Prize Money, Taxes and Foreign / International Students
The committee folks told us Did they also give you advice on your medication? Maybe if they told you to take this medicine or that you'd do that? What is it with people taking tax advice from random people? The committee told you that one person should take income belonging to others because they don't know how to explain to you which form to fill. Essentially, they told you to commit a fraud because forms are hard. I now think about the tax implications, that makes me pretty nervous. Rightly so. Am I going to have to pay tax on $3000 of income, even though my actual winning is only $1000? From the IRS standpoint - yes. Can I take in the $3000 as income with $2000 out as expenses to independent contractors somehow? That's the only solution. You'll have to get their W8's, and issue 1099 to each of them for the amounts you're going to pay them. Essentially you volunteered to do what the award committee was supposed to be doing, on your own dime. Note that if you already got the $3K but haven't paid them yet - you'll pay taxes on $3K for the year 2015, but the expense will be for the year 2016. Except guess what: it may land your international students friends in trouble. They're allowed to win prizes. But they're not allowed to work. Being independent contractor is considered work. While I'm sure if USCIS comes knocking, you'll be kind enough to testify on their behalf, the problem might be that the USCIS won't come knocking. They'll just look at their tax returns and deny their visas/extensions. Bottom line, next time ask a professional (EA/CPA licensed in your State) before taking advice from random people who just want the headache of figuring out new forms to go away.
I'm guessing you're asking about the US. Please add a location tag to your question.  Unfortunately you cannot claim expenses paid for someone other than yourself or your dependents. In IRS publication 970, that deals with education credits, they give the following guidance: Expenses paid by others.   Someone other than you, your spouse, or   your dependent (such as a relative or former spouse) may make a   payment directly to an eligible educational institution to pay for an   eligible student's qualified education expenses. In this case, the   student is treated as receiving the payment from the other person and,   in turn, paying the institution. If you claim an exemption on your tax   return for the student, you are considered to have paid the expenses. Also, you should keep the gift tax in mind: your help to your friend is only exempt from gift tax if you pay the tuition directly (i.e.: you write the check to the school cashier, not to your friend). If you give the money to your friend, it is subject to gift tax (which you have to pay). In some cases, someone who is not family may in fact qualify to become your dependent. For that he must live with you (in the same household), and be supported by you and not have any significant income. If that's the case with you and your friend, you might be able to claim him as a dependent and get some significant tax benefits, including the education credits. Consult your tax adviser if its relevant to your situation. Why limit yourself to $28K per year?  If you pay the tuition directly to the institution, it does not count against your annual or lifetime gift-giving totals.  You could pay the entire tuition each year with no tax consequences. The only thing you can't do if you want to go this route is give the money to your children; that's what causes the gift tax to kick in.  The money must be paid directly to the school. A stipend received for the specific purposes of studies is not taxable. It is not clear from your question as to whether there are any strings attached to the money you receive. If its not for specific purpose, then its taxable as income and tax need to be paid accordingly. Please consult a CA and he can go through the specifics of your case. "Your friend probably cannot deposit the check to your U.S. bank account. U.S. banks that I've worked with will not accept a deposit from someone who is not an owner of the account. I don't know why not. If some stranger wants to make unauthorized deposits to my account, why should I object? But that's the common rule.  You could endorse the check, your friend could then deposit it to his own account or cash it, and then transfer the money to you in a variety of ways.  But I think it would be easier to just deposit the check in your account wherever it is you live. Most banks have no problem with depositing a foreign check. There may be a fairly long delay before you can get access to the money while the check clears through the system.  I don't know exactly what you mean by a ""prize check"", but assuming that this is taxable income, yes, I assume the U.S. government would want their hard-earned share of your money. These days you can pay U.S. taxes on-line if you have a credit card. If you have not already paid U.S. taxes for the year, you should make an ""estimated payment"". i.e. you can't wait until April 15 of the next year, you have to pay most or all of the taxes you will owe in the calendar year you earned it." I have been a private tutor on and off for about 30 years, in three countries, so I understand your concerns!  I always kept records as though it was a real business - even if I only had one student I kept records of dates/times/names, and also tracked where the money went (I never spent it straight up - it always got deposited to complete the paper trail; yes, this is paranoia on my part).  I've never been asked to prove anything with regards this income (although I have no Canadian experience). It's always been a case of tell the tax folks and make sure my arse is covered if they come asking questions. Hope this helps. "Not sure I understood, so I'll summarize what I think I read: You got scholarship X, paid tuition Y < X, and you got 1098T to report these numbers. You're asking whether you need to pay taxes on (X-Y) that you end up with as income. The answer is: of course. You can have even lower tax liability if you don't include the numbers on W2, right? So why doesn't it occur to you to ask ""if I don't include W2 in the software, it comes up with a smaller tax - do I need to include it?""?" I can clear the Thailand side for you.  These are the sale tax in Thailand: Don't forget to ask your bank in Thailand to issue an (FTFs). This document shows the money originated from abroad (before in came to your Thai account) from outside of Thailand.  The land office will ask for the (FTFs). I filed all my tax returns when I was abroad so they know how much I   made (just not how much I saved). I smell problems here. If you were compliant wrt to your filings, you must have filed FBAR forms and form 8938. Even if you were below the threshold for form 8938, you will probably be above it when you move back to the US - the threshold for people living in the US is much lower. Do I still need to declare it, even though I might not intend to use   this money to help my kids through college? I believe so. Here's what they want: Nothing there suggests that it is only limited to the accounts in the US or to the money you intend to use to help your kids through college. You don't need to file or do anything. The bank will report all transfers over 10 000, but chances are slim that it will even be looked at, if you don't do this every week. Worst case, someone will ask you about the source, and you tell them exactly what you wrote above (I had multiple international transfers over 60k and nobody ever asked). You said you paid his tuition, and he is now paying you back, so in case someone asks, you should be able to produce the documentation on the tuition payment - a bill, or your bank statement showing you paid it; and the amount should be matching, so you have proof. Note that if he pays you interest, it is taxable income. You are obligated to list it on your next tax filing. "What's the value of the scholarship, and is it administered by itself or by the university?  If by itself, the financial return discussed above drives.  If by the university, they create the tuition, so it gets more interesting.   If this is something that is administered and backstopped by the university, then keep in mind that while it may be named the ""John Doe Memorial Scholarship"" with $30000 in it's account under the endowment, the university overall is likely to cut some number of students' tuition in financial aid packages anyway.  Let's say they substitute a generic tuition adjustment in past years with this happens-to-be-named ""John Doe Memorial Scholarship"" moving forward: the university can do this as long as they are not constrained in pricing power by laws and financial aid customs.  There's the finance answer, and there's the fact that a university can create a ""coupon"" indefinitely (Similar in concept to the price discrimination where Proctor and Gamble can launch a new flavor of Tide at a high price to maintain the market position, and flood marketing channels with coupons) Also the university might find it to be an inexpensive benefit to the faculty to create a ceremony around a valued, deceased professor; collecting funds from other professors or staff to partially pay for it at finance price or even a slight loss." Your wife doesn't need to file a 2014 tax return because she's a nonresident and she didn't have any U.S. income. Her visa is irrelevant; it only matters what her status was (if she was in the U.S., but she wasn't) and if she had U.S. income. Your child doesn't need to file a tax return because she didn't have any income. There's a certain income threshold below which she doesn't have to file. Children generally never file their own tax returns. I don't know who told you otherwise. You may have to file if you had income (maybe including fellowship income and stuff like that) in the U.S. during the year? Did you? If you didn't then you probably don't need to file a tax return. Also, you said you're nonresident for the year. Are you sure about that? Students are generally nonresident for the first 5 calendar years, and resident thereafter. So if you came in 2009 or before, you would be resident for all of 2014; but if you came in 2010 or after, you would be nonresident for all of 2014. If you were in the first 5 calendar years of being a student, you also need to file Form 8843 regardless of whether you need to file a tax return. Nonresidents generally can't claim dependents. Residents can, however. A dependent will provide you with an exemption (it reduces your taxable income by a certain amount). You can also get the Child Tax Credit if your income is low enough. There is a U.S.-Sweden tax treaty. It has a section covering students. It may exempt some or all of your income from U.S. tax. Most universities provide free international tax programs for their international students and scholars. You should look to see if your school offers this. Don't go to outside tax filing places because those generally don't know anything about how to file for nonresidents. From Kiplinger: Can the money be used at a foreign   college? You can use the money at   hundreds of foreign colleges,   including the University of Toronto,   McGill in Montreal and many other   Canadian schools. If U.S. students at   the school qualify for federal   financial aid, you can use 529-plan or   ESA money to pay the bills without   worrying that you'll lose any of the   tax benefits. If your dad would have won money on the slot machines(And the amount was high), the casino would have given him a W2G to fill out right there and taxes would have been deducted. However, table games including Poker does not have any such rule. You will have to account for your winnings(And losses) at the end of the year. So, it is ok if you sign that paper, as you do not owe the IRS any money yet.  You will still need to file your taxes as a non resident alien at the end of the year and attach the form W2G with it and pay your dues. Since you worked as an RA, the university should send you a W2 form. The taxable wages line in that form would be the sum of both the direct salary and employer paid benefits that are taxable. As such you should not need to do anything than enter the numbers that they provide you. This might be useful http://ec.europa.eu/taxation_customs/individuals/cash-controls_en As far as I am aware there should be no issues with anything below 10000. But anything after that you have to declare.