14.3. FOREIGN RECIPIENT TAXATION

A. Determining Funding Source

Scholarships/fellowships for foreign recipients can be considered U.S. sourced or non-U.S. sourced. The payment for a foreign recipient will be considered non-U.S. sourced if one of the following applies:

• The location of the activity is outside the U.S.
• The funds originate from a foreign third party who also selects the recipient.

B. U.S. Taxation

For foreign recipients, the following information applies to taxation of scholarship/fellowship income by the U.S.:

• U.S. sourced funding is taxable income.
• Non-U.S. sourced funding is not taxable income.

For more information concerning the reporting of scholarship taxes, see the Handbook of Business Procedures 14.5. Taxes.

Part 14. Scholarships, Fellowships, and Cash Prizes - Table of Contents