The purpose of this web page is to assist UAB faculty and staff in understanding the legal nature of scholarships and fellowships and in understanding the UAB procedures applicable to processing scholarship and fellowship payments.

It is important to make the appropriate distinction between scholarships/fellowships vs salaries/wages. Past failure to accurately and consistently make this distinction has resulted in the IRS questioning the legitimacy of all UAB's scholarship/fellowship payments. Furthermore, if sponsored programs are involved, failure to do so may result in violation of grant regulations or contract terms.

Nonresident Alien Disclaimer: If the recipient of the financial aid is a nonresident alien, statements on this web page regarding reportability and taxability of scholarships and fellowships will probably be overridden by nonresident alien taxation laws. However, nonresident alien taxation laws do not affect the classification of a payment as being a scholarship/fellowship. If the individual is a nonresident alien, be sure to consult with the International Scholar and Student Services (ISSS) (Ext. 4-3328, HUC 318) before making any commitments to the individual.