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Travel reimbursements pay students reasonable and customary costs for air fare and other transportation costs, lodging, meals, and per diem. The payments are exempt only if the student traveling is performing services benefitting IU rather than the student. Otherwise, travel payments are considered by IRS to be a fellowship and are taxed at 14% federal/3.4% state for students in F-1, J-1, M-1, or Q-1 status, and at 30% federal/3.4% state for students in any other visa status. Individuals who are considered visiting scholars or fellows who are not conducting IU business may also be subject to tax withholding on travel reimbursements.
The department should attach a copy of the student's I-94 departure card, appropriate supporting visa documents (e.g., I-20, DS-2019, or H-1B approval notice) and form W-8BEN to the disbursement voucher when processing the travel reimbursement.
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