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Minnesota Taxes on Stipend


UMN2BE
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Hello,

I will be attending the University of Minnesota Twin Cities this fall and was trying to plan out some finances. For the 09-10 school year, I will have a $19,000 stipend. I will not make enough to pay state income taxes, and it looks as if my federal income tax rate will be 15% based off IRS tables. Aside from university fees, is there anything I'm missing? I'm not sure how social security/medicare works. Any help would be great.

EDIT: I also have a tuition waiver (which for out of state students is rather large.) Is this considered taxable income?

John

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You won't have FICA and Medicare taken out of your paycheck, just local/state/federal taxes. I'd double check about the state tax rate because, in every state I've lived in with an income tax, some portion of my paycheck was taken for that, even though I sometimes was able to file and get all or almost all of it back. The tuition waiver is not taxed.

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You won't have FICA and Medicare taken out of your paycheck, just local/state/federal taxes. I'd double check about the state tax rate because, in every state I've lived in with an income tax, some portion of my paycheck was taken for that, even though I sometimes was able to file and get all or almost all of it back. The tuition waiver is not taxed.

I received a form I would've needed to fill out and return if I wanted state income tax withheld throughout the year. I didn't sign up, because at least for the first year I'll still be a Michigan resident, and through a reciprocity agreement I only have to pay Michigan income taxes. For future years, any idea whether it would be more beneficial to stay a Michigan resident, or declare residency in Minnesota?

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Okay, I looked into the situation a little more.

Looks as if though I will be exempt from FICA taxes.

I misread the state tax information. My 19k will be taxed at 5.35%.

Federal tax bracket still puts me in the 15% bracket.

At this rate, I am looking at about $15,200 take home pay (before university fees, bill etc.)

Am I missing something?

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  • 1 month later...

I think this is an overestimate of the tax you will have to pay. I will be at the U of M as well and am trying to figure out how much I will have to pay and I found out a few things. First, I think there is a standard deduction that you can apply to your income to reduce the amount of income on which you have to pay tax. Second, if you are filing as a single individual, you pay 10% federal tax on the first $8350 and 15% on the rest.

If you find out more, please post the info here. I have contacted my grad coordinator as well as payroll and I hope to get some more info. They really should make this clearer for those of us who want to budget effectively!

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