Participant stipends are payments for participation in vocational training, secondary school training, and other nonacademic programs. It is not related to an academic endeavor. There is no real wage, just the expectation that the participant be present at some event.
Taxation
Participant stipends are considered compensation, and are reportable and taxable under IRS regulations.
US Citizens, Permanent Residents, and Resident Alien
Participant stipend payments made to US Citizens, Permanent Residents and Resident Aliens are reported as Other Income on IRS Form 1099-MISC.
Nonresident Aliens
Participant stipend payments paid to Nonresident Aliens are subject to tax withholding at a rate of 30 percent based on Section 144(b) of the Internal Revenue Code unless they qualify for the foreign source exemption (see below).
Funds from Foreign Source
When examining a nonresident alien or participant stipend, if the source of the funds is outside the U.S., the payment is not subject to U.S. federal income taxation. The Research Foundation is not required to withhold federal income tax or report the payment to the Internal Revenue Service.
According to the Internal Revenue Service regulations, the source of funding is determined by the residence of the payer. So, for example, if the money for payment originates from a sponsor in France, then it is considered foreign source funding and not taxable. The fact that the Research Foundation facilitates the payment of the funds does not make the source of funds the U.S.
Other Documentation
It is the responsibility of the Project Director to maintain any other documentation as may be required by the sponsoring agency.
Forms required:
Participant Stipend Form (required for all participant stipend payments)
Nonresident Alien Participant Stipend Tax Exemption Certificate (required for Nonresident Aliens paid with funding from a foreign source)
