Sign the petition to make graduate stipends tax-exempt again!

[TakeruK]

TakeruK,

Thanks for the info. That actually isn't so different from how it is in the US- the only parts of any funding that are taxable (whether it's TA/RA pay, scholarships, fellowships, etc) are those that are not used to directly pay for educational costs- tuition, fees, required books, etc. Any funding that is used for required school expenses is directly deductible.

What is taxed is the stipends that go towards living expenses, and any other income on top of school expenses.

So as an example (fairly typical in the sciences), lets say you get accepted with funding to a private university, with a tuition of around $40k per year. You're accepted with a "tuition remission" and a TAship with a 25k stipend. On top of the cost of tuition, lets say you have ~$200 per semester in books to buy for classes, and another ~$800-1000 in fees per semester.

Cool, that's interesting to know! And this will be helpful when I am in the US next year. Just to clarify though, in Canada, fellowship money is intended to be enough to both pay tuition and living costs and is not taxable. In addition, similar to your tuition remission credit, we get tax credit for tuition, living costs ($400/month), "textbook costs" ($65/month), and any monthly or yearly bus passes you buy. So with tuition averaging around $6k, and a basic tax-free income exemption of 10k, a full time grad student would have to make more than ~$22k per year in TA/RA ships in order to pay taxes. The average minimum grad student stipend, before tuition, is around $24k, and, for students without external fellowships, is 1/3 TA, 1/3 RA, and 1/3 internal fellowships. So grad students in Canada will generally not pay any taxes and also accumulate tax credits that can be used once you graduate and get a post-doc or other work.

[belleidee]

I'm not sure how books and supplies are purchased for science courses, but the IRS restrictions on these deductions make them impossible to claim for the students I know in history and humanities. The following is from the Tax Benefits for Education page of www.IRS.gov:

Student-activity fees and expenses for course-related books, supplies and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance.

...

Qualified education expenses do not include the cost of:

• Room and board.
  
• Travel.
  
• Research.
  
• Clerical help.
  
• Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution.
  
  This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. Scholarship or fellowship amounts used to pay these costs are taxable.
  
  So, costs that are required to succeed in a PhD program (and have some possibility of a job at the end), but are not tax-deductible include:
  • Books purchased from Amazon, where they're generally at least 20% cheaper (And it's not clear to me that books purchased from the student book store are eligible either.)
    
  • Books purchased for individual research -- for class projects, conference papers, a dissertation or a thesis
    
  • Travel expenses for research
    
  • Travel expenses for conferences
    
  • Copies of research materials
    

[michigan girl]

I can understand the pro-tax argument. First, you want to build up your social security and medicare so that you'll receive decent government assistance later in life (those who paid more into the system during their working years will have more money to live off in old age) Second, when you pay taxes and earn EITC-similar wages, you will be eligible for a tax refund. In my own experience, I've always looked forward to tax refunds when I needed access to money.

[Eigen]

So, costs that are required to succeed in a PhD program (and have some possibility of a job at the end), but are not tax-deductible include:

• Books purchased from Amazon, where they're generally at least 20% cheaper (And it's not clear to me that books purchased from the student book store are eligible either.)
  
• Books purchased for individual research -- for class projects, conference papers, a dissertation or a thesis
  
• Travel expenses for research
  
• Travel expenses for conferences
  
• Copies of research materials
  

How is this different than any other similar-type of job, though? All are necessary thing to advance your standing, knowledge base, and visibility in any research based field, whether you're a student or not.

Faculty and post-docs can't write them off. Industry researchers can't write them off. Why should we be able to? Properly, they aren't school-related expenses, but are rather career related expenses, and as such are not at all unique to students or "necessary" to the education, but rather professional development.

You could probably get around it by filing your taxes under a schedule C and writing them off as business expenses, though- I bet you could get that definition to stick, since they're for your professional development, and as such are legitimate expenses for your "business". I know some faculty that do this, and it seems to work OK for them. Heck of a lot more paperwork, though.