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Grad Student Tax Lie #5: If nothing was withheld, you don’t owe any tax.

February 10, 2016 by Emily

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Image adapted from Flickr user Geoffrey Fairchild and used under Creative Commons licensing

This lie starts with the assumption that the it’s the IRS’s responsibility to collect the tax due. Instead, it is truly up to the taxpayer to send in the appropriate amount of tax due, either once per year in tax season or on a regular basis throughout the year. There are lots of types of income other than grad student non-compensatory pay that do not or may not have taxes withheld from them, and the responsibility is still on those taxpayers to sent in the right amount of tax in a timely manner.

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Graduate students with assistantships will receive W-2s at tax time and will likely be required to set up income tax withholding. Domestic graduate students with fellowships, on the other hand, may or may not have taxes withheld from their stipends. Some universities offer graduate students with fellowships the opportunity to have taxes withheld and some do not. If your university does have a system for withholding taxes from fellowship pay, doing so will likely help your money management.

If you are not having tax withheld from your stipend, you need to check whether you are supposed to pay quarterly estimated tax or simply send in your tax due once per year.

Tax lie #1 and tax lie #4 explain in more detail that fellowship pay is taxable. See the tax lies home page for a full list of tax lies that graduate students should not fall for.

We at Personal Finance for PhDs are not tax professionals, and none of the content in this section should be taken as advice for tax purposes.

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Filed Under: Taxes Tagged With: tax lies

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  1. How to Prepare Your Grad Student Tax Return - Personal Finance for PhDs says:
    February 7, 2018 at 9:38 pm

    […] Grad Student Tax Lie #5: If Nothing Was Withheld, You Don’t Owe Any Tax […]

  2. Weird Tax Situations for Fully Funded Grad Students - Personal Finance for PhDs says:
    February 21, 2018 at 12:31 pm

    […] Grad Student Tax Lie #5: If Nothing Was Withheld, You Don’t Owe Any Tax […]

  3. The Complete Guide to Quarterly Estimated Tax for Fellowship Recipients - Personal Finance for PhDs says:
    March 26, 2018 at 6:41 am

    […] Grad Student Tax Lie #5: If Nothing Was Withheld, You Don’t Owe Any Tax […]

  4. New Fellow? Pay Your Quarterly Estimated Tax for the First Time This Week! - Personal Finance for PhDs says:
    April 9, 2018 at 2:27 pm

    […] in the US: you do owe federal income tax (and probably state, too) on your fellowship income. If income tax is not being withheld from your stipend/salary (and the majority of universities do not offer withholding on this type of income), you may be […]

  5. How to Financially Manage Your NSF Graduate Research Fellowship - Personal Finance for PhDs says:
    July 15, 2018 at 2:08 pm

    […] Grad Student Tax Lie #5: If Nothing Was Withheld, You Don’t Owe Any Tax […]

  6. How Much Tax Will I Owe on My Fellowship Stipend or Salary? - Personal Finance for PhDs says:
    October 15, 2018 at 10:08 am

    […] Grad Student Tax Lie #5: If Nothing Was Withheld, You Don’t Owe Any Tax […]

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