The term "trainee" payments is used by the University, but defined by the IRS as a "fellowship" payment. Fellowship payments have specific tax reporting requirements for federal and Alabama state filings. The following are points that you should consider when completing the required tax documents.
- Trainee/Fellowship payments are not reported to any tax agency.
- Exception: Trainee/Fellowship payments made to a NRA with NRA Tax ramifications are subject to 1042S reporting requirements. NRA Tax is identified on your payslip.
- Exception: Trainee/Fellowship payments made through UAB Payroll Services to UAB students are reported on the 1098T form provided there were tuition, scholarship or other qualified payments posted to the student account. This information is reported to the IRS. The 1098T is issued by UAB Student Accounting. Please click here for contact information for UAB Student Accounting.
- Trainee/Fellowship payments made to US citizens or RA taxed as US citizens are reportable to the federal government.
- Trainees in this category should retain their 31DEC20XX payslip for a record of the year-to-date information. Copies of payslips may be accessed through Oracle Self Service. Instructions for accessing this information are available online (http://www.uab.edu/images/finance/vpad/pdf/training/SelfService/Payslip.pdf)
- Assistance in determining how to report these payments is available in most online filing software.
- To follow is the information on where to report fellowship payments on the 1040 Internal Revenue Service Forms as defined by IRS publication 970
This information is taken directly from the Alabama Administrative Code (810-3-14-.02 Exclusions from Gross Income). As for reporting the income, the State of Alabama tax form does require disclosure of the payments, but they should be qualified as scholarship/fellowship payments. The graphic below indicates the line on which the payments should be reported.