And in addition, the individual recipient
a)  pays no social security (not "wage" in IRS terms)
b)  has no withholding by the payor for income tax,
c)  may or may not have all of the income taxed -- there are expenses which
he can deduct directly from the amount of the fellowship paid in the tax
year to determine what is taxable.
 From IRS Pub. 17:
"Scholarships and fellowships. A candidate
for a degree can exclude amounts received as a qualified scholarship or
fellowship. A qualified  scholarship or fellowship is any amount you re-
ceive that is for:
• Tuition and fees to enroll at or attend an educational institution, or
• Fees, books, supplies, and equipment required for courses at the
educational institution.
Amounts used for room and board do not qualify for the exclusion."
Get IRS Publication 970 for details.

It would be a courtesy to pass this information on to the recipient!

Chuck

At 02:07 PM 8/31/2004, you wrote:
>Since this is a fellowship, there should be no employee/employer
>relationship.  And that should mean no taxes on behalf of the school.
>
>Ken Landorf
>UConn Health Center
>Farmington, CT 06030
>860 679-1990
>-----Original Message-----
>From: Research Administration List [mailto:xxxxxx@HRINET.ORG]On Behalf
>Of Joyce Davies
>Sent: Tuesday, August 31, 2004 10:52 AM
>To: xxxxxx@HRINET.ORG
>Subject: [RESADM-L] NRSA fellowships
>
>We just received a National Research Service Award (NRSA) for a Predoc
>Research Fellowship.  I had a question from the sponsoring PI as to how
>other institutions handle the employee benefit costs not covered by the
>Fellowship grant (i.e. employer share of retirement, medicare, and workers
>comp). We have only had postdoc fellowships and we have required the PI to
>find other sources of funding (non-federal) to cover these costs but he
>feels that the institution should be picking them up. What do other
>institutions do? Do you have a pool of funds to cover such expenses or do
>you make it the PI's responsibility to figure it out?
>
>Thanks for you help and I look forward to hearing from anyone willing to
>help me.
>
>Joyce
>~~~~~~~~~~~~~~~~~~~~~~~~~
>Joyce M. Davies, CPA
>Manager, Grants Accounting
>Northeastern Ohio Universities College of  Medicine
>4209 SR 44, PO Box 95
>Rootstown OH 44272
>
>phone:  330-325-6369
>fax:  330-325-7943
>email:  <mailto:xxxxxx@neoucom.edu>xxxxxx@neoucom.edu
>
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Chuck Chermside
804-320-5502
xxxxxx@verizon.net

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