School of Ocean and Earth Science and Technology

SOEST Fiscal Services

Stipends



Stipend General Information and FAQ's

Overview
Stipend Processing
Tax Treatment of Scholarships/Fellowships

STIPEND OVERVIEW

Postdoc Stipend Recipient
The National Postdoctoral Association defines Post-Doctoral Scholar as follows: "A Postdoctoral Scholar (postdoc) is an individual holding a doctoral degree who is engaged in a temporary period of mentored research and/or scholarly training for the purpose of acquiring the professional skills needed to pursue a career path of his or her choosing. Postdoctoral appointees can pursue basic, clinical or translational projects so long as their primary effort is devoted toward their own scholarship. Postdocs are essential to the scholarly mission of the mentor and host institution, and thus are expected to have the freedom to publish the results of scholarship."

Postdocs are awarded a stipend to offset the cost of living expenses. All Postdoc expenses, including but not limited to, travel expenditures, purchase of supplies, and equipment may be reimbursed, but may be reportable. Stipend payments to Postdoc Fellows are considered a scholarship/fellowship and are classified as Non-Service Financial Assistance (NSFA) to individuals.

More information can be obtained through your FA.


Q: What is a stipend?
A: A stipend is a payment in the form of a scholarship/fellowship with no service obligation. It is not wages.

Q: What is the minimum and maximum stipend amounts for Postdoc stipend recipients?
A: Minimum stipend for SOEST Postdoc/Trainee is $55,000/year. Maximum stipend for SOEST Postdoc/Trainee is $60,000/year.
This level of support can be provided from all sources: Government, Personal, Grants, etc. These sources may be combined.

Q: I would like to offer a Postdoc fellow a stipend amount above the maximum, is this possible?
A: Yes it is possible; however, approval is required. Please see sample letter for an example. Please contact your FA should you need assistance.

Sample Letter for Stipend Approval

Q: I plan to budget a Post Doc stipend recipient in my proposal, is there anything to consider?
A: In your proposal you should not list this expense under payroll as that would give the impression that UH is hiring these fellows (currently the only exception is with NSF proposals, who would like to see the stipend costs under personnel). In your budget justification you should refrain from using the words "hiring," "employing," or "pay" or any similar forms of these words, as UH is not hiring the Postdocs. As a non-employee, the Postdoc is responsible for paying for and obtaining their own fringe benefits such as medical, and is responsible for their own taxes, however, if you want to offset their costs, you can estimate how much it would cost them and include that as part of their stipend payment.

In addition, these scholarship and fellowship payments are exempt from Indirect Costs, and should not be included in the Modified Total Direct Cost (MTDC) base when calculating Indirect Costs.


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PROCESSING STIPEND PAYMENTS

Q: How do I process a payment to a stipend recipient?
A: All Non-Qualified Scholarship/Fellowship payments must be processed in KFS using the Disbursement Voucher (DV) eDoc.

Q: What is the proper way to label the DV eDoc?
A: It is UH's business practice to begin the DESCRIPTION with a 3 digit FA code, followed by a short description of the document. In the EXPLANATION field, please enter an expanded description of the document. Please see below for an example:

Description - 017 Stipend Doe, John
Explanation - Monthly Stipend Payment, October 2015

Please visit the following link for available training material on processing a Disbursement Voucher document:
http://www.fmo.hawaii.edu/financial_systems/docs/Creating_a_Disbursement_Voucher.pdf

Q: What is the Grant-in-Aid Tab?
A: The Grant-in-Aid tab is a new tab on the Disbursement Voucher eDoc. It is designed to help you classify the payment, and helps with selecting the appropriate object code for the payment.

Please see the following link for more information:
http://www.fmo.hawaii.edu/tax_services/index.html#tab10


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TAX TREATMENT OF SCHOLARSHIPS/FELLOWSHIPS

Tax Withholding/Reporting
Depending on the classification of the scholarship/fellowship payment and the residency status of the payee, the stipend payment may be subject to tax withholding and tax reporting. Please see links below for more information:

Grant-in-Aid Tab for Scholarship/Fellowship Payment Process - Part 1 (Tax)

AP 8.561: Tax Treatment of Non-Service Financial Assistance for Individuals


Q: What is the difference between a Qualified Scholarship/Fellowship and a Non-Qualified Scholarship/Fellowship?
A: A qualified scholarship is not considered income to a recipient, and no reporting or withholding is required. A scholarship and/or fellowship are considered "qualified" if the following conditions are met:

(1) The recipient must be a candidate for a degree at an educational institution that maintains a regular faculty and curriculum, and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities (this includes students who attend a primary or secondary school or are pursuing a degree at a college or university); (2) The scholarship or fellowship must be for the purpose of conducting study or research at an educational institution; and (3) The scholarship or fellowship must be used for tuition, fees, books, supplies, and equipment required for enrollment or attendance at the educational institution (i.e., required for all students in the course at the educational institution).

A non-qualified scholarship/fellowship is considered income, but is only reportable (and possibly withholdable) by UH for nonresident aliens. Accountable plan rules may not be applied to exclude income from any expense payments (including travel expenses) that qualify as scholarship/fellowship. Thus, all non-qualified scholarship/fellowship travel expense payments are considered income regardless of substantiation.

A scholarship and/or fellowship is considered "non-qualified" if it does not meet the definition of a qualified scholarship or fellowship. Non-qualified scholarships/fellowships are often provided for room, board, and other types of expenses, such as travel costs.

Q: How do I determine if an individual is a Resident Alien or a Nonresident Alien?
A: To determine this, please have the individual complete the Substantial Presence Test (SPT) on the UH Form WH-1. If the indiviual passes the SPT, he/she is categorized as a Resident Alien and may be treated in the same manner as a U.S. Citizen or Permanent Resident Alien. If the individual does not pass the SPT, he/she is categorized as a Nonresident Alien.

Q: I am a non-qualified scholarship/fellowship recipient, will UH issue me the pertinant tax paperwork?
A: Non-qualified scholarship/fellowships payments to U.S. Citizens, Permanent Residents, and Resident Aliens are not required to be reported on an IRS Form 1099-MISC, and thus UH does not issue a 1099-MISC to the recipient. However, the recipient is required to self report the financial assistance. For more information, please contact your financial advisor or tax preparer.

Non-qualified scholarship/fellowship payments to Nonresident Alients that are U.S. source income (meaning that the payment is made for an activity that occurs in the U.S.) may be subject to tax withholding, and must be reported on an IRS Form 1042-S regardless of the amount paid or whether the tax withholding rate is reduced or eliminated. Thus, UH will issue a 1042-S to all Nonresident Alien recipients receiving a non-qualified scholarship/fellowship. For more information, please contact your financial advisor or tax preparer.

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