Do graduate students pay tax?

[Abu Aljood]

---

Members don't see this ad.

Hello,

Is there any tax cut out of graduate student stipend?

 

[solitude]

Hello,

Is there any tax cut out of graduate student stipend?

Legally, you are supposed to pay tax on your fellowship*. At most schools (perhaps all?), they will not deduct it for you, and the onus is on you to pay quarterly taxes. That said, some people do cheat and not pay. I even know a few who claim their accountant staked his reputation on the legality of that position. But the IRS literature is very clear, and those students are tax evaders. Bottom line: pay quarterly taxes.

A gray area IMO is whether you have to report the cost of your health insurance premium and pay the tax on that. In my reading the IRS literature is vague on this, and it's not entirely clear to me whether the premium is paid by your employer/university (tax exempt) or whether that contribution is from your fellowship (taxable). You could also, perhaps erroneously, make the argument that the health insurance is required for your coursework (see asterisk). In any case, it's a relatively small slice of the fellowship.

*you may deduct from your gross income the cost of required expenses for coursework (e.g. textbooks, computer, etc.)

 

[Abu Aljood]

Legally, you are supposed to pay tax on your fellowship*. At most schools (perhaps all?), they will not deduct it for you, and the onus is on you to pay quarterly taxes. That said, some people do cheat and not pay. I even know a few who claim their accountant staked his reputation on the legality of that position. But the IRS literature is very clear, and those students are tax evaders. Bottom line: pay quarterly taxes.

A gray area IMO is whether you have to report the cost of your health insurance premium and pay the tax on that. In my reading the IRS literature is vague on this, and it's not entirely clear to me whether the premium is paid by your employer/university (tax exempt) or whether that contribution is from your fellowship (taxable). You could also, perhaps erroneously, make the argument that the health insurance is required for your coursework (see asterisk). In any case, it's a relatively small slice of the fellowship.

*you may deduct from your gross income the cost of required expenses for coursework (e.g. textbooks, computer, etc.)

Thank you for the response.

Would having kids change anything in that regard?

 

[solitude]

Thank you for the response.

Would having kids change anything in that regard?

It will decrease your taxable income because you get to deduct a set amount from your income for each dependent. There may also be tax deductions for child care, etc. You will probably still have to pay some small amount of tax quarterly. Best to check with a tax professional or use TurboTax, etc.

 

[gbwillner]

Legally, you are supposed to pay tax on your fellowship*. At most schools (perhaps all?), they will not deduct it for you, and the onus is on you to pay quarterly taxes. That said, some people do cheat and not pay. I even know a few who claim their accountant staked his reputation on the legality of that position. But the IRS literature is very clear, and those students are tax evaders. Bottom line: pay quarterly taxes.

A gray area IMO is whether you have to report the cost of your health insurance premium and pay the tax on that. In my reading the IRS literature is vague on this, and it's not entirely clear to me whether the premium is paid by your employer/university (tax exempt) or whether that contribution is from your fellowship (taxable). You could also, perhaps erroneously, make the argument that the health insurance is required for your coursework (see asterisk). In any case, it's a relatively small slice of the fellowship.

*you may deduct from your gross income the cost of required expenses for coursework (e.g. textbooks, computer, etc.)

At some programs you are technically an employee and will get a W2. At others you are a non-employee "scholar" and NOT get a W2. This means you technically receive no wages. As social security, medicare, and some city or state taxes are deducted from your "wages", as a "scholar" receiving a "scholarship" you are not obligated to pay those. You are, however, obligated to pay income tax, typically by making quarterly payments.

I have been both.