Are stipends taxed? Or is the amount given in my offer letter the exact amount given to me?

[dirkwww]

Are stipends taxed? Or is the amount given in my offer letter the exact amount given to me? Will it shrink from taxes?

[FeelTheBern]

38 minutes ago, dirkwww said:

Are stipends taxed? Or is the amount given in my offer letter the exact amount given to me? Will it shrink from taxes?

From what I understand, most stipends are taxed, so expect it to shrink. I would recommend looking at the tax table for the city/state that you are planning on moving to and subtracting whatever amount is indicated from your total stipend. This will help you to create a realistic budget for yourself.

Edited March 8, 2016 by FeelTheBern

[kalexand]

Mine is taxed, but less so than an average employee. For example, I don't get anything taken out for medicare and social security taxes.

[TakeruK]

Stipends are taxed. The school does give you exactly the amount they state in the offer letter, but you will owe the US Government taxes (which the schools may withhold on their behalf, but the school still pays you the full amount). It's really hard for others to guess how much tax you will pay because everyone's situation is different.

On average though, expect to pay about 10% to 15% of your stipend as taxes. These are good guideline numbers to budget for. As kalexand says, graduate students do not pay FICA payroll taxes (medicare and social security) so we are taxed about 6% less than non-student employees.

[guest2130]

My stipend is also taxed but it isn't that bad; as @TakeruK mentioned you still get close to the amount the school offers. 

[EveryDay]

I'm assuming you would also get education credits during tax season, which would make the situation better, right?

[TakeruK]

1 hour ago, EveryDay said:

I'm assuming you would also get education credits during tax season, which would make the situation better, right?

You are not taxed on your tuition waiver and you get credits for any mandatory supplies (or books etc.) that are specifically required for the course and required of every student. But I don't think you get much more credits than that. You get more deductions if you are a resident though---I file as a non-resident alien, so I can't take the standard deduction (I have to itemize, but there isn't much I can itemize). Smaller stipends and/or larger amounts of deductions will mean a lower effective tax rate!

[EveryDay]

23 minutes ago, TakeruK said:

You are not taxed on your tuition waiver and you get credits for any mandatory supplies (or books etc.) that are specifically required for the course and required of every student. But I don't think you get much more credits than that. You get more deductions if you are a resident though---I file as a non-resident alien, so I can't take the standard deduction (I have to itemize, but there isn't much I can itemize). Smaller stipends and/or larger amounts of deductions will mean a lower effective tax rate!

That makes sense, thanks for the info! I recently became a permanent resident, so I'll check out the deduction situation depending on where I get (and if!). Not expecting much anyways.

[FantasticalDevPsych]

Mine is taxed and I think my letter stated this. I just filed for this year and I am getting everything I paid my state back and a decent federal return compared to what I paid. Monthly, I get to keep about 90% of what my letter said my monthly stipend would be, the rest goes to taxes. 

[lewin]

Presumably the OP is American but for any Canadian readers, stipends that are classified as scholarships are not taxed. The portion that is classified as TA wages is taxed. You also get tuition credits that will (likely) be more than enough to get any taxes returned.

[eternallyephemeral]

Just now, lewin said:

Presumably the OP is American but for any Canadian readers, stipends that are classified as scholarships are not taxed. The portion that is classified as TA wages is taxed. You also get tuition credits that will (likely) be more than enough to get any taxes returned.

You're absolutely right. In addition, any pay directly for work (including TA or RAships) is taxed, but your won't pay tax on the money you make if you're below minimum wage (around $22,000 in Ontario for example). So if about $12k is coming from TA or RAships, you won't be paying any tax, and you shouldn't need to use your tuition credits below 22,000.