13.31 Processing Scholarship Awards for Postdoctoral Fellows

Procedure Information

Purpose and Summary

To describe the method of processing fellowship awards for postdoctoral fellows.

NOTE: Payments to nonresident aliens are governed by policy 9.16 Payments to Nonresident Aliens, which contains detailed information about payments allowed and documentation required. Refer to policy 9.16 before payment is made to or on behalf of a nonresident alien as some visa types do not allow payments. For additional details on specific situations please contact FSO Tax Services.

Scope

This procedure applies University-wide, including Main Campus, the Arizona Health Sciences Campus, the Phoenix Biomedical Campus, and the University of Arizona-South. In addition, this policy applies to all extension off-site campus units, both domestic and international.  

Definitions

1. Postdoctoral Fellow: A person professionally working after the completion of their doctoral studies, as a part of a temporary academic appointment, in preparation for an academic faculty position.
2. Award: Generally, an amount paid or allowed to, or for the benefit of, a student at an educational institution to aid in the pursuit of his or her studies (IRS Publication 970 (2016), Tax Benefits for Education).  The Internal Revenue Code further indicates that any such payment may not represent compensation for personal services. Can also be referred to as a grant, scholarship, or stipend.

Procedures

1. Select an award recipient according to the guidelines of the award(s).
2. Prepare a disbursement voucher for each postdoctoral fellow and include the following additional information in the notes and attachment section:
   1. Total number of payments
   2. Amount of each payment
   3. Disbursement dates
   4. Total amount of all payments combined
3. Obtain appropriate departmental/college level approvals for each disbursement voucher.
4. Submit the disbursement voucher for processing.
5. Payment will be distributed via mail or ACH, as indicated by the initiator.

Frequently Asked Questions

1. Where can I find more information regarding the taxability of payments received as a postdoctoral fellow?
   Employees of the University are prohibited from acting as tax consultants or providing tax advice, however, the following is meant to provide general guidance as well as links to additional information.
   
   Postdocs receiving payments for services will be paid via payroll and are subject to payroll taxes and will not be processed as a DV. Payments not subject to automatic tax withholding may still be taxable to the recipient. For more information please see Understanding Payroll Taxes.
   1. Information regarding withholding and making estimated tax payments may be found in IRS Publication 505 – Tax Withholding and Estimated Tax.
   2. U.S. citizens and resident aliens may find guidance regarding the potential taxability of payments received in IRS Publication 970 – Tax Benefits for Education.
   3. All payments to nonresident aliens are potentially subject to withholding and are addressed in Policy 9.16 – Payments to Nonresident Aliens.
       
2. Whom can I contact if I have questions regarding processing a disbursement voucher?
   Please contact Accounts Payable at 520-621-9097 or accts_pay@fso.arizona.edu

Related Information

Policy 9.16 – Payments to Nonresident Aliens.
Policy 13.01, Introduction to Methods of Paying Students - for clarification of scholarships versus consulting fees or wages; and the appropriate method of payment.
IRS Publication 505 – Tax Withholding and Estimated Tax.
IRS Publication 515 – Withholding of Tax on Nonresident Aliens and Foreign Entities
IRS Publication 519 – U.S. Tax Guide for Aliens
IRS Publication 901 – U.S. Tax Treaties.
IRS Publication 970 – Tax Benefits for Education.