Income tax

[khan786]

Is the income for the Md/Phd fully taxable? Is both portion the grant and tution both taxable?

Is there any kind of exemptions that we can claim?

The University did not deducted any money now I am wondering how much is taxable?

Thanks

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[Neuronix]

Is the income for the Md/Phd fully taxable? Is both portion the grant and tution both taxable?

Is there any kind of exemptions that we can claim?

The University did not deducted any money now I am wondering how much is taxable?

Thanks

For the Federal Government, your income and money paid on your behalf for health insurance is taxable under standard federal income tax. However, the money paid on your behalf for tuition and fees are not taxable. See Publication 520 at the IRS website. Most programs do not withhold, so you must report this yourself and you will likely pay several hundred dollars to over a thousand dollars depending on how much you earned untaxed. Unless your program withholds, you must also file a quarterly statement and send them a check for 1/4 of your expected tax burden for the year each quarter via the 1040-ES. Most MD/PhDs don't make enough untaxed in their first calendar year to owe a penalty for not paying quarterly on that money, but they must start paying quarterly by their second calender year (halfway through the academic year). The first installment for this year was also due on April 15th.

As for state tax, it depends on the state. In the state of PA, graduate students (including MD/PhDs) are exempt from income tax. This is also true for the city of Philadelphia. You'll have to check the situation in your locality.

I claimed the Lifelong Learning Credit for those expenses that I paid for out of my stipend. This amounted to about $500, which gave me a $100 credit. I still ended up having to pay several hundred dollars for last year. My tax burden for this coming year is around $1700, so I already sent them my first installment.

Your taxes were due yesterday, as well as you first installment for this year. I hope you get on this ASAP.

 

[surge]

Is the income for the Md/Phd fully taxable? Is both portion the grant and tution both taxable?

Is there any kind of exemptions that we can claim?

The University did not deducted any money now I am wondering how much is taxable?

Thanks

Ah! Exactly what I've spent the last few weeks trying to figure out.

Yes, the income is fully taxable. Only the portion of the stipend is taxable. The tuition is not and you don't have to report it.
You could deduct books and other educational expenses, but you would have to itemize your deductions, and I suspect it would be better to just claim the "standard deduction" (you cannot claim the standard deduction and add itemized deductions).
I don't know of any schools that will whithold taxes on stipends. I think it sucks, because they are taxable, but for some reason, they are not required to report your income, and therefore withold any taxes. It's up to you. That also means, you will either owe the whole amount for taxes, or you should arrange to start paying quaterly "estimated tax".

This whole thing blows. Good luck.

 

[Neuronix]

You could deduct books and other educational expenses, but you would have to itemize your deductions, and I suspect it would be better to just claim the "standard deduction" (you cannot claim the standard deduction and add itemized deductions).

From what I read, you can deduct those expenses via the Lifelong Learning Credit or you can simply remove them from the amount you earned in income. However, it saves you more to take the credit. Then you may still take the standard deduction.

 

[khan786]

Thanks Surge and Eric. You folks are great........