There are two broad categories of PhD trainee income: employee income and awarded income. Employee income is W-2 pay, whereas awarded income is any other regular type of income for a graduate student or postdoc, e.g., Form 1098-T Box 5 or Form 1099-MISC Box 3 or 7. For US citizens and residents, both employee and awarded income are supposed to be reported in the ‘wages’ line on your tax return, i.e., Form 1040 Line 1. For non-residents (e.g., some international students and postdocs), other lines on Form 1040-NR and Form 1040-NREZ are used. Read on for the relevant tax code references.

Where to Report Employee (i.e., W-2) Income

Compensatory income comes from work as an employee and will be reported on a Form W-2. The terms used for employees at the postdoc level vary quite a lot, but at the graduate student level the positions are usually called assistantships (research, teaching, graduate, etc.).

Your gross yearly compensatory income will appear in Form W-2 Box 1, and the income tax that has been withheld from you pay will appear in Boxes 2 (federal), 17 (state), and 19 (local).

Form W-2 contains instructions for the employee (p. 7), which state: “Box 1. Enter this amount on the wages line of your tax return.”

On Form 1040 (for US Citizens and Residents)

The wages line of your tax return is Form 1040 Line 1, which is labeled: “Wages, salaries, tips, etc. Attach Form(s) W-2.”

The Form 1040 instructions for Line 1 (p. 21) state: “Enter the total of your wages, salaries, tips, etc. If a joint return, also include your spouse’s income. For most people, the amount to enter on this line should be shown in box 1 of their Form(s) W-2.”

On Form 1040NR (for Non-Residents)

The wages line of your tax return is Form 1040NR Line 8, which is labeled: “Wages, salaries, tips, etc. Attach Form(s) W-2.”

The Form 1040NR instructions for Line 8 (p. 17) state: “Enter the total of your effectively connected wages, salaries, tips, etc. Only U.S. source income is included on line 8 as effectively connected wages. For most people, the amount to enter on this line should be shown in box 1 of their Form(s) W-2.”

On Form 1040NR-EZ (for Non-Residents)

The wages line of your tax return is Form 1040NR-EZ Line 3, which is labeled: “Wages, salaries, tips, etc. Attach Form(s) W-2.”

The Form 1040NR-EZ instructions for Line 3 (p. 6) state: “Enter the total of your effectively connected wages, salaries, tips, etc. Only U.S. source income is included on line 3 as effectively connected wages. For most people, the amount to enter on this line should be shown in box 1 of their Form(s) W-2.”

Where to Report Awarded Income

Awarded income is not given in exchange for work as an employee, and therefore no W-2 is issued. At the graduate student level, awarded income is usually called scholarships, fellowships, and grants. The titles used for postdocs receiving awarded income vary, but they are not considered employees.

Awarded income will be officially reported to the student on a Form 1098-T in Box 5, on a Form 1099-MISC in Box 3 (rarely Box 7), or on a Form 1042-S in Box 2 (for non-residents). It also might be unofficially reported on a courtesy letter or not appear on any documentation at all.

Please note that when you calculate the taxable portion of your non-compensatory income for the year, you have two choices for what to do with your qualified education expenses: to take a deduction or a credit. See How to Prepare Your Grad Student Tax Return for more details.

Publication 970 Chapter 1 discusses where to report the taxable portion of scholarships, fellowships, and grants (p. 6-7):

How you report any taxable scholarship or fellowship grant income depends on which return you file.

Form 1040 or 1040-SR. If you file Form 1040 or 1040-SR, include the taxable amount in the total on line 1. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 1.

Form 1040-NR. If you file Form 1040-NR, report the taxable amount on line 12. Generally, you must report the amount shown on Form(s) 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, box 2. See the Instructions for Form 1040-NR for more information.

Form 1040-NR-EZ. If you file Form 1040-NR-EZ, report the taxable amount on line 5. Generally, you must report the amount shown on Form(s) 1042-S, box 2. See the Instructions for Form 1040-NR-EZ for more information.

The Form 1040 instructions for Line 1 (p. 21) state: “The following types of income also must be included in the total on line 1… Scholarship and fellowship grants not reported on Form W-2. Also, enter “SCH” and the amount on the dotted line next to line 1.”

Form 1040NR Line 12 is labeled: “Scholarship and fellowship grants. Attach Form(s) 1042-S or required statement (see instructions).”

The Form 1040NR instructions for Line 12 (p. 20) state: “If the grant was reported on Form(s) 1042-S, you must generally include the amount shown in box 2 of Form(s) 1042-S on line 12. However, if any or all of that amount is exempt by treaty, do not include the treaty-exempt amount on line 12. Instead, include the treaty-exempt amount on line 22 and complete item L of Schedule OI on page 5 of Form 1040-NR.”

Form 1040NR-EZ Line 5 is labeled: “Scholarship and fellowship grants. Attach Form(s) 1042-S or required statement.”

The Form 1040NR-EZ instructions for Line 5 state: “If the grant was reported on Form(s) 1042-S, you generally must include the amount shown in box 2 of Form(s) 1042-S on line 5. However, if any or all of that amount is exempt by treaty, do not include the treaty-exempt amount on line 5. Instead, include the treaty-exempt amount on line 6 and complete item J of Schedule OI on page 2 of Form 1040-NR-EZ.”