An interesting question came up recently from someone I was talking to -- The question was, "What taxes, if any, do I have to pay on my graduate assistantship stipend in graduate school?"
Are assistantship stipends taxable?
The simple answer to this is YES. They are reported to the IRS as taxable income. However, depending on the state, the rules change slightly.
For example, in Virginia (see grads.vt.edu link below), federal and state withholding taxes will be taken out of each paycheck. International students are subject to different rate schedules and filing procedures unless specifically exempted by a tax treaty.
On the other hand, at the University of Pennsylvania, full time graduate students in engineering departments are considered Research Fellows. Their stipend is subject to Federal income tax, but not Pennsylvania personal income tax. One-half of the stipend is also subject to City of Philadelphia wage tax. In addition, as a full-time graduate student a Research Fellow’s stipend is exempt from FICA/Medicare tax. (see finance.upenn.edu link below)
Furthermore, in North Carolina, ful time graduate students on assistantships are subject to federal and state withholding taxes, but are exempt from FICA taxes (see acs.ncsu.edu link below).
So, as you can see, the rules vary slightly on what degree of taxes you have to pay from state to state. Now that we know that you do indeed pay taxes when receiving an assistantship, my follow up question pertains to what you can deduct on your taxes as a student.
What tax deductions can you itemize as a graduate student?In looking at the IRS.gov website below, it is pretty definitive what the answer to this is -- You can deduct the follow things:
- Tuition and fees required for enrollment or attendance; and
- Fees, books, supplies, and equipment required for courses.
***You cannot exclude any part of a scholarship used for room and board expenses. (Dang!!!)
As you might have figured out by now, since in most engineering and science programs, almost all of your student experiences are fully taken care of by the department, it looks like there won't be much tax deducting on major expenditures. However, if you are in a program where you are paying for everything yourself, remember to deduct the items above from your income at tax time in April.
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