THE GRADUATE SCHOOL

The tuition portion of University fellowships and University scholarships paid directly to the student’s account is tax free, and does NOT have to be reported. If you are receiving a scholarship, the amount equal to your tuition cost is tax exempt under current regulations. Any amount which exceeds your tuition is considered taxable and needs to be reported. 

The stipend portion of the University fellowship is taxable. Follow the directions for reporting scholarship and fellowship grants as indicated in your tax return instruction booklet. It may be beneficial to obtain Publication 970, Tax Benefits for Higher Education, from the Internal Revenue Service or by calling 800-829-3676. 

Northwestern will not issue a W2 or 1099 for students receiving University fellowships unless you have requested a specific dollar amount to be withheld. In that case, only the withholding amounts will appear, not your total stipend award. It is the responsibility of the student to report appropriate stipend amounts to the Internal Revenue Service. Obtain Publication 970, Tax Benefits for Higher Education, from the IRS or by calling 800-829-3676. 

The University will not automatically withhold federal or Illinois taxes from your fellowship stipend, even if you have filed W-4 forms for federal or Illinois claiming any exemptions. You must request the Payroll Office (720 University Place, Evanston), at 847-491-7362 or askhr@northwestern.edu to withhold a specific dollar amount each month on the appropriate W-4 form.

For students paid on fellowship, students may deduct from the stipend expenses for books, supplies and equipment required for courses and required fees. For example, if you received a stipend of $4,000 and you spent $1,000 on books, you would report $3,000 on your tax return. You must be able to show appropriate documentation for these expenses if asked. 

If you are a first year student and receive a University fellowship for the academic year, you should report the amount you receive from your September, October, November, and December stipends (after you have made the allowable deductions) on that year’s federal and state tax returns. The following year, you will need to report your January through December stipends (after you have made the allowable deductions). 

Since the academic year crosses different calendar years, the W-2 will reflect earnings on a calendar-year basis. For instance, you may receive a University fellowship from September to May in your first academic year. For the first calendar year (ending that December), you would not receive a W-2 showing fellowship earnings, but the stipend you received from September to December is taxable income for that year. You then may be paid as a teaching assistant or research assistant from September to December of your second academic year.  For the second calendar year, Northwestern would issue you a W-2 reflecting only your assistantship earnings from September to December. Your fellowship stipend from the previous January through May would not be reported on your W-2, but you will need to include it, along with your assistantship earnings, in the taxable income you report to the IRS and the state of Illinois.  

You must report any funds received in the state of Illinois on an Illinois tax return, regardless of your state of residency. Visit the Illinois Department of Revenue website to obtain forms.

Illinois has reciprocal agreements with several bordering states, so you may report your income on either state’s form. In Illinois, you will be taxed only on the income received in Illinois. Report your income using state form IL-1040NR. If you are a resident of another state, please refer to that state’s tax regulations concerning your liability. The Illinois Department of Revenue website offers links to all other state revenue departments.

The tuition portion of University fellowships and University scholarships paid directly to the student’s account is tax free, and does NOT have to be reported. If you are receiving a scholarship, the amount equal to your tuition cost is tax exempt under current regulations. Any amount which exceeds your tuition is considered taxable and needs to be reported. 

The Internal Revenue Service treats assistantships differently from fellowships. You are not permitted to deduct books, supplies, or fees from the amount you report to the IRS or the state. Your entire earnings as a teaching, graduate or research assistant will be reported to the IRS and Illinois.

The University will issue a W-2. If you do not have a W-4 on file, Northwestern will treat you as single having zero exemptions. Therefore, the maximum amount allowable in taxes will be withheld.

You should complete W-4 federal and Illinois withholding forms, because the University is required to withhold taxes from your stipend checks. Federal and Illinois W-4 forms are available on the Payroll Office's website. If you do not have a W-4 on file, Northwestern will treat you as single having zero exemptions. Therefore, the maximum amount allowable in taxes will be withheld. Completed W-4s should be submitted to the Payroll Office, 1800 Sherman Ave, Evanston, telephone 847-491-7362.

Unless you are eligible for a U.S. treaty agreement, Northwestern withholds 14 percent of your fellowship stipend for federal tax purposes. Your research and teaching assistantships are taxed based on your filing status and exemptions claimed. The Payroll Office can provide you with further information and the appropriate forms for Nonresident Aliens. Payroll Office: 1800 Sherman Ave, Evanston, 847-491-7362, askhr@northwestern.edu. 

As international students receiving scholarship earnings or claiming a treaty for earned wages, you will receive a 1042-S form for the calendar year. The 1042-S forms are distributed to you by March 15 in the following calendar year. You should not file your 1040NR form with the Internal Revenue Service until you have received your 1042-S form for the year. If you are receiving assistantships earnings, you should receive a W-2. W-2 forms are distributed to you by January 31 in the following calendar year. If you do not receive one or both of these forms, contact the Payroll Office (1800 Sherman Ave, Evanston), at 847-491-7362 or askhr@northwestern.edu. 

Complete the federal form 1040NR, which includes submitting a copy of your award letter detailing the terms of your award. Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens, may be helpful. Questions concerning taxes should be directed to the IRS or by calling 800-829-3676. Questions concerning tax treaty agreements should be directed to the Payroll Office (1800 Sherman Ave, Evanston), at 847-491-7362 or askhr@northwestern.edu.