Tax Guidance for U.S. Residents

• You are a U.S. tax resident if you are a U.S. citizen or meet either of these tests for the calendar year (January 1 through December 31):
  • The green card test (Lawful Permanent Resident)
  • The substantial presence test
• If you are a foreign national, MIT provides you access to the Sprintax Tax Determination System to help you determine your tax status (non-resident alien vs. resident alien) and whether you are exempt from paying U.S. income taxes due to your home country’s tax treaty with the United States. Nonresidents should refer to the “Tax Guidance for Nonresident Aliens” website for more information.

If your tax status changes, you are responsible for updating your tax status with MIT.

• If you are an MIT affiliate or MIT employee and become a resident alien for federal tax purposes, you should notify VPF HR/Payroll (nratax-payroll@mit.edu) and complete a new Form W-4 through Atlas if necessary.
• If you were both a nonresident alien and a resident alien during the same tax year, refer to the FAQ for more information on tax compliance obligations and dual-status reporting.
• If withholding tax no longer applies to your income from MIT due to a change in tax status, you may still need to pay estimated taxes throughout the year or use Form W-4 to request additional withholding to avoid penalties. Visit the IRS website to learn more about federal estimated tax payments.

• How do I determine what portion of my scholarship or fellowship is taxable?
  Scholarship/fellowship funds used for qualified tuition and related expenses (such as tuition and student life fees) are not taxable. This nontaxable amount is reported on Form 1098-T. Taxable nonqualified tuition and related expenses are amounts used to pay for housing expenses, meals, books, supplies, health insurance fees, and other fees not related to course enrollment. These taxable payments are not reported on Form 1098-T and must be tracked by US citizen and resident students so they can calculate estimated tax payments and accurately report income on their tax returns.
  To determine the amount of a scholarship/fellowship that should be included as taxable income,  use Worksheet 1-1 from IRS Publication 970 or the IRS Interactive Tax Assistant. Topic No. 421 also provides further guidance.

• Where do I find the taxable amount of my scholarship or fellowship?
  MIT does not withhold taxes from taxable scholarships or fellowships given to students that are US citizens or tax residents. These students must keep track of their taxable fellowships or scholarships since MIT will not provide a tax form summarizing the taxable amount. Students can refer to the amounts listed in their fellowship or scholarship letter, amounts deposited in their bank or student account, and amounts listed on pay stubs.
  If you receive a scholarship or fellowship that provides payments over multiple years, only taxable payments earned during the calendar year are included in gross income. For example, taxable payments earned between January 1, 2022, and December 31, 2022, should be included in your tax return due on April 18, 2023. Any amounts earned after December 31 are included in the next year’s tax return.     

• If I receive money as part of a prize or award, do I need to report it and pay tax on it?
  Prizes and awards are amounts paid in recognition of an outstanding achievement or winnings in a competition, raffle, or other contest. Generally, prizes and awards must be included in gross income and taxable at the applicable rates, regardless of your tax residency status. Certain exceptions may apply.
• What if I don’t want to be a resident for tax purposes because I don’t want Social Security and Medicare withheld from my pay? 
  Residency for tax purposes is determined by the substantial presence test, based on an individual’s physical presence in the United States over a three-year period. As a resident, your compensation as an employee is subject to tax withholdings by your employer to cover payroll tax and income tax. Income tax withholdings are related to your annual income tax liability which you calculate and report on your annual tax return (Form 1040). These income tax withholdings can be reduced using Form W-4, but note that withholding too little may result in penalties. Payroll taxes include Social Security and Medicare. You may not request a reduction in these payroll tax withholdings nor may you elect to be a nonresident to avoid paying these taxes on your U.S. source income. Only earning less income will result in lower payroll taxes.
• Do I have to file a Massachusetts state tax return?
  If you received Massachusetts gross income of more than $8,000 during the calendar year, you must file a Massachusetts state tax return. If your Massachusetts gross income is less than $8,000, you do not need to file a Massachusetts tax return. The form you file will depend on your Massachusetts residency status. Refer to the links below for more information:
  • https://www.mass.gov/topics/individuals
  • https://www.mass.gov/service-details/learn-about-legal-and-residency-status-in-massachusetts

• The individual income tax return for residents and citizens includes income earned both within and outside of the U.S. The income may have been received from MIT or other sources.
• Understand the multiple types of income you might receive from MIT. Some common types of payments issued by MIT are described on the VPF website page Scholarships, Fellowships, and Other Non-Payroll Payments.

• See IRS Taxation of U.S. Residents
• The IRS and state websites contain information and guidance for complying with your tax filing obligations, however, you may have individual circumstances that require additional tax guidance or advice. If your tax situation is complex, you may want to seek the services of a professional tax preparer to file your tax returns.