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Tax question


UnlikelyGrad

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I know that I'll have to pay taxes on my stipend. What I'm really wondering is if my tuition waiver is considered "taxable income" as well. Anyone know?

Hmm that's an interesting question. And it varies by university policy. Portions of educational awards that cover direct educational expenses (tuition, fees, etc) are not taxable.

The iffy part comes in if you are a university employee. Then if your tuition reimbursement exceeds a certain threshold, then it may be taxable. You will likely not fall under this category since you will be a grad student. The only time you will need to check against it if you get a teaching assistantship or something.

So I think you will be in the clear.

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Even if you are a university employee, any money given out as remission for paying tuition, fees, or any other educational expenses is almost never taxable.

I am a university employee. And if I get over a certain amount of money for tuition remission on graduate courses, then it counts as taxable income for me. So again, it varies by university policy.

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I am a university employee. And if I get over a certain amount of money for tuition remission on graduate courses, then it counts as taxable income for me. So again, it varies by university policy.

Can you explain how this is the case? Does the university withhold on it? Essentially, my understanding on the tax code, as well as my university's head accountant is that any income spent on tuition is automatically tax deductible.

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Can you explain how this is the case? Does the university withhold on it? Essentially, my understanding on the tax code, as well as my university's head accountant is that any income spent on tuition is automatically tax deductible.

It is not considered as income being spent on tuition, in which you would be eligible to deduct a portion via Lifetime Learning Credit. You are not spending your money on it. It is considered supplemental income by the university. There is definitely a difference.

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Do I need to pay taxes on my entire stipend? If the amount that I actually receive in a check is used for books, school supplies, rent, etc. how does one figure out what amount is taxable?

IRS has a detailed section on this. The portion used for rent would be considered taxable. You should check the IRS site about this.

I know many students though who do not pay taxes on any portion of their stipends and fellowships. But then again, they may not be aware that they should.

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IRS has a detailed section on this. The portion used for rent would be considered taxable. You should check the IRS site about this.

I know many students though who do not pay taxes on any portion of their stipends and fellowships. But then again, they may not be aware that they should.

This is true. The IRS will occasionally come back and ask the university of this information, so be careful.

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It is not considered as income being spent on tuition, in which you would be eligible to deduct a portion via Lifetime Learning Credit. You are not spending your money on it. It is considered supplemental income by the university. There is definitely a difference.

I would still look into that more closely FSIA. If I don't have to pay taxes on stipend used for books and other educational expenses, I would be shocked if you need to pay taxes on supplemental income spent directly on tuition.

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I would still look into that more closely FSIA. If I don't have to pay taxes on stipend used for books and other educational expenses, I would be shocked if you need to pay taxes on supplemental income spent directly on tuition.

Trust me when I say I have worked in Higher Education long enough to understand the stipulations very well regarding tuition remission for all of the universities I have been affiliated with. There is a large policy difference between graduate students and employees.

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Trust me when I say I have worked in Higher Education long enough to understand the stipulations very well regarding tuition remission for all of the universities I have been affiliated with. There is a large policy difference between graduate students and employees.

This is true, but having worked in graduate financial aid for over two years now, I am alarmed by your distinction between employee and graduate student, simply because it opens a can of worms. Most students are paid through TAs or RAs which are technically classified as part time regular positions. If the tuition waiver generated from these positions is considered pay, this would open almost all of them to your above dichotomy.

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Sounds like it's confusing! Argh. I was inclined to pay on stipend only, and this is probably what I'll do.

Of course, this is all a formality for me--with four children I get a fair amount of $ deductions and probably won't have to pay any taxes anyway--but I like to fill out my tax forms correctly.

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This is true, but having worked in graduate financial aid for over two years now, I am alarmed by your distinction between employee and graduate student, simply because it opens a can of worms. Most students are paid through TAs or RAs which are technically classified as part time regular positions. If the tuition waiver generated from these positions is considered pay, this would open almost all of them to your above dichotomy.

Exactly. Which is why is helps to check with the university in question about those things, as I have suggested. Not all universities have the same policies. The terms of the assistantships are also typically spelled out in terms of number of credits that be taken under the assistantship and whether it would be taxable income.

Also note the Op raised two different questions. The portion of her financial package waiving her tuition would not be taxable income because it is covering direct educational expenses.

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Any idea what the rule is for F1 student visa holders (international grad students)? Some websites say that a federal tax of 14% will be levied on the stipend alone and some people who've done internships in the US tell me that they get back the amount when they file for tax returns because F1 visa holders are not liable to pay tax. Does anybody in here know what the actual rule is? Is it true that I can get back all the money when I file for returns?

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Sorry, I don't know much about taxation of international students. But for the American students, the following link has a decent explanation, scroll to the bottom third of the page, of how this works:

http://www.irs.gov/individuals/students ... 74,00.html

Also, if you click on the link for IRS Pub 970, one of the 1st few pages has a chart which gives quick answers to what's taxable and what's not.

But definitely, if you get money for tuition and don't have to pay tax on it, you don't get a deduction or credit for it either - that would be double dipping.

(my SO is a CPA and helps me out with this stuff)

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Sorry, I don't know much about taxation of international students. But for the American students, the following link has a decent explanation, scroll to the bottom third of the page, of how this works:

http://www.irs.gov/individuals/students ... 74,00.html

Also, if you click on the link for IRS Pub 970, one of the 1st few pages has a chart which gives quick answers to what's taxable and what's not.

But definitely, if you get money for tuition and don't have to pay tax on it, you don't get a deduction or credit for it either - that would be double dipping.

(my SO is a CPA and helps me out with this stuff)

Thanks! That is definitely helpful.

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So, I'm currently paying about 20.5% of my total (is that Gross or Net? I can never remember) income in federal and state income taxes, FICA and medicare, after about 9.5% is deducted pre-tax for healthcare, transit card, retirement savings, etc. I think that I must be in the bottom tax bracket already (I do okay though), but I wonder whether anyone knows whether this talk about "taxes" is comprehensive or not. That is, should I expect to be paying the same 20.5% toward federal & state and social security and medicare, or do graduate students living near the poverty line get to be exempt from some of those tax-like things? And if the school doesn't withhold taxes from my fellowship, do I need to worry about paying MORE in taxes because of the amount my employer currently pays? Does anyone know if the rules are different in the state of CA? I know, I'm sure there's a website I can look at, but I thought it was worth asking. Maybe you know - or maybe you can give me a good URL?

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