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HELP!! Is a fellowship grant taxable income???

Discussion in 'Pre-Medical - MD' started by racergirl, Jan 27, 2002.

  1. racergirl

    racergirl Senior Member
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    So here's the deal: I've got my W2s from my employer (a university). According to the w2's, my income was only a little over 5000 bucks last year, money I made TAing and working hourly in a lab. However, last summer I also received 5000 dollars to do Lupus research. It was a "Student Fellowship research grant." So far, I haven't received a 1099 or anything else tax-related for this grant money.

    I called the foundation who gave me the grant, and they told me they considered 4500 dollars a direct fund transfer to my University, and only the final 500 dollars I received for my final report as coming from them. Since 500 dollars is below the "cut off", I will not be receiving a 1099 or anything else from them.

    So I called the University, and they seem to have no idea what I'm talking about--it's like they have no record of me getting this money!

    I asked some graduate students about this whole thing, and they told my not to worry about it, to just file my taxes and fill out my FASFA with just the W2s. They also said that institutions only have until the end of January to send out tax forms anyway. Is this true?

    The thing is, nobody took out taxes from this $5000 grant. I've never gotten a grant before, so do you guys know, do I need to pay taxes on this money or not? I need to file my taxes and fill out the FASFA ASAP for Med School next fall. What should I do?
     
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  3. SMW

    SMW Grand Member
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    Sounds like you should report the $500 as "other income." You could probably get away with not mentioning it since there will be no 1099, but I don't think that's a good path for a future doctor to go down, even if "everybody does it."
     
  4. racergirl

    racergirl Senior Member
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    Ooookaay... But I'm more concerned about the $4500 ! So does any one know, ARE STUDENT RESEARCH GRANTS TAXABLE?
     
  5. SMW

    SMW Grand Member
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    Oh, sorry, thought it would be clear that I meant that it seems the $4500, as a "direct fund transfer" to your university would not be considered personal income. It seems to me if the money was used for research, and not to pay the researcher, then you shouldn't have to pay taxes on it. Were you paid the $500 to write the final report? Did you have access to any of the $4500 for your own personal use? It seems to me these are the key questions, but I am not a tax professional by any means, nor have I ever had a research grant.

    C'mon, all you SDN reserachers!! Help racergirl out!! One of you must know the definitive answer to this question!
     
  6. YBee

    YBee Member
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    Racergirl:

    although I do not know about "research" grants in particular, I can tell you for sure that grants are taxable, to the extent that they are not used to pay for tuition and other school related expenses such as books and supplies.

    So, if you use your grant for room or board or any other expenses not directly related to school, yes you need to report it. If you use only part of the grant for non-school expenses, just report that amount. Be sure to itemize in your tax records your basis for NOT including the full amount in your taxable income.

    I believe the amount goes in other income, with the words "scholarship" typed next to it, but I know for a fact that the 1040 instructions cover this item. (not the thin book that comes with your copy of the tax return, but the larger 100 page or so book - sorry I don't know the publication number but you can find it at the post office or on-line at the irs web site.)
     
  7. algae

    algae Senior Member
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    Hello racergirl - it's odd that you asked this question because I was in an identical situation a couple of weeks ago. I too received a fellowship that was not taxed and did not appear on my W2's. According to the IRS, a fellowship may or may not be considered taxable. This confused me obviously, and so I asked around at my school and I think I figured it out. I was told that a fellowship is considered to be a gist towards your education. When I filled out my 1040a, for "other income" you only have to list the amount of the fellowship that you DID NOT use for your education. I believe the instructions give you more detail as to what this includes.
     
  8. racergirl

    racergirl Senior Member
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    Yeah, this money was used to pay me, the researcher. So I should just fill in $5000 under "other income" on the 1040?
     
  9. algae

    algae Senior Member
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    From my understanding, you can deduct your educational expenses from the $5000. For instance, if you spent $2000 on school related stuff, then you only have to put $3000 down for your additional income.
     
  10. racergirl

    racergirl Senior Member
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    Oh! Well, I just added it up, and I paid $4,897.49 for tuition in 2001. This pretty much cancels out the grant, doesn't it? Can I just say I used all the grant money for educational expenses?
     
  11. racergirl

    racergirl Senior Member
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    Okay, I think I just found the answer--On page 21 of the 122-page form 1040 instructions I just dowloaded, it says to report any grant money on the dotted line next to line seven with a SCH next to it, but only report funds NOT used for "tuition and course-related expenses."

    So it looks like I'll write like $113 bucks down on that line. Thanks for the help, Algae, Ybee, and SMW!!!
     
  12. algae

    algae Senior Member
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    Glad to help racergirl - I have a question for you or anyone else who may know. So, suppose you don't list that $4,800 as additional income because you've take out tuition expenses. Can you then file for the Life time learning credit for that $4,800? If you can do this, which it seems like you can as far as I can tell, than you'll get a much larger refund. Any thoughts??
     
  13. racergirl

    racergirl Senior Member
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    I don't think you could do both, because then you'd be deducting tuition money twice! In my case it doesn't really matter--my income was so low last year, I didn't pay many taxes to begin with.
     

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