<p>This may not necessarily be the most academic topic, but I'm sure it's quite useful... I'm sure many of you have some experience... or need help... with filing your taxes for your stipends and fellowships!</p>
<p>I've just started graduate school this fall with full funding/support through a research assistantship. I also had a fellowship through NLM this past summer. I am aware that taxes aren't directly taken out of stipends and fellowships (ie because they weren't from my pay checks!), but I'm confused as to how to go about reporting them. I've looked at the IRS website where they mention that you would have to estimate quarterly taxes... any way to go about this?? I've also heard that you could just wait until tax statements are due in April to report everything... then you would owe the government. Then I've also heard that if the funding is used directly towards your tuition (I guess in the case of a summer fellowship/stipend used in the next semester if you weren't funded) then you are not required to pay taxes on it.</p>
<p>So what are your recommendations for going about this?? The last thing I need is the IRS hunting me down, handcuffs in hand to arrest me for not paying my taxes!</p>
<p>Whatever you're paid for your stipend is taxable income. So, my stipend is around $25,000 a year, so I have to report all of that as earned income. I set up an ING Direct account to automatically take out around 25% of my paycheck every month, so when I have to cut the big check to the IRS in April, I'll know all of my money is there (plus ~3.5% interest).</p>
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Then I've also heard that if the funding is used directly towards your tuition
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<p>This means the portion of your stipend that covers tuition (in my case around $30k a year) which you'll probably never lay hands on you don't consider as taxable income. I'm not sure if you're required to report it or not; I don't think I did last year.</p>
<p>You are supposed to pay quarterly estimated taxes, because I was under the impression that the government will levy a penalty on you if you wait to pay everything until April -- you won't have been paying enough at the intermediate times of year. Plus, it's easier to pay as you go along than to have to write a big check at the end of the year, at least for me.</p>
<p>If you worked at a job that withheld taxes for the first part of the year, you often don't need to start paying estimated taxes until the January due date of your first year in grad school. When I started grad school, my fiscal-year-pre-grad-school job had withheld enough money to cover my stipend taxes.</p>
<p>If you live in a state that has income tax, you'll also need to pay quarterly estimated income tax.</p>
<p>Is that clear as mud? :) (Obvious disclaimer: I am not an accountant, so this is only unofficial tax advice, etc.)</p>
<p>This isn't directly relevant but you needn't worry about the IRS hunting you down with handcuffs and drug sniffing dogs. I worked for a company that deducted the taxes from my paycheck but never actually handed the money over to the government. The IRS was somewhat friendly when I got audited. They explained the situation fully, assigned a specific person to my case (and gave me her contact info), and only charged me the taxes that I had accrued plus interest and a 50.00 dollar processing fee. I was able to recoup the costs from my criminally negligent employer and all was well. In conclusion, do deal with this but don't let it stress you out too much.</p>
<p>In addition to my fellowship, I was given a chunk of money to be used for educational expenses (program fees, travel to conferences, books, computer, etc). Does anyone know how this is taxed? </p>
<p>From what research I've done, it appears that I can only count expenses that are specific requirements of the program as non-taxable educational expenses. So although a computer is absolutely essential for my specific graduate work, since it's not included in the charges for my program, I can't deduct that as an educational expense?</p>
<p>If you're paying for a computer that's used for work, then you might be able to deduct it as a work expense. Similarly, if you're buying books, going to conferences and whanot as an "essential" part of your duties (which I imagine they are), then your expenses on them should be tax deductible.</p>
<p>Anyone a bit more experience know the answer for sure so we won't get nailed when we're eventually audited? :)</p>
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My university required each incoming freshman to come to school with their own computer. Is there any way to deduct the cost of the computer from my tax liability?</p>
<p>The cost of a personal computer is generally a personal expense that is not deductible. However, if the school includes the cost of school-supplied computers as part of the cost of tuition or as a fee required for attendance or enrollment, and bill students for computer software that students cannot obtain elsewhere, your expenses may qualify as an expense towards either the Lifetime Learning Credit or Hope Credit. For more information, refer to Publication 970, Tax Benefits for Education, Chapters 2 and 3.
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<p>For travel,
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What types of educational expenses are deductible?</p>
<p>Deductible educational expenses include amounts spent for tuition, books, supplies, laboratory fees, and similar items. They also include the cost of correspondence courses, as well as formal training and research you do as part of an educational program. Transportation and travel expenses to attend qualified educational activities may also be deductible. For more information, refer to Publication 970, Tax Benefits for Education; Chapter 12 and Tax Topic 513, Educational Expenses.
<p>Thanks for that link mollie, my girlfriend and I were just talking about what we ought to be able to deduct this year. Hopefully it'll help settle a bit of our disagreements!</p>
<p>Good time to learn how to do taxes. Our S first year of grad school, we had a similar questions and complicated by S going to a Canadian school. Son has a fairly complicated tax situation and we prepared for this tax preparation, one year in advance. Not happy with the preparation fee but worthwhile for his first year as grad student . The second year, S was able to do his own taxes and save himself a bundle in fees and now able to do the most complicated tax forms.</p>