Tax question for fellowships/tuition waivers

[Knights24]

Hey all,

So I FINALLY received an offer this year for Clinical Psych PhD program (neuropsych) - I cannot be happier! This is my 3rd year applying, so everyone rest assure the time comes!!!

I am offered a wonderful package of 100% tuition waiver and a yearly stipend. The first year is a fellowship and does not require I perform an services as a condition (i.e. RA, TA...), and the next years I will receive the same amount or more and serve as an RA/TA/etc.

My question is what portion of this is taxable? The letter with the offer said the school won't remove any taxes and to make sure I know what I'm responsible to withhold myself... I assume the tution waiver is not taxable, but is the stipend/fellowship?

I know tax rules change every year if this has been asked before...

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[dcc777]

Hey all,

So I FINALLY received an offer this year for Clinical Psych PhD program (neuropsych) - I cannot be happier! This is my 3rd year applying, so everyone rest assure the time comes!!!

I am offered a wonderful package of 100% tuition waiver and a yearly stipend. The first year is a fellowship and does not require I perform an services as a condition (i.e. RA, TA...), and the next years I will receive the same amount or more and serve as an RA/TA/etc.

My question is what portion of this is taxable? The letter with the offer said the school won't remove any taxes and to make sure I know what I'm responsible to withhold myself... I assume the tution waiver is not taxable, but is the stipend/fellowship?

I know tax rules change every year if this has been asked before...

Wow, I never thought of that. I sure hope not. I feel like they should tell us that....

 

[positivepsych]

Fellowship stipends are considered grant/scholarship income, and are taxed.

The university does not withhold the taxes for you like most employers do (i.e. take the taxes out of your regular paycheck). As a result, you get the entirety of the stipend up front, but have to pay taxes to Uncle Sam at the end of the year, which can be a significant amount (~15%). Most of the time, you will end up paying taxes instead of getting a refund, so budget accordingly.

 

[positivepsych]

I was referring to the 'stipend' as the portion that you are actually paid (i.e. above and beyond tuition and fees). So yes, anything you take home you have to pay taxes on. And I echo the sentiment to estimate taxes in advance to avoid the minor penalties (which no one ever explains).

 

[psychRA]

Is your stipend connected to some kind of job, like being a TA or an RA? In my program, our stipend is our salary for whatever position we have within the department, and we're processed like every other university employee: we get paid every month, the university withholds the appropriate amount for state and federal taxes from each paycheck, and we get a regular W2 every year. I've never heard of anyone in my program who ended up owing money for taxes, and in fact, we make so little (compared to people with "real" jobs) that we always get at least a small refund.

Programs may process stipends differently, so check with yours!

 

[Quynh2007]

This is slightly incorrect. Grants and scholarships are only taxable above and beyond the amount of the grant or scholarship that goes toward tuition, fees, books, and supplies. Thus, if you get a scholarship and the entire amount goes toward tuition, it is not taxable. So in this case, your tution waiver would not be taxable, but the fellowship would be (although you can deduct education expenses for any fees or supplies you have to pay out of your fellowship money). Additionally, you have to pay estimated taxes quarterly - if you wait until the end of the year, you can get slapped with late fees.

It's a shame they don't just withhold it. My program withheld taxes from our stipends, so it made it much easier.

EFTPS is the site to do quarterly withdrawals.

 

[dcc777]

I have a somewhat related question:

What kind of fees can I expect to pay before officially starting at my school? (It's a clin phd) I have a full tuition waiver and stipend but I feel like there are always some sort of "hidden fees" (parking permit, admissions fee, etc.)

Anyone know?

 

[blindchaos]

I also have a tax question...figured I'd throw it out here to see what others have done. Last tax year (2010) for my taxes, I filed as a resident in the state of my graduate school university. In Aug 2011, I moved to another state for internship but maintained my status as a student at the university. Since I am in my current state solely for internship (and will be leaving the state when internship is done) and am still a student in another state...do I file as a part-time residence in both states (university state for the first half of the year, internship state for the last half of the year) or do I file as a full-time resident of my university state and a non-resident of my internship state?

I'm working on my taxes right now and being a nonresident versus a part-time resident in my current internship state makes a significant difference. What have others done regarding residency during internship year?

 

[Psychadelic2012]

I also have a tax question...figured I'd throw it out here to see what others have done. Last tax year (2010) for my taxes, I filed as a resident in the state of my graduate school university. In Aug 2011, I moved to another state for internship but maintained my status as a student at the university. Since I am in my current state solely for internship (and will be leaving the state when internship is done) and am still a student in another state...do I file as a part-time residence in both states (university state for the first half of the year, internship state for the last half of the year) or do I file as a full-time resident of my university state and a non-resident of my internship state?

I'm working on my taxes right now and being a nonresident versus a part-time resident in my current internship state makes a significant difference. What have others done regarding residency during internship year?

I didn't know you could be a part-time resident of two states simultaneously--don't you have to claim one or the other? I think you should talk to an accountant and ask your question to someone who is (literally) accountable for your tax return, not a discussion board.

 

[4410]

When you start paying your loans back you can deduct the interest. My accountant just finished my taxes for this year and I did not have enough money towards the internship application to use this as a jobsearch deduction. One problem is that I applied before the end of the year but my interview expenses where not until 2012, but still it would have needed to be above $1300 to use the deductions.

Most programs have you enroll in a one hour credit for internship and they count this as full time study to meet the requirements for additional loan money. I believe it has to be GradPlus money at a higher interest rate.

Per resident requirements, if you still have a residence in your home State you count that as your primary resident. I own a home and as of now it looks like I will keep my house and my family will stay and I will be home on weekends and stay in a extended stay type Motel during the work week of my internship. My accountant is trying to get me to buy a 5th wheel or a camper as he claims this would help me out greatly on my taxes this year and future years. I have been looking but the best thing out there are around $12,000 bucks. They have loans where you can pay back in 10 years and only pay $150 to $200 bucks a month.

 

[AcronymAllergy]

When you start paying your loans back you can deduct the interest. My accountant just finished my taxes for this year and I did not have enough money towards the internship application to use this as a jobsearch deduction. One problem is that I applied before the end of the year but my interview expenses where not until 2012, but still it would have needed to be above $1300 to use the deductions.

Most programs have you enroll in a one hour credit for internship and they count this is full time study to meet the requirements for additional loan money. I believe it has to be GradPlus money at a higher interest rate.

I'm not positive, but I'm pretty sure enrolling for one credit hour, regardless of what program you're in, won't let you be considered as full-time (at least as far as the government is concerned).

In general, your internship year is treated the same as any other year (as far as I've been able to tell, anyway) in terms of student loans. If you're enrolled for <9 credit hours, you're half-time (assuming you're taking at least 6 hours, I believe); if you're enrolled in at least 9 credit hours, you're full-time. You should qualify for stafford and GradPlus loans as a half-time student; anything less than that, and I have no idea.

Our program requires that we sign up for exactly enough internship hours each semester to be considered half-time (i.e., 6 in the spring/fall and 3 in the summer), and provides enough of a waiver to cover half-time tuition. Other programs will vary, particularly if the program doesn't offer waivers. I believe they will all require that you sign up for at least 1 hour, though.

 

[4410]

I believe it is how the program defines part-time/full time credit hours. Obviously, when you are doing a full-time internship over a year long time span, this would be considered more than full-time, especially considering the housing expense, moving expense, and other factors. If a program requires you to be enrolled in nine hours but then waives your tuition for those nine credit hours, this too would seem to be in some way a violation of student loan rules.

 

[Psychadelic2012]

I believe it is how the program defines part-time/full time credit hours. Obviously, when you are doing a full-time internship over a year long time span, this would be considered more than full-time, especially considering the housing expense, moving expense, and other factors. If a program requires you to be enrolled in nine hours but then waives your tuition for those nine credit hours, this too would seem to be in some way a violation of student loan rules.

It's not up to a program to define full- or part-time attendance. It is standard: 9 hours is full-time and 6 hours is half-time. This is defined by the government. Why would it matter if the school waives tuition? Many schools do that anyway, regardless of internship status.

 

[4410]

Sorry, there are two thread related to tuition, taxes, and full-time/part-time status. I believe I meant to post this on the other thread. Have you ever noticed that at any given time, this message board has numerous threads about the same thing. It would be nice if the moderators somehow deleted some of the threads that are about the same topic or combined them more often as they have done with other threads. On the other thread others are saying that their programs count one credit hour as full time during internship and I believe this is how my program does it as we are actually more than full time since we are working forty hours a week on internship compared to the normal three to four classes per week when taking classes.

 

[AcronymAllergy]

I believe it is how the program defines part-time/full time credit hours. Obviously, when you are doing a full-time internship over a year long time span, this would be considered more than full-time, especially considering the housing expense, moving expense, and other factors. If a program requires you to be enrolled in nine hours but then waives your tuition for those nine credit hours, this too would seem to be in some way a violation of student loan rules.

This might have been meant for the other thread, but no, the program waiving your tuition is not in violation of student loan rules (otherwise no grad students in fully-funded programs would be eligible for student loans, which of course isn't the case). That information is included in your FAFSA from what I can remember, and thus tuition that's waived isn't factored into expected costs of attendance. I definitely know it's also included in your taxes, so that you don't somehow get credit for tuition that you never paid owing to a waiver.

 

[paramour]

I didn't know you could be a part-time resident of two states simultaneously--don't you have to claim one or the other? I think you should talk to an accountant and ask your question to someone who is (literally) accountable for your tax return, not a discussion board.

I don't know all the details (because I'm not an accountant), but it is possible to file multiple state tax returns. Unfortunately, my spouse & I had to deal with this crap repeatedly. We lived in one state, but he worked in another state: different state returns. We had a permanent residence in one state, but I moved to grad school (kept permanent residence still in the other state): different state returns. He lived in one state, then moved to another state permanently: different state returns. So, they will do "partial" returns if you move from one place to another as an actual resident, and they also can do resident & non-resident tax returns. It's all sort of screwy.

 

[AcronymAllergy]

I don't know all the details (because I'm not an accountant), but it is possible to file multiple state tax returns. Unfortunately, my spouse & I had to deal with this crap repeatedly. We lived in one state, but he worked in another state: different state returns. We had a permanent residence in one state, but I moved to grad school (kept permanent residence still in the other state): different state returns. He lived in one state, then moved to another state permanently: different state returns. So, they will do "partial" returns if you move from one place to another as an actual resident, and they also can do resident & non-resident tax returns. It's all sort of screwy.

I've had to do multiple state returns while in grad school as well, and again this year while on internship (earning income in both my grad school state and internship state). Definitely adds another step of inconvenience, but it wasn't too horrible overall.

 

[Psychadelic2012]

I don't know all the details (because I'm not an accountant), but it is possible to file multiple state tax returns. Unfortunately, my spouse & I had to deal with this crap repeatedly. We lived in one state, but he worked in another state: different state returns. We had a permanent residence in one state, but I moved to grad school (kept permanent residence still in the other state): different state returns. He lived in one state, then moved to another state permanently: different state returns. So, they will do "partial" returns if you move from one place to another as an actual resident, and they also can do resident & non-resident tax returns. It's all sort of screwy.

Ah, yes. It is based on time, i.e. the calendar year, and when you are in (or claim to be a resident in) a location. You can be a resident of multiple states within a year, but just never at the same time (or so I thought). On the returns for each state, you claim where and when you were a resident of the particular states. I've done this, too. It certainly is confusing. I just didn't know if the OP was asking to claim part-time residence in two states for the same time period--I thought it was resident/non-resident, period.

 

[blindchaos]

Ah, yes. It is based on time, i.e. the calendar year, and when you are in (or claim to be a resident in) a location. You can be a resident of multiple states within a year, but just never at the same time (or so I thought). On the returns for each state, you claim where and when you were a resident of the particular states. I've done this, too. It certainly is confusing. I just didn't know if the OP was asking to claim part-time residence in two states for the same time period--I thought it was resident/non-resident, period.

Sorry, I should have clarified. Not part-time at the same time. I thought I may need to claim part-time residency for my university state (from Jan 1 to the date I moved) and part-time residency for my internship state (from my move date to Dec 31). Part-year would have been a better way to phrase it. If anyone else is in the same boat, two different accountants both felt I could file as a full-time resident in my university state and a non-resident in my internship state. Will be filing a federal return plus two state returns due to the filing requirements for each of the states. Fun fun Oh well - I'm just happy I'll get a return!