Emily

You may have received money or benefits from quite a few sources of the course of a calendar year. Some of that money is taxable income and some of it is not. In this article, we will focus only on the income and expenses related to your role as a graduate student. Those income sources and relevant expenses might be documented by official tax forms generated by your university and/or funding source, but in some cases the university is not required to.

Your sources of income as a graduate student may or may not be readily apparent to you.

The most obvious source of income is your stipend, or the money you are given to pay for your living expenses. Your stipend may be compensatory (given in exchange for work) or non-compensatory (given as an award).

If your stipend is from an assistantship, your university will provide you with a W-2. This type of documentation indicates that your stipend is taxable compensation or earned income.

If your stipend is from a fellowship (or training grant), your university might report your fellowship income officially on a 1098-T in box 5 or 1099-MISC in box 3. However, your university or funding source is not required to report your fellowship to you or the IRS, so it may send you an informal courtesy letter or no documentation whatsoever. This type of documentation or lack of documentation indicates that your stipend is not taxable compensation or earned income. (Any “fellowship” income that is given in exchange for work will be reported on a W-2 and is compensatory.)

Related articles:

• What is a 1098-T?
• What is a 1099-MISC?
• What is a courtesy letter?

A less obvious source of income is the money that pays for your university-related benefits such as your tuition, required fees, and health insurance premium. This money is scholarship income, which is non-compensatory. Similar to fellowship income, the official documentation of scholarship income will be on a 1098-T, but it also may not be reported to you at all.

Related article: What is a 1098-T?

Another important element in this equation is your qualified education expenses. Tuition, for example, is a qualified education expense, while health insurance may not be. You can find a more complete list of qualified education expenses in Publication 970 in each chapter (the definition of qualified education expenses changes with the education tax benefit you are trying to take). Your university may add up your qualified education expenses for the year and report them on a 1098-T, or it may not.

Related article: What are qualified education expenses?

If you don’t receive a 1098-T from your university, you can still figure our your scholarship income and qualified education expenses by viewing the transactions in and out of your student account (which may be termed your Bursar or Cashier’s account or have another name). It’s also a good idea to check the amounts reported on your 1098-T against these transactions. You may have additional qualified education expenses that did not pass through your student account, such as money you spent on required textbooks.

Before you begin preparing your tax return, make sure you can answer these questions:

1. What amount of compensatory stipend pay did I receive? What amount of non-compensatory stipend pay did I receive?
2. What documentation did I receive or not receive for my stipend?
3. Did I have any scholarship income? If so, what is the total amount and is there documentation?
4. Did I have any qualified education expenses? If so, what is the total amount and is there documentation?

Use the answers to these questions to help you prepare your tax return.

Parent post: Grad Student Income Tax Guide: 2015 Edition

We at Grad Student Finances are not tax professionals, and none of the content in this section should be taken as advice for tax purposes.

 

If you are receiving a fellowship stipend and your university does not allow you to have income tax withheld from it, you may be required to make quarterly estimated tax payments. These estimated tax payments need to be listed on your federal tax return so you receive credit for making them. Luckily, entering estimated tax payments into TurboTax is fairly straightforward. Follow the steps below to account for your estimated tax payments on your federal tax return:

1. Under the ‘Federal Taxes’ and ‘Deductions & Credits’ tabs, click ‘Check for tax breaks’ and ‘Show me the full list.’ Scroll down to ‘Estimates and Other Taxes Paid’ and click ‘Start’ next to ‘Estimates.’

2. Under ‘Estimated taxes’ and ‘Estimated tax payments,’ click ‘Start’ next to ‘Federal estimated taxes for 2016 (Form 1040ES).

3. Affirm that you paid federal estimated tax in 2016 and press ‘Continue.’

4. Enter the amounts of the federal estimated tax payments you made in 2016 and press ‘Done.’

5. Under ‘Estimates and Other Income Taxes Paid’ and ‘Estimated Tax Payments,’ choose ‘Start’ next to ‘State estimated taxes for 2016.’

6. Affirm that you paid state estimated tax in 2016 and press ‘Continue.’

7. Enter the amounts of the state estimated tax payments you made in 2016 and press ‘Done.’

 

That’s it!

Check: The first page of the 1040A shows the fellowship income in Line 7 and the estimated tax payments in Line 41.

Parent post: Grad Student TurboTax Guide: 2015 Edition

We at Grad Student Finances are not tax professionals, and none of the content in this section should be taken as advice for tax purposes.

 

This year, TurboTax recognized the fact that some graduate students receive 1099-MISC forms for their fellowship income and does not force you into a self-employment trap. Great! Unfortunately, TurboTax does not report the income as fellowship income but rather “Other” income. If you follow the steps that TurboTax suggests for 1099-MISC fellowship income, 1) you’ll have to pay $35 to upgrade the software and 2) your income will be reported in line 21 of the 1040 instead of line 7 with “SCH” next to it.

If your 1099-MISC box 3 income is from a fellowship or training grant, you will need to enter the 1099-MISC information into TurboTax piecemeal to report it as a fellowship/scholarship. Entering your 1099-MISC information into TurboTax will take two general steps: 1) entering the income from Box 3 (step 1) and 2) entering the tax withheld from Boxes 4 and 16 (steps 2 to 4).

1. First, follow the steps for entering undocumented fellowship/scholarship income into TurboTax to enter the income reported in Box 3 of your 1099-MISC.

2. Go to the ‘Federal Taxes’ and ‘Deductions & Credits’ tabs. Click ‘Check for other tax breaks’ and ‘Jump to the full list.’ Next to ‘Estimates and Other Taxes Paid,’ click ‘Show more’ and then press ‘Start’ next to ‘Other Income Taxes.’

3. On the ‘Income taxes paid’ page, scroll down to ‘Other Income Taxes Paid in 2015’ and then press ‘Start’ next to ‘Withholding not already entered on a W-2 or 1099.’

4. Enter the tax withheld from Boxes 4 and 16 of your 1099-MISC into the first Other Withholding fields and press ‘Continue.’

That’s it!

Check: Under tabs ‘My Account’ and ‘Tools,’ click ‘View Tax Summary’ and then ‘Preview My 1040’ to verify that the income you entered was added to the correct line on your tax return.

Parent post: Grad Student TurboTax Guide: 2015 Edition

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.

Please note that this post was published for tax year 2015.

Entering undocumented fellowship income into TurboTax is slightly unintuitive, but the steps below will show you how.

1. Under the ‘Federal Taxes’ and ‘Deductions & Credits’ tab, press ‘Continue.’

2. On the ‘Let’s check for tax breaks’ page, select ‘Jump to the full list.’ Scroll down to ‘Education’ and press ‘Show more.’ Select ‘Start’ for ‘Expenses and Scholarships (Form 1098-T).’

3. Counter-intuitively, to enter undocumented fellowship income, select ‘Yes’ on the section regarding higher education expenses.

4. Enter your proper personal information on the next three screens.

5. To enter undocumented fellowship income, say that you did not receive a 1098-T (but if you did receive one for other scholarship and fellowship information, say yes and enter the information from the form).

By default, universities are supposed to issue each student a 1098-T. TurboTax wants you to verify that you qualify for an exception to that rule. The most likely reason that a grad student receiving a stipend would not receive a 1098-T is that he had more scholarship/fellowship income than qualified education expenses.

6. Click through the next several screens, entering your proper information. (I’m skipping the expenses section for now because I’m focusing on the fellowship stipend income. However, if you have any relevant education expenses you should enter them at this point at this point.)

7. Finally, we arrive at the Scholarships and Financial Aid page – click ‘Continue.’

8. On the next screen, say ‘Yes,’ enter the amount of your undocumented fellowship/scholarship information under ‘Other Scholarships/Grants/Fellowships,’ and press ‘Continue.’

9. Enter your proper information on the next screen.

10. Next, TurboTax asks what you used this fellowship/scholarship information for. The hypothetical grad student didn’t pay room and board, etc. with this fellowship, so his answer is ‘No.’ If you did, just enter your information here. (For what it’s worth, I also answered ‘Yes’ at this stage to test it out, and it didn’t affect the outcome.)

11. Enter your proper information on the next three screens.

12. Next, TurboTax gives you the option to enter the information for another student.

13.  TurboTax concludes that you can’t claim an education deduction or credit, which is what we expected as our intention was to report additional income.

That’s it!

Check: Under tabs ‘My Account’ and ‘Tools,’ click ‘View Tax Summary’ and then ‘Preview My 1040’ to verify that the income you entered was added to the correct line on your tax return.

Parent post: Grad Student TurboTax Guide: 2016 Edition

We at Grad Student Finances are not tax professionals, and none of the content in this section should be taken as advice for tax purposes.

Entering 1098-T information – scholarships, fellowships, and qualified education expenses – into TurboTax is very straightforward. The software should prompt you through the process fully under the ‘Deductions and credits’ section, or you can follow the steps below.

1. Under ‘Setup,’ choose ‘College expenses/tuition’ and then press ‘Continue.’

2. Choose the ‘Federal Taxes’ and ‘Deductions and credits’ tabs and then press ‘Continue.’

3. Then, press ‘Start’ to enter your 1098-T information.

4. Select ‘yes’ to enter your higher education expenses.

5. Click through the next four screens, entering your proper educational information, and concluding with reaffirming that you want to enter your 1098-T into the software.

6. Now, replicate your 1098-T information exactly in the software. In this example, I am using both the fellowship and scholarship income and the qualified education expenses for the hypothetical grad student. If the fellowship stipend were not reported on the 1098-T, the amount in Box 5 would be only slightly larger than the amount in Box 2.

7. Click through the next four screens, entering your proper educational information. I selected that the income the hypothetical student reported on the 1098-T is not duplicated elsewhere on the tax return, like on a W-2 or 1099-MISC.

8. The next section is where you need to enter additional qualified education expenses such as required textbooks. The hypothetical grad student doesn’t have any, but you might.

9. In this step, TurboTax verifies that you entered your scholarship income (Box 5 on the 1098-T) correctly.

10. Sometimes universities bill qualified education expenses in a different semester from when they post the scholarships to pay for them. TurboTax asks in the next step if that is the case for your 1098-T, because the bill and scholarships can be pulled into the same tax year. The hypothetical student’s 1098-T doesn’t have this issue, but consider if yours does (e.g., the amount in Box 2 is approximately double that in Box 5 or vice versa).

11. TurboTax asks if you used your scholarship income for room and board and other non-qualified education expenses. The hypothetical student did not, but your answer could easily be yes. (I tried answering this both ways, and the result was the same for my example.)

12. Click through the next three screens, entering your proper educational information.

13. TurboTax pauses for a summary page in case you have more student information to add.

14. TurboTax concludes that the hypothetical student can’t claim an education tax deduction or benefit. That is what we expected because the purpose of this 1098-T was to enter net non-compensatory pay rather than get a tax break.

That’s it!

Check: Under tabs ‘My Account’ and ‘Tools,’ click ‘View Tax Summary’ and ‘Preview my 1040’ to verify that the income you entered was added to the correct line on your tax return. In this example, TurboTax generated a 1040A.

Parent post: Grad Student TurboTax Guide: 2015 Edition

We at Grad Student Finances are not tax professionals, and none of the content in this section should be taken as advice for tax purposes.

 

Entering your W-2 stipend information into TurboTax is very straightforward. The software will naturally prompt you to enter the information if you tell it you received a W-2, so you can follow its lead in this case.

Alternatively, follow the steps below:

1. Under the ‘Federal Taxes’ and ‘Wages & Income” tabs, click ‘Continue.’

2. Under ‘Wages and Salaries,’ click ‘Show More’ and ‘Start.’

3. Select ‘Work on my W-2 now’ and ‘Continue.’

4. In the next several screens, you will replicate the information printed on your W-2 in TurboTax. I have entered our hypothetical grad student’s income into the correct boxes.

Check: Under tabs ‘My Account’ and ‘Tools,’ click ‘View Tax Summary’ and then ‘Preview My 1040’ to verify that the income you entered was added to the correct line on your tax return.

Parent post: Grad Student TurboTax Guide: 2015 Edition

We at Grad Student Finances are not tax professionals, and none of the content in this section should be taken as advice for tax purposes.