Hi all, I was notified that I received an NSF fellowship in April of this year (after I filed my taxes) and did not start receiving my fellowship money until July. I know that I will have to pay taxes on my fellowship, but I am totally mixed up about estimated taxes. I've looked at a lot of the IRS publications online, but I'm still confused! I've heard from several sources that the IRS will let you get away with not paying estimated taxes for your first year (in this case, the 2011 tax year), but that starting April 15, 2012, I will have to start making estimated tax payments. Is this true? Can anyone who's further along in their NSF fellowship shed some light on this for me? Also, how much total did you end up paying in taxes on your fellowship (state and federal)? Are there estimated tax payments for your state, too?
Any advice would be much appreciated. I don't want to end up not saving enough/paying a bunch of penalties for being so clueless!