Tax Liability and Scholarships

International Tax Liability and Scholarships

Section 117 of the Internal Revenue Code exempts all scholarships from taxation as long as the amount of the scholarship does not exceed the amount of eligible tuition charges. Any scholarship in excess of tuition is taxable to international students unless the student's country of citizenship has a tax treaty with the U.S. which exempts their scholarship from taxation. Winthrop University is required to report the excess of tuition to the IRS. Additionally, we are required to withhold 14% of the portion of scholarship that exceeds tuition and place that amount on the student's account.

International students are required to pay the 14% tax liability as soon as the charge appears on their account. Beginning early November (April for Spring terms), registration and transcript holds will be placed on all student accounts until the tax liability is paid. Balances must be under $1000 for the registration hold to be lifted. Tax liability cannot be carried over from semester to semester. Students may contact our office to set up a payment plan if needed to help them spread out the costs over several months. Please contact Student Financial Services if you would like to enroll at 803/323-2165 or e-mail us at

What if my country has a tax treaty with the United States? How do I have my tax liability waived?

International students who wish to claim the tax treaty and avoid paying the 14% tax liability can submit a W8-BEN form to the Student Financial Services office. The form must be filled out entirely and signed by the student. The form is good for 3 years from the date it was signed.

What tax return must the student file with the IRS?

International students who receive taxable income while in the United States may need to file a 1040NR or a 1040NR-EZ. The IRS describes who must file a 1040NR at and notes that international students who receive scholarships fall into one of the categories.