The Internal Revenue Service (IRS) and the California Franchise Tax Board (FTB) consider graduate fellowships taxable income. A portion of the fellowship may be excludable from your gross income. Generally stated, fellowship support may be excludable if (1) you are a candidate for a degree at an eligible institution, and (2) you use the fellowship to pay qualified education expenses. IRS Publication 970 provides detailed information

Please view the publications listed in order to receive complete instructions and regulations on the calculation of taxable fellowship income and qualified education expense tax deductions.

Form 1098-T

For information on form 1098-T, including how to get a copy of your 1098-T, please visit the Business and Financial Services Website FAQ page (1098-T FAQs) and navigate to the “Tax Information” section.  The 1098-T reflects a summary of the qualified educational expenses, as well as fellowship support processed through the University system on your behalf, based on information on file at the University. This information may be of use to you in determining the qualified educational expense. In addition, the site also provides information about the  American opportunity tax credit (AOTC) and the lifetime learning credit (LLC).

Students are advised to retain fellowship award letters, fellowship stipend information, payroll wage information, as well as receipts and documents that show the total amount of your support and qualifying educational expenses. UCSB students may log in to BARC for relevant data.

Note that the tax year (calendar year) and the academic year are different. Income received during the calendar year should be reported on that year's tax return.

Domestic Graduate Students

US citizens, permanent residents, refugee, asylees, or residents for tax purposes do not have Federal or State income taxes withheld from their stipends by the University.

If you are a US citizen, permanent resident, refugee, asylee, or resident for tax purposes you may have to make estimated quarterly tax payments, as needed, directly to the IRS/FTB on your stipend income.

Please obtain the estimated tax publications in order to assess whether or not you will need to make estimated quarterly tax payments.

International Graduate Students

The University is required to withhold federal tax at a flat 14 percent rate on fellowship stipends for all nonresident aliens unless the international graduate student's country of origin has a tax treaty with the United States that excludes US-sourced fellowship stipend income from the mandatory withholding. Refer to the IRS Publication 901 on "US Tax Treaties with Other Countries."

For all international students, whether there is withholding by the University or not, U.S. fellowship stipend income is reported to the IRS on Form 1042S. The Business & Financial Services Office provides a copy of this form to the student by mid-March. 

For additional information and resources, please visit the 
Office of International Students & Scholars related webpage.

The Graduate Student Resource Center has also put together
a tax information resource page for international students.