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Financial Aid and the IRS



Taxable Aid

Some forms of financial aid may be considered taxable by the federal Internal Revenue Service (IRS).

Assistantships, Scholarships, and Fellowships

Under current federal law, stipend payments such as teaching and research assistantships are generally viewed as compensation for services and as such are considered by the IRS to be taxable income. However, if there is no work obligation, the stipend portion of a Georgetown University fellowship award is considered to be a “non-qualified scholarship” rather than compensation. The amount of your total scholarships and/or fellowships that exceed the cost of tuition, fees, books, supplies and equipment are generally considered by the IRS to be taxable income. U.S. recipients should consult with their personal tax advisor concerning reporting requirements they may have. Recipients who are not U.S. citizens will have taxes withheld and the amount of the award will be reported to the IRS by the University. Information can also be found in IRS publications #520 and #501. Free copies of these publications may be obtained by calling 1-800- TAX-FORM (3676) or by visiting the IRS website.

Taxable Federal Work-Study Earnings

The Federal Work-Study program provides a subsidy to the wages of participating students which improves significantly their chances of obtaining employment. Federal Work-Study paychecks are earned income and as such are subject to federal, state, and local tax withholding. Students employed under the Federal Work-Study program at Georgetown University will receive a W-2 form documenting all earnings at Georgetown (including Federal Work-Study program earnings) and students must report those earnings as income on federal, state, and local tax returns.

Tax Benefits

Provisions of the Taxpayer Relief Act of 1997 offer many tax benefits to students investing in higher education, including the Lifetime Learning Tax Credit, a deduction for student loan interest paid, more generous rules regarding withdrawals from education IRAs, and favorable treatment of employer-provided education assistance benefits. Students are encouraged to consult their tax advisors for more detailed information about eligibility for these benefits. Information is also available from the at United States Department of Education website, or from publications posted on the U.S. IRS website.