stipend tax question?

[ellifino]

For those of you on one of the standard MSTP-type stipends, how does your school handle taxes? Are withholdings taken out for medicare, social security, etc?

I am trying to put my budget together for next year and I'm trying to get a feel for what figures I should use and what it considered "normal".

Thanks in advance for your help!

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[echod]

Think of your stipend as a regular salary when it comes to taxes. You will be taxed for both federal and state. However, you don't have to pay social security taxes during the semesters you're registered for classes (ie. you'll have to pay social security taxes during the summer and winter breaks).

 

[Neuronix]

Are withholdings taken out for medicare, social security, etc?

This is very state and program dependent. I have nothing withheld while in the clinical phase and do not owe state taxes (graduate fellowships are exempt). I pay 1/2 of the city taxes during grad school but none during med school. Goofy.

I am trying to put my budget together for next year and I'm trying to get a feel for what figures I should use and what it considered "normal".

For me it's ~12% federal income tax on the stipend and what they pay for health insurance (taxable). That's it.

 

[mrsanator]

Think of your stipend as a regular salary when it comes to taxes.

As Neuronix mentions, it's actually quite program/location dependent, and in many cases the taxation is quite different. At my institution, during the medical school phase you earn income but not wages and thus are never taxed for Social Security / Medicare (aka FICA) at any time of year. We do pay state tax but do not pay tax on our health insurance premiums.

During the graduate school phase everyone's funding is different and so is its taxation. For instance, currently I am considered an employee and am paid wages but am FICA-exempt because I'm a full-time student; that doesn't change during the summer. However, at my undergraduate institution they did take FICA out during the summer. Once you settle on an institution ask your program coordinator how they handle things.

 

[ellifino]

Very helpful, thanks!

 

[solitude]

As Neuronix mentions, it's actually quite program/location dependent, and in many cases the taxation is quite different. At my institution, during the medical school phase you earn income but not wages and thus are never taxed for Social Security / Medicare (aka FICA) at any time of year. We do pay state tax but do not pay tax on our health insurance premiums.

During the graduate school phase everyone's funding is different and so is its taxation. For instance, currently I am considered an employee and am paid wages but am FICA-exempt because I'm a full-time student; that doesn't change during the summer. However, at my undergraduate institution they did take FICA out during the summer. Once you settle on an institution ask your program coordinator how they handle things.

But to make matters even more complicated, your program coordinator may not be able to tell you what to do. In my case, not only did my program coordinator tell me that she wasn't sure, she said that she had been forbidden by the higher-ups to give tax advice to students in the program. So everybody does it differently--some people had a tax advisor vouch that they didn't owe anything, which is patently false as per the IRS literature.

 

[Maebea]

See IRS Publication 970 http://www.irs.gov/pub/irs-pdf/p970.pdf Pages 5 and 6 are especially germane.

 

[Freak]

We do not have taxes withheld at all, and have to file estimateds on our own.

 

[QofQuimica]

We do not have taxes withheld at all, and have to file estimateds on our own.

That's what I had to do, too. Major PITA.