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Tax Information for Postdoctoral Fellows

Postdoctoral fellows (PDFs) receive monthly fellowship payments.  PDFs are not University employees, do not perform services for the University, are not paid wages by the University, and will not receive a Form W-2 reporting their fellowships. 

Unless the PDF is a non-resident alien (NRA), the University generally does not have withholding or reporting requirements for fellowship payments or health insurance payments made to or on behalf of PDFs.  However, such payments may constitute income under Federal and State laws.  In accordance with IRS Notice 87-31 it is ultimately the PDFs’ responsibility to determine the taxability of their fellowship.  The University recommends that PDFs refer to IRS Publication 970, Tax Benefits for Education and consult with their individual tax advisor regarding reporting requirements for these payments.  Additionally, PDFs should be advised that they might be required to pay quarterly estimated taxes.  The University recommends that PDFs contact their tax consultants for additional guidance.

Non-resident Alien Postdoctoral Fellows

The University is required to report fellowship payments paid to PDF NRAs on IRS Form 1042-S. In addition, the University is required to report health insurance payments made to or on behalf of NRAs as income on IRS Form 1042-S.  These amounts may be subject to Federal and State tax withholdings at varying rates depending on the facts and circumstances. 

Depending on the situation, tax treaties may apply to fellowship payments.  Therefore, the fellowship federal withholding rate may be 0%, 14% or 30% and the Illinois state withholding rate may be 0% or 3.75%.  Generally, PDFs on a J-1 and F-1 visa will be subject to 14% federal and 3.75% state withholding.  PDFs on other visas are typically subject to 30% federal and 3.75% state withholding.  For additional information on tax treaties, please refer to IRS Publication 901, U.S. Tax Treaties

IRS Publication 519, U.S. Tax Guide for Aliens is also a helpful resource.