Taxes

[Horb]

I'm going to be a first semester MA/PhD student this fall and was curious about how taxation works. My first year is a fellowship, meaning I do not teach, I just get paid to go to classes. I looked up the tax code online, but it is pretty confusing about whether or not a fellowship is actually taxed. I know TA positions are, but as this isn't that, I wasn't sure.

 

I emailed one of the people in the program currently and they said the first year isn't taxed, but I'm worried that if I don't put money away, I'll get a bill from the IRS and be in trouble. Has anyone had any experience with this?

 

 

[ss2player]

As far as I know, you will get a 1099-MISC form instead of a W-2 for any fellowship money. You owe federal tax on any of that not used for educational expenses (so rent, groceries, etc). I plan to save 15% of my stipend for tax purposes and I think if you owe >$1000/year you pay them in quarterly installments.

 

I would definitely love some more info on this, though! From what I hear, many students don't file and just hope they don't get caught...

[ComeBackZinc]

My fellowship is taxed, but it comes out of the check, so I don't have to worry about setting money aside. In any case: your department's financial officer, whatever his or her title, is employed to help you out with this sort of thing, so don't hesitate to email and ask.

[Horb]

I imagine with my state's rent deduction and my student loan deductions I probably wouldn't have to pay much anyway for state. I'll see about federal! Thank you!

[hopefulwoolfian]

I paid on my fellowship my first year and ended up paying something like $450 in taxes (partially because I have side income for the summer). Some others in my program didn't report their fellowship and turned out fine, but I didn't want to risk it (especially since I've messed up on my H&R Block form and the IRS came after me for an entire $5.00). This year, mostly because of the rent credit, I actually got a $350 refund, so make sure you're using that!

[Horb]

$450? That'd be awesome if it was that cheap. I'm definitely going to see an accountant or tax specialist about this. I read about having to pay "estimated" tax each quarter or risk a penalty, but I'd like to get an idea of how much I should save for that.