Office of Budget, Payroll and Fiscal Analysis

U.S. tax law divides non U.S. Citizens into residents and nonresidents for tax purposes. Residency for tax purposes is determined by the Substantial Presence Test – a complicated calculation that considers how long you have been in the U.S. and in what status. TAMIU uses Glacier to calculate the Substantial Presence Test and tax residency status for each individual.

Residents for tax purposes follow the same rules as U.S. Citizens and are taxed on world-wide income. Similar to U.S. Citizens, Residents for tax purposes are not taxed on scholarships issued by TAMIU.

Nonresidents for tax purposes follow different rules and are only taxed on U.S.-sourced income such as wages, scholarships, etc. Nonresidents for tax purposes are not eligible for many of the tax benefits available to residents for tax purposes, including the ability to use most of the tax products marketed in the U.S. and the ability to benefit from many tax credits.

The Internal Revenue Code section 1441 reads "Withholding agents must withhold federal income tax from all payments made to or on behalf of a nonresident alien."

TAMIU is the withholding agent in the quote above and will report any payments made to a nonresident alien to the IRS. Failure to comply with your tax filing responsibilities while in the U.S. could result in severe consequences including, but not limited to, revocation of your visa.

Failure to comply with U.S. tax filing requirements may result in significant consequences, including but not limited to the revocation of visa privileges, denial of visa renewal, and potential deportation. 

A scholarship is considered non-taxable when a nonresident for tax purposes uses the scholarship funds for qualified expenses. Qualified expenses are defined by the Internal Revenue Service (IRS) and include tuition and required fees.  

If a nonresident alien receives a scholarship, but the full scholarship amount is used for qualified expenses only then that scholarship is tax exempt. 

Example: an nonresident student on a J-1 visa is issued a scholarship of $2,000 in 2024. The student's tuition for that year is $2,500, and their required fees are $500. The total cost incurred by the student was $3,000, but the full scholarship was applied to their tuition and qualified fees. That means the scholarship is not taxable and the student will not be liable for any tax on that scholarship.

A scholarship/fellowship/waiver is taxable to the extent that it exceeds tuition and qualified fees. This can include, but is not limited to, expenses related to meal plans, housing, rec sports, etc.
A scholarship/fellowship/waiver is taxable regardless of whether the student receives the money in their bank account.

Taxable scholarships are subject to withholding when paid to nonresident aliens (NRA's).
The withholding tax rate is 30%. However, the withholding tax rate may be reduced to 14% if the stipend is paid to an NRA on an F-1, J-1, M-1, or Q-1 visa. Taxable scholarships are not subject to FICA withholding since the payment is not for services.

Example: A nonresident student on an F-1 visa is issued a scholarship of $10,000 in 2024. The student's tuition for that year is $6,500, and their required fees are $500. The student pays housing expenses of $3,000 and a meal plan of $500 in 2024. The total cost incurred by the student was $10,500 using $10,000 of scholarship funds and $500 out-of-pocket expenses. That means $7,000 of the scholarship amount is not taxable, and the student will be taxed on the remaining $3,000.

Scholarship Amount: $10,000
Tuition and Qualified Fees: $7,000
Taxable Scholarship Amount: $3,000
Tax Rate: 14%
Tax Owed: $420.00

Glacier is a web-based tool used by institutions to determine how to tax payments made to foreign individuals and companies. Glacier helps TAMIU collect information to calculate the substantial presence test and determine tax residency status for resident and nonresidents.

If TAMIU Bursar's Office reports a taxable scholarship/fellowship/waiver for a student, that student will receive an email from support@online-tax.net with a GLACIER User ID, temporary password, and further instructions to complete their GLACIER file.The student will be able to provide IRS required information via the Internet using the GLACIER Tax Compliance System (https://www.online-tax.net).

Failure to complete the GLACIER file as required, will cause the student's profile to default to nonresident for tax purposes during that tax year and a 1042-S will be issued.

The Form 1042-S is a tax form used to summarize taxable scholarships/fellowships/waivers issued to nonresident alien for tax purposes for a tax year. TAMIU will report taxable scholarship and the amount of federal tax withheld, if any, on Form 1042-S to the NRA student and to the IRS. Students issued a Form 1042-S are responsible for reporting these payments and with their personal income tax return at the end of the year on Form 1040-NR and any corresponding forms.

TAMIU will issue Forms 1042-S on or before the IRS deadline of March 15th.

Although Glacier and Glacier Tax Prep are owned by the same company, the two softwares are used for different purposes. TAMIU uses Glacier to track and determine tax residency status for internation students. 

Glacier Tax Prep (GTP) is a software that specializes in nonresident taxes and will help students prepare their U.S. federal tax returns using the Form 1042-S provided by TAMIU. GTP is designed for use only by individuals filing as “nonresidents” for federal tax purposes.

GLACIER Tax Prep Features:

• Form 1040-NR Filing
• Tax treaty analysis
• Form W-7 Filing
• Year-round access to the software
• Access to previous tax returns
• Your basic information saved for annual use
• An extensive FAQ, Live Q&A sessions with a GTP tax professional, tutorial videos, and a Help form where you can submit a question to get connected with support from a nonresident tax expert.