What is Considered Taxable Income?

Non-Residents, for tax purposes, are taxed only on their U.S. income. With a few exceptions, this means that any income received from outside the U.S. is not considered taxable in the U.S. Residents, for tax purposes, are taxed by the U.S. on their income from anywhere in the world.

Sources of U.S. income may include on-campus employment, scholarships, fellowships, graduate assistantships, practical or academic training, awards, and any compensation received for labor.

Income is not limited to wages paid to the nonresident in cash, but also includes that portion of a scholarship, fellowship, or assistantship that is applied to housing and meal expenses. These expenses are called non-qualified expenses, and any part of a scholarship received to cover these expenses is considered a taxable income.

The portion applied directly to tuition, fees, and books is not considered income to any student. If scholarship money is provided directly to the nonresident by check or cash, however, it is fully taxable even if the student intends to use it to pay for tuition, fees, and/or books.