Tax returns on HPSP

[2th Doc]

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I'm just trying to take into account all possible sources of income throughout dental school, so I'm wondering what people have seen happen with their tax returns after being on HPSP, e.g. how did it compare to what you were used to getting before HPSP: significantly more/less/about the same?

 

[vinnie83]

There are a lot of factors that influence your taxes. I'm not sure that you're going to get many useful responses.

 

[2th Doc]

I understand that it's not reasonable to compare one person to another, but to compare the same individual before and after being on HPSP I figure would at least provide some general perspective. That's all I'm really looking for.

 

[vinnie83]

Were you making $80k last year or an undergrad with your parents paying most of your living expense? Are you married? Is your spouse bringing home a paycheck? Did you pay state income tax last year? Will you pay it this year?

I would recommend using one of the various free tax calculators online to get an estimate of how much you will owe in taxes. Your refund is not a source of income. For the most part it is the money you already earned that was withheld from your paycheck by the federal government, but was in excess of what you owed so they are giving you your own money back. By itself the amount of your tax return is not that relevant.

 

[2th Doc]

Were you making $80k last year or an undergrad with your parents paying most of your living expense? Are you married? Is your spouse bringing home a paycheck? Did you pay state income tax last year? Will you pay it this year?

I would recommend using one of the various free tax calculators online to get an estimate of how much you will owe in taxes. Your refund is not a source of income. For the most part it is the money you already earned that was withheld from your paycheck by the federal government, but was in excess of what you owed so they are giving you your own money back. By itself the amount of your tax return is not that relevant.

Yeah, okay. I actually know about two dozen now-dental students who were making $80k/year before they quit and started dental school. Anyway, my tax refunds are a source of income. I can guarantee you I didn't pay in as much taxes as I got in return. Regardless of how much is net gain and how much is just getting back what I paid in (according to many HPSP recipients [in AZ at least], only the 45-day AD check is taxed, which would be very little, so the typical HPSP tax return would be even less variable), that check is cash in the pocket. Since we're all getting the same amount of stipend, that means the same amount of EIC (the majority of an average tax return; if EIC is applicable for scholarship money), so the amount of an HPSP recipient's tax return would be very relevant. Sure, a spouse working would increase the EIC, but "Oh, my spouse has an job too" isn't that hard to mention. Thanks for your help.

 

[USArmyHPSP]

, only the 45-day AD check is taxed, which would be very little, .

I would suggest that you research a little rather than trusting what other students say. One thing that I can tell you is that your stipend is taxed (FITW) but not FICA. This is outlined in the Financial Management Regulation, Chapter 62, of Volume 7A.

If someone were to share with you the amount of return, or amount of taxes owed, I would suggest that you ask them to do in a PM so that they aren't sharing (what in my estimation is a very personal thing) on an open forum...

 

[2th Doc]

I would suggest that you research a little rather than trusting what other students say. One thing that I can tell you is that your stipend is taxed (FITW) but not FICA. This is outlined in the Financial Management Regulation, Chapter 62, of Volume 7A.

I have read through the policy handbook on MODS and read elsewhere the same things you mention about federal and even state tax being withheld, but when people tell me they receive the full stipend amount ($2088/$2122) every month except the AD check which is taxed, I'm not sure how to reconcile those two. One is the written rule, but the other is what is actually happens in the real world...? Is this a result of Obama's "Making Work Pay"? Clerical error?

Edit: I just read through that source you cited and it seems to only mention tax withholding on the accession and continuation bonuses. Maybe I missed the part about stipend withholding.

If someone were to share with you the amount of return, or amount of taxes owed, I would suggest that you ask them to do in a PM so that they aren't sharing (what in my estimation is a very personal thing) on an open forum...

I wholeheartedly agree, it can be a very personal thing to some (although I personally would not be against divulging this specific information, since the personal nature is somewhat curbed by the fact that we all make the same amount and "work" for the same people on the scholarship; ask me in 10-15 years when I'm on my own in private practice, and that would be another story), which is why I didn't directly ask for people's tax return amounts, but certainly that would be the most conclusive I'd think, aside from waiting for my own tax return next year. If anyone is comfortable with sharing their tax return amount via PM, it would be much appreciated.

By the way, thanks for a genuine response.

 

[USArmyHPSP]

Here is the specific paragraph:.

620203. Tax Withholding
A. Active duty pay paid under this program is subject to Federal income tax withholding (FITW) and Federal Insurance Contribution Act (FICA) in the same manner as prescribed in Chapters 44 and 45.
B. Monthly stipends paid to students entering the program are subject to FITW.
C. Monthly stipends are not subject to FICA withholding.

Also, some states don't withhold tax, but I know for a fact that FITW is automatically taken depending on the number of dependents 0-10? claimed on the W-2. It's done by computer and it can't be changed by human hands.

It's a simple fact of life. You tell Uncle Sammy to take money now (sometimes more than you owe which results in a refund) or he'll get it by April 15th depending on your W-2.

 

[2th Doc]

Ah found it... the link I had only showed a section of Chapter 62 and it wasn't the right one for the situation. Thanks USArmyHPSP.

 

[twh019]

Sorry to resurrect this, but I've noticed on the last couple of stipends my federal income tax hasn't been withheld. Should I contact someone about this? I don't feel like paying a lump sum come April.