Student Grant funding offered by the Undergraduate Research Opportunities Program (UROP) is classified as fellowships/stipends and are not employee compensation.
UROP provides for students, who do research and creative work, an enhancement to their undergraduate education. Although UROP stipend payments are administrated through the university’s payroll office (Employee Services), they are not considered payroll wages. See IRS Publication 970 for guidance regarding fellowships.
Payments to recipients who are U.S. citizens and resident aliens are not typically subject to federal and state income tax withholding and payroll taxes (i.e., FICA and Medicare taxes). The university has no tax reporting requirement for these payments (no W-2), however UROP recipients should be aware that these payments may be taxable income and should consult with their tax advisors. The university is required to report the payments on the federal form 1042-S.
UROP advises recipients to keep award letters for their records.