Taxes

[robot_hamster]

I am trying to do my taxes. As a graduate assistant, my stipend is exempt from social security and medicare taxes. What I found weird though was my tuition form. It shows X amount was charged and then X amount was reported as a scholarship. My tuition was waived, so they just cancel my tuition out with a scholarship of the same amount. What was weird though was they reported more for the "scholarship" than my tuition. I was using Turbo Tax and it says the difference needs to be treated as income. What I don't get is how it could be more than what the tuition was.

Has anyone else had this problem?

[Amogh]

I'm not even a grad student yet so no I'v not faced this but I think you should go down to the University Bursar's office and ask them what to do. I'm quite sure they will know best or will at least refer you to someone who does know if they don't.

All the best

[rising_star]

It probably refers to fees that were covered by a scholarship. And yes, that is taxable income.

[robot_hamster]

So you think there were fees that they paid for with the scholarship that wasn't part of the tuition? This is why I'm confused because I wouldn't think the scholarship would be more than the tuition unless they paid for something else. The scholarship is just supposed to cancel out what you owe for tuition.

[Eigen]

Are you paying university fees out of pocket each semester? Some scholarships cover tuition+fees, some just cover tuition.

I'm assuming you're referring to a 1098 form- on mine, for instance, it shows scholarships for about 400 less than what I paid- our tuition waivers don't include fees. Of course, I paid about 1200 in fees... The forms are pretty inconsistent from year to year.

Also, make sure you differentiate between scholarships and TA/RAships, they are treated differently for tax purposes.

For scholarships, you can directly deduct from the income any portion used on tuition, required fees, or required texts/supplies. So you get a $25k fellowship, you spend 1500 on fees and books, you report an income of 23,500. You can't do the same for TA/RAships, but you can take educational deductions under some cases. For scholarships/fellowships, anything that is required for attending courses at the institution is an allowable deduction- so required books, required tuition, and required fees. Optional fees aren't deductible, nor are optional books, etc.

Tuition exemptions are counted as income under circumstances, but mostly they just cancel out with the actual tuition.

Edited February 4, 2012 by Eigen

[robot_hamster]

No, they only pay for tuition. I have to pay all the required fees out of pocket and I have to buy my own books. Turbo Tax is telling me I can't take books etc. as a deduction. My 1098-T form says my scholarship was about $300 more than what the "tuition and related expenses" was. I went back and looked at my account showing all the charges and credits. Something isn't adding up. I might call whoever is in charge of this stuff on Monday.

As far as my stipend goes, I only have to pay state taxes on that and they took that out of my checks already. The school pays all social security and medicare taxes for us. Turbo Tax figured that part out when I entered my school's employer ID number in, so it's not saying I need to pay anything on that.

[Eigen]

I find mine is a few hundred off every year, I've never really bothered with it, I assume it's just an accounting error somewhere.

When you say you only have to pay state taxes, what do you mean? Any stipend should be taxable for both state and federal income taxes.

You didn't mention if you're on an assistantship or a fellowship, but taxes really differ between the two. The former is described as payment for any teaching or research services, from what I recall. The main difference with a fellowship is that it's not reported as income by the school (on a 1098 or W2), usually, but you still have to report it as "other" taxable income at the end of the year.

For an assistantship, books aren't deductible. For a fellowship, you can directly deduct the costs of *required* books from the income you're reporting.

I've found Turbotax to require a bit of coaxing to get the correct end result sometimes with graduate stipends, which aren't always the most useful situations.

[robot_hamster]

I had a TA position. They sent me a W-2. Graduate assistants at my school at "exempt" from social security and medicare taxes. The school (i.e. the employer) pays for all of it (their share and my share). That's why I don't have to pay the taxes. I'm only required to pay state income tax.

[Eigen]

I get the exemption from SS and Medicare, but I'm more wondering about Federal income tax no way for a school to exempt you of that that i know of. Even if you're getting it withheld, thats no assurance that you don't owe more/have a refund coming your way at the end if the year

If you have a TA position and a W2, however, filing is really easy- numbers from the W2, 1098 and a 1099 from your bank and you're set for a 1040 EZ filing. Then you just use the federal adjusted gross income to file your state taxes.

As for your original question, you probably just need to go talk to the university accounting office, it sounds like they misfiled your 1098. You can get them to issue you a corected one. Sconce you're a TA, nothing other than the tuition is deductible, and the tuition is a wash with the tuition waiver, so you just file as if the TAship was a normal job, basically..

Edited February 5, 2012 by Eigen

[robot_hamster]

Turbo Tax says I don't owe anything on my stipend. Maybe the total amount is too low to owe anything anyway.

And yep, I will check with someone on Monday to see what's going on with the 1098.

Edited February 5, 2012 by robot_hamster

[Eigen]

IIRC, the threshold for owing something is around 18k for a married couple, and around 10-12k for an individual. And, if you've been getting withholding taken out of your paycheck, you'll have paid out part of it already.

Good luck with getting your 1098 straightened out.

[alexis]

FYI employees (I.e. TA/RA stipends) who are full-time students at the university they are employed at are exempt from paying social security (and Medicare). This is a federal tax perk; the university doesn't foot the bill.

I don't know about tuition though, I didn't get a 1098, just a W-2.

And yup, it you don't make over a certain threshold, it's likely you won't owe any federal taxes or at least owe very little.

Edited February 6, 2012 by alexis

[robot_hamster]

My school might not pay for it, I don't know how it works exactly. It might just be exempt. For some reason, every time I say I am exempt people say that that can't be so. It is in the GA handbook at my school, so I know I am. So thanks for clearing that up.

Thanks everyone for your help.

[long_time_lurker]

1098

No, they only pay for tuition. I have to pay all the required fees out of pocket and I have to buy my own books. Turbo Tax is telling me I can't take books etc. as a deduction. My 1098-T form says my scholarship was about $300 more than what the "tuition and related expenses" was. I went back and looked at my account showing all the charges and credits. Something isn't adding up. I might call whoever is in charge of this stuff on Monday.

1) 1098-T's are famous for being wrong. The important thing is that you don't have to put what is on the 1098-T. As long as you have documentation (i.e. bursar statements that show your bills for tuition & fees, the amount of your waiver, and amount you paid) you can put the actual amounts on your return.

2) Just add your books cost onto whatever your out-of-pocket fees cost was, and enter that in TurboTax, then it won't complain. In all seriousness though, there are differences among the different deductions in whether you can count books as an expense or not. One standard says the books must be REQUIRED, as in you buy them from the school directly when you sign up for the course; one standard says the books must be Required, as in if you were to show an auditor your syllabus, you would be ok. Another standard - which is what I use on Schedule A - it's good enough that your books are an expense. It really goes by whether your taking a deduction or credit, and for a deduction whether the deduction is above-the-line or below-the-line.

Honestly I would just can the software and do it by hand. The IRS publishes all of the information online and all the forms (and instructions) no matter how obscure are available at the click of a button, unlike the old days when you used to have to go to the post office which usually only had 1040's and Schedule A's.

[Eigen]

Personally, the main reason I use Turbotax is that it's really easy to just clone your information after the first year. And on a 1040EZ, half of the time is filling in information.

When it comes to books/required fees and deductions, I figure that I'll claim what I think are legitimately required, and if audited, we'll see how it goes. It's not like the deduction causes an enormous reduction in tax burden.

[robot_hamster]

Okay, I figured it out (partially). The school charged my account for the student health plan. GAs get a reduced rate for the student health plan. There was a credit on my account for difference (actual cost - what GA is responsible for = amount credited to the account). So I added:

tuition waiver for spring semester

tuition waiver for fall semester

credit for student health plan

This equals the amount displayed in "scholarships and grants". That's box 5 on the 1098.

Anyway, this difference basically means that I will be paying taxes on "income" that I never really received because it was used to cancel out most of the student health plan premium. That doesn't sound very fair.

Edited February 7, 2012 by robot_hamster

[Eigen]

Actually, from what I recall of the tax documents on GA/TA stuff, payments towards a health plan count as income for tax purposes, since it's not directly a benefit of employment, but rather an increased compensation to help cover a cost. It's part of a stipend or grant that isn't paying for required tuition, fees or supplies, so it's taxable.

IE, if you got health insurance as part of your employment, it wouldn't be taxed. But you aren't. You're getting an increase to your stipend to help pay for part of your healthcare.

Ours is the same way- it's not really a reduced cost to the student health plan, but rather that our department increases the stipends of those GAs on the health plan to help out with paying for it.

Edited February 7, 2012 by Eigen

[robot_hamster]

That still doesn't sound very fair. If it wasn't for the health plan credit, I would actually be given credit for the fees I had to pay for out of pocket since the tuition waiver only cancels out the tuition.

i.e. tuition and fees would equal more than scholarship

Edited February 7, 2012 by robot_hamster

[Eigen]

None of that has changed.

Effectively, the credit was an addition to your stipend. Since it wasn't paid normally (ie, a paycheck) it wasn't taxed. Hence, it's additional income that has yet to be taxed, so it needs to be reported and paid for.

The 1098 shows how much you were paid (tuition waivers+that credit), and then how much your tuition costs were.

If you paid for fees out of pocket, you can plug that into turbotax and take it as a deduction.

There's no difference between how they're doing it with the 1098 and if they'd just added that amount to one of your paychecks.

[robot_hamster]

Still not fair. Haha!

Isn't putting in the number from box 2 accounting for the fees? It is tuition plus fees in that box. Right now, box 2 is about $300 less than box 5. If the fees weren't reported in there, then the difference would be around $900.

[robot_hamster]

Just thanking everyone for their help. I think I have this stuff figured out now.

[Goldendust]

Quick question: My 1098-T shows the tuition I paid for both Fall & Spring semesters, but only shows the tuition waiver for Fall making it look like I paid the rest out of loans that were used for other things like a computer, books, etc. It means I get a lot more back from taxes, but I'm afraid I might be audited.

[robot_hamster]

Since those are the amounts reported to the IRS by your school and what you would be entering in would match, I don't think it would cause your return to be flagged. That being said, it's probably better to be honest just to be on the safe side. It would suck to have to pay back a refund, especially if you spent it already.