Travel reimbursement pays qualified individuals reasonable and customary costs for air fare, other transportation costs, lodging, meals, and per diem. Employees and independent contractors may be reimbursed, according to the rules of the IU travel office. Tax is not withheld. When funds for such travel expenses are paid to a student, the payments are exempt only if the travel was required by an academic course. Otherwise, travel payments are considered by IRS to be part of a fellowship and are taxed at 14% for students in F-1, J-1, M-1, or Q-1 status, and at 30% for students in any other visa status.
The department should attach a copy of the student's I-94 departure card to the disbursement voucher when processing the travel reimbursement.