[lcer75]

I have a question regarding the definition of non-service fellowship.
I am in the US on a J-1 visa, category: Research scholar, purpose of visit: research in astronomy/astrophysics (from Section 4 in my DS-2019).
I receive a predoctoral fellowship. This means that I am a PhD student but enrolled at a university in Italy, not in the USA and my visit to the US is not connected to any class or course attendance but only performing research.
My income has been classifed as a non-service fellowship but I'm not sure if this is correct. I know, for instance, that postdoctoral fellowships are usually classified under Code 18 in Form 1042-S (Compensation for Teaching and research), because that income is granted under the condition of performing research and this makes it not qualifiable as a non-service fellowship (which would have Code 15 in Form 1042-S), the service performed being research (is this correct?).

How can I find out if my fellowship is to be classified as a non-service one or involving personal services? I know that as regarding tax rules they are different.

The contract I signed with my institute states that "Fellows are expected to devote full-time effort to the research proposed and to be in residence" at the institute. It also says "Leave totaling up to three weeks may be taken during a twelve-month tenure if planned in consultation with the Fellow's advisor". Our year round schedule does not include any Winter, Spring or Summer break.
I read in "Pay for services rendered" at http: Scholarships and Fellowship Grants (Income Code 15) that "Grants given to students, trainees, or researchers which require the performance of personal services as a necessary condition for disbursing the grant do not qualify as scholarship or fellowship grants. Instead, they are compensation for personal services considered to be wages. It does not matter what term is used to describe the grant (for example, stipend, scholarship, fellowship, etc.)."

My understanding is that a non service fellowship is disbursed to a student for his necessities during his studies and the only thing he needs, to get it and keep it, is being a student (probably a good one, but that's it), not doing any special activity for the institute which is giving him the money. In my case I got my fellowship after submitting a research project proposal and during the period of the fellowship I have to carry out the research I proposed: a committee checks every year that I have worked on the project and may confirm the fellowship or not. This sounds to me like the institute requests me to perform research as a condition for getting and keeping the grant.

So, my question is: does my grant need to be classified as compensation for the research I perform (then code maybe 18 or 19 in Form 1042-S) or is it a non-service fellowship (Code 15)?

Thank you.

[AtlantaTaxExpert]

In my opinion, it is a non-service fellowship (Cde 15).

PM TaxSearcher for his input; his area of expertise covers question much better than mine.

[taxsearcher]

I have a question regarding the definition of non-service fellowship.
I am in the US on a J-1 visa, category: Research scholar, purpose of visit: research in astronomy/astrophysics (from Section 4 in my DS-2019).
I receive a predoctoral fellowship. This means that I am a PhD student but enrolled at a university in Italy, not in the USA and my visit to the US is not connected to any class or course attendance but only performing research.
My income has been classifed as a non-service fellowship but I'm not sure if this is correct. I know, for instance, that postdoctoral fellowships are usually classified under Code 18 in Form 1042-S (Compensation for Teaching and research), because that income is granted under the condition of performing research and this makes it not qualifiable as a non-service fellowship (which would have Code 15 in Form 1042-S), the service performed being research (is this correct?).

How can I find out if my fellowship is to be classified as a non-service one or involving personal services? I know that as regarding tax rules they are different.

The contract I signed with my institute states that "Fellows are expected to devote full-time effort to the research proposed and to be in residence" at the institute. It also says "Leave totaling up to three weeks may be taken during a twelve-month tenure if planned in consultation with the Fellow's advisor". Our year round schedule does not include any Winter, Spring or Summer break.
I read in "Pay for services rendered" at http: Scholarships and Fellowship Grants (Income Code 15) that "Grants given to students, trainees, or researchers which require the performance of personal services as a necessary condition for disbursing the grant do not qualify as scholarship or fellowship grants. Instead, they are compensation for personal services considered to be wages. It does not matter what term is used to describe the grant (for example, stipend, scholarship, fellowship, etc.)."

My understanding is that a non service fellowship is disbursed to a student for his necessities during his studies and the only thing he needs, to get it and keep it, is being a student (probably a good one, but that's it), not doing any special activity for the institute which is giving him the money. In my case I got my fellowship after submitting a research project proposal and during the period of the fellowship I have to carry out the research I proposed: a committee checks every year that I have worked on the project and may confirm the fellowship or not. This sounds to me like the institute requests me to perform research as a condition for getting and keeping the grant.

So, my question is: does my grant need to be classified as compensation for the research I perform (then code maybe 18 or 19 in Form 1042-S) or is it a non-service fellowship (Code 15)?

Thank you.

From the information you provided, I would interpret your situation as a fellowship and not pay for personal services. It sounds like you are working on your own research, not serving as a research assistant performing work for someone else.

The institute you work for should have reviewed it pretty carefully because of their withholding obligations. It seems that they would know if you were performing personal services.

[AtlantaTaxExpert]

Thanks, TaxSearcher!