The admissions and financial aid letter you received from Kellogg that outlines your financial aid package should be kept for your records when reporting income. Students who are making the appropriate academic progress have their financial aid renewed each year. Stipends are paid in equal payments over 12 months (September through August). The first payment will be made at the end of September. Stipend payments are deposited on the last day of the month. If the last day of the month falls on a weekend, then your stipend will be available on the previous Friday. All payments are made through direct deposits into your bank account.
The Graduate School has information on financial aid and taxes posted on their Web site. The Graduate School also references some publications from the Internal Revenue Service (IRS) that discuss fellowships and taxes. There is information for US and international students.
For US citizens and permanent residents, fellowships are considered income, but you will not receive a W2 form and taxes are not withheld from your check unless you request it. You could deduct educational expenses (books/supplies, equipment required for attendance, etc. – save your receipts!) against your fellowship, so that would affect how you report your income. Beginning in year two, a portion of your stipend funding will be allocated toward teaching and research assistance. The IRS treats assistantships differently than fellowships – you are not permitted to deduct educational expenses (books/supplies, etc.) from the amount you report to the IRS. Your entire earnings as a teaching/graduate assistant or research assistant will be reported to the IRS. So TA/RA work is taxed as wages, and Northwestern will issue a W-2. Tuition is not taxable.
Because their tax status is based upon any tax treaties that may exist between the US and their home countries, there is not much guidance the PhD Program Office can provide international students. Unless you are eligible for a US treaty agreement, Northwestern withholds 14 percent federal tax and 3 percent Illinois tax from your fellowship stipend for tax purposes. International students receiving scholarship earnings or who have claimed a treaty for earned wages will receive a 1042-S for the calendar year.
Because of these complexities, all students should refer to the Graduate School’s Web site for information concerning their tax status or the following publication: Internal Revenue Service Publication 970, Tax Benefits for Higher Education. International students should also visit the Web site of the Payroll Office at Northwestern University for more information regarding taxation.
The Payroll Office at Northwestern has some helpful links with more information concerning tax treaties and other questions for nonresident aliens, such as a link to the IRS Publication 519 US Tax Guide for Alien. (.pdf)
note: Questions concerning taxes should be directed
to the IRS by calling 800-829-3676. Questions concerning tax treaty
agreements should be directed to Northwestern’s Payroll Office.
They are located at 720 University Place, 2nd Floor. The Payroll
Office can also be reached by phone at 847-491-7362. The PhD Program
Office cannot provide any tax advice other than providing direction
to the resources listed in the Web resources above.