Tax Implications of the NHSC Scholarship Award

Some portions of the National Health Service Corps Scholarship Program (NHSC SP) award are subject to income taxes.

Is your scholarship award subject to federal income tax?

The stipend payment portion of an NHSC scholarship award is subject to federal income tax and the Federal Insurance Contributions Act (FICA) tax. We will withhold federal income taxes based on the W-4 you submit.

The tuition, eligible fees, and other reasonable costs’ portions of the scholarship award are not subject to federal taxes.

Is your scholarship award subject to state and local income taxes?

We do not withhold state and local income taxes. Consult your local tax authority regarding applicable state or local taxes for which you may be liable.

Note: It is your responsibility to arrange for the payment of any additional federal, state, and local taxes that you may owe.

What must you submit?

If you receive and accept a scholarship award, you must submit an Internal Revenue Service (IRS) Form W-4.

• The information you provide on the W-4 form will determine federal income tax withholding.
• If you want additional funds deducted, indicate the additional amount on the appropriate line on the W-4 form.

Additionally, each February you will receive a W-2 Wage and Tax Statement for the taxable income received under the NHSC SP during the prior tax year.

You have two options for receipt of the W-2 forms:

• Sign up to receive the W-2 form in your BHW Customer Service Portal account. The NHSC highly encourages you to sign up for the electronic delivery.
• We will mail your W-2 to the address you provide in the BHW Customer Service Portal.
  • Avoid a delay: update your contact information by November 30 of each year.