RF Human Resources
The RF processes payments to fellows, however fellows are not employees of the Research Foundation because they are not performing a service for the RF.
Fellowship awards are subject to SUNY academic policies and procedures, such as the Patents and Inventions Policy.
If the terms of the award require the recipient to provide a service, the person must be appointed to the Research Foundation payroll as an employee and paid a salary or wage for the service provided.
The following forms are required to establish a Fellowship:
Participant Stipend Versus Fellowship Comparison
A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research.
Fellow (Graduate Student Fellow, Post Doctoral Fellow, etc.) is and individual who is performing independent research. If the fellow is a student this research would be part of his/her educational pursuits. This student is not required to perform any specific research project or under the direct supervision of any individual. They may seek advice or assistance from colleagues, or may collaborate with others in their particular discipline; but the final decisions of what to do, how to proceed, and in what direction the research is to travel rests with the fellow. There is no expectation of performing a service.
Employee (Research Assistant, Teaching Assistant, Post Doctoral Associate) who is performing a service for his/her university and for such services is compensated as is any other employee. Each of these types of employees is required to perform services in order to receive their compensation and each individual is subject to the control and supervision of the employer. Service refers to teaching, research, or other work that the recipient must agree to perform. Service does not include research initiated by the recipient or such incidental activities as preparing progress reports or giving a speech on the results of the recipient's research. A service is not constituted by a general condition that the recipient comply with degree requirements even though the person is required to teach or engage in research in order to obtain the degree.
*Prior to 1987, the Research Assistant stipend and Graduate Student Fellowship Award stipend were considered tax-free scholarships or fellowships by the Internal Revenue Service. The Teaching Assistant stipend was always considered taxable salary for services rendered.
In 1986, congress passed the Tax Reform Act of 1986 which, among many other things, stated, that effective January 1, 1987, Research Assistant stipends would be considered, and treated, as salary. Also, that piece of legislation changed the way fellowship stipends would be treated. Effective January 1, 1987, fellowship stipends would be considered, and treated as, taxable scholarships.
*“Stipend” is not a tax term. Stipends are payments typically given to individuals to help defray living or other costs, often under the assumption that they are not taxable. Frequently, stipends are not taxed, not because they are not subject to tax, but because they are not reported by payers to the recipient or the IRS on an information return or by the taxpayers on their tax returns.
Under U.S. tax law, the substance of a transaction determines how a payment is taxed, not the name or form of a payment. Therefore, the first task of payers is to classify the income character of a stipend based on the tax rules.