRSA) grants to postdoctoral individuals have been officially determined by the IRS to be nonwage payments. Unless an IRS ruling has been obtained, all other payments to postdoctoral individuals from grant sources are treated as employee payments and are paid through the payroll system.

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Procedure

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Only payments from sponsored accounts can be processed against the 7750 expenditure object code. In most instances only those payments to postdoctoral fellows who are NIH NRSA grant recipients can be coded to these accounts.


Expenditure Coding

All noncompensatory postdoctoral financial support is paid on an object/sub-object code starting with 7750. Noncompensatory postdoctoral financial support is permitted only on a NIH National Research Service Award.


Income Tax Considerations

All awards, scholarships, fellowships, grants, and stipends to postdoctoral individuals for which no services are required as a result of the payment are taxable nonemployee income to the recipient.

Additional information on the taxability of scholarships can be obtained from the following IRS publications:

  1. Publication 4—Student’s Guide to Federal Income Tax
  2. Publication 520—Scholarships and Fellowships

These publications can be obtained from the Internal Revenue Service through a toll free number, 1–800–827–FORM, or on the Web at www.irs.ustreas.gov/prod/forms_pubs/index.html.


Additional Guidance and Requirements

For additional guidance on university and IRS requirements relating to fellowships, scholarships and student cash awards, access the Financial Services Web site.


Payments to Nonresident Aliens

The university is required to either withhold taxes or determine that a tax treaty exists for all noncompensatory postdoctoral financial payments paid to a nonresident alien. In these instances, the payment request and documentation relating to the payment must be forwarded to the tax management area of Financial Services (Tax Compliance Issues & Guideance) for computation of the necessary tax withholding. If the individual is a resident of a country that has a tax treaty with the United States, he or she may be able to qualify for exemption from withholding. Questions regarding the availability of these benefits can be directed to the tax area within Financial Services at 480/965–8479 or 480/965–0108.

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Cross-Reference

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For more information, see FIN 425–05, “Student Financial Support Payments to Nonresident Aliens.”

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