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Making Ends Meet on a Graduate Student Stipend in Los Angeles

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In this episode, Emily interviews Adriana Sperlea, a PhD student in computational biology at the University of California at Los Angeles (UCLA). Living in Los Angeles is financially challenging to say the least, and Adriana has found ways to improve her cash flow over time, such as by doing a summer internship, moving into subsidized graduate housing, living car-free, and budgeting intensively. She has even recently started contributing to a Roth IRA! Adriana and Emily additionally discuss how Adriana discovered that she owed a large tax bill on her fellowship income and how she paid those back taxes and started paying quarterly estimated tax.

Links mentioned in episode

grad student los angeles

0:00 Introduction

0:54 Please Introduce Yourself

Adriana Sperlea is a PhD student at the University of California, Los Angeles. She is studying Bioinformatics through an interdepartmental program. She is an international student from Romania. Her stipend is about $32,500 and she says it goes up a little bit every year. Each month, she receives $2,400. She is in her fifth year of her program.

3:03 How do you live within your means in Los Angeles?

Adriana says that getting outside financial support wasn’t an option for her. Her family doesn’t have the means to provide her financial support. As an international student, she doesn’t qualify for subsidized loans. After her third year of graduate school, she had a summer internship that provided an income on top of her graduate stipend. This is the only extra income she has been able to receive outside of her stipend. Due to regulations on visas, international students cannot work side hustles. It is illegal for international students to be employed outside of the university. Emily says that international students are in a tough financial position because they don’t have access to options to loans or side income that U.S. citizen graduate students can access.

Adriana was on a training grant that required her to do an internship. It was the Biomedical Big Data training grant. She received pay for her internship and continued receiving her graduate student researcher funding. She lived in San Diego for her internship. San Diego is cheaper than Los Angeles, but she still had to pay her portion of rent for the apartment she shared with her partner in Los Angeles.

6:56 What is your approach to budgeting in Los Angeles?

Adriana says that before she created your budget, she had to figure out your housing costs. She lives in graduate student housing, which is subsidized and affordable, but there’s not enough available for all graduate students at UCLA. In Los Angeles, you have to shop around a lot and hustle to make housing costs work with your stipend income. Many people use Craig’s List. Finding housing that costs 30% of your income is not feasible in Los Angeles, but housing that costs 40% of your income could be feasible.

Adriana explains that the subsidized housing at UCLA is available through a lottery system. Those who get into the subsidized housing are allowed to stay for seven or eight years, basically as long as needed to complete the graduate program. The leases are month-to-month, so people move out at any time of the year. Adriana says there isn’t enough available, so she pushes for more student housing. She lives in a junior one bedroom, which costs $1,300 per month. She pays $650 for rent because she shares the one bedroom. It helps lower housing costs to share a one bedroom, but for many people this is not an ideal situation.

Adriana says that housing and transportation are the two big items for the budget. She doesn’t have a car, but she shares one with her fiancé. She says to find affordable housing, you need to spend time looking for uncommon offers, start early, and have patience. You may need to sacrifice certain amenities and quality, but look for places livable and clean. Ultimately, there is only so much you can do.

13:30 What is the system that you use for budgeting?

For her budgeting system, Adriana uses a manual spreadsheet. She inputs her income and monthly fixed payments first. Then she divides the remaining income by four, for four weeks of the month. This sets her variable spending income for each week. Whenever she buys something, she inputs it. She always has a sense of what she spends. She buys groceries on the weekends and cooks her meals, so she doesn’t go out to eat during the week. She doesn’t spend anything Monday through Friday. Often, she has about $100 leftover to use on the weekends for fun.

Emily recaps Adriana’s budgeting system. Adriana subtracts her monthly bills from her monthly income. With the remainder, she divides by four for each week. She uses it for groceries first, then doesn’t spend money during the week. She has wiggle room for miscellaneous and money leftover for the weekend. Adriana adds that if she sees something she wants to buy, she puts it on a list. At the end of the month, she looks at her list and ranks the things she wants. This reduces impulse purchases and formalizes the practice of delayed gratification.

17:30 What do you do about large expenses?

Adriana has a savings account with $2000 to $3000. She has this savings because her rent decreased since she moved into subsidized housing and she received extra income during her internship. She uses this savings account for big expenses that are necessary, and then she gradually fills it back up. She says that before her internship, it was really tough to make big purchases. For example, she didn’t go home to Romania often because she didn’t have enough for flights.

Emily recaps that Adriana got a boost from her summer internship. This helped her get ahead. She repays herself into savings instead of using a credit card. Adriana says she has credit cards for maximizing rewards but she does not spend unless she actually has that money. She has a healthy fear of credit cards.

20:16 Any other comments about your budget or how you make it work in Los Angeles?

Adriana has loosened the reigns on herself. She says she has gotten a sense of it after manually managing her budget for so long. Emily says Adriana has internalized her budget. Her budget is in her mind, so she is less dependent on the spreadsheets. Emily says that if you go to a new city, you get thrown. If there’s a big shift in your life that’s a good time to start carefully tracking again.

22:00 Can you talk about saving for retirement?

Adriana shares that about one year ago, she asked her fiancé’s dad about investing. Her fiancé’s dad talks a lot about investing, so she asked to learn more. He recommended the book A Random Walk Down Wall Street*. Adriana realized that investing is not rocket science and super simple. She thinks there is a weird culture around investing to make it sound more complicated than it is. She says that it’s easy, there’s a low risk way to do it, and during graduate school is the best time to invest. She thought that you have to worry about the market, but she jokes that the best strategy is to forget your password.

[* This is an affiliate link. Thank you for supporting PF for PhDs!]

Adriana uses a Roth IRA. This account pays taxes on her money now. She says this is better because during graduate school, this is the lowest tax bracket that she’ll ever be in. It’s the lowest tax bracket that exists, so this is a good time to invest. She puts $200 in every month. She can budget that now because her rent costs are low. Adriana likes to check in and see she’s accumulated money. Emily writes about investing on her blog and agrees investing is easy.

25:54 Can you tell us the story of your big financial mistake from your second year?

When Adriana started graduate school, she was taxed as an international student. As an undergraduate, she went to college in the U.S. She always had taxes withheld and she never had to worry about taxes. But after Adriana started graduate school, Adriana’s residency status changed from non-resident alien to “resident for tax purposes.” This means the U.S. can tax her like she’s a resident. This tax status changed in June of her first year of graduate school, but it was retroactive for the whole calendar year. She had never heard about this issue from anyone else. In June when her status changed, the IRS refunded her about $3,000 that was originally withheld from her. At the time she didn’t fully understand why she received this money, and she spent it. But when April came and she had to do her taxes, she learned that she owed about $3,000 in taxes. It was pretty scary for her.

Emily says this tax mistake is pretty common. For the first full calendar year that you’re in graduate school on a fellowship-style stipend, you’re supposed to pay quarterly estimated tax. Most people don’t know about this.

30:28 How did you pay the tax balance?

Adriana only had about $1,000 set aside. She feels a bit lucky that she was disputing with the IRS for money that she hadn’t gotten back due to a treaty between Romania and the U.S. that provides for international workers to get their taxes back from first five years from working with non-resident alien status. This dispute got resolved at the same time as her large tax bill. She also applied for a payment plan with the IRS. Anyone can do a payment plan with the IRS if you haven’t done one in past five years and your balance is less than $200,000.

Emily says that many people are intimidated by the IRS, but it sounds like Adriana had a good experience. Adriana says she spent a lot of time on hold. But if you’re a graduate student and you realize you can’t pay your tax bill, the IRS is a place to turn to and get a payment plan with no interest.

34:40 Final Comments

Adriana says budgeting can be tough and time consuming, and a little bit stressful. She says it’s worth it because it’s more stressful to not be able to pay rent. Emily says that it’s better to fess up, face up to reality of the situation, and engage with it. Don’t try to run and hide, because that compounds the problems.

35:18 Conclusion

Purchasing a Home as a Graduate Student with Fellowship Income

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In this episode, Emily interviews Jonathan Sun, a second-year PhD student at Yale University. Jonathan purchased a house in New Haven after his first year in graduate school. He shares the process he used to search for and ultimately go under contract on a home, including applying for various incentive programs. But his home ownership goal was nearly derailed; his original mortgage lender pulled out because his fellowship income isn’t reported on a W-2, and he had to scramble to find another lender at the last second.

Links mentioned in episode

homeowner grad student

0:00 Introduction

1:02 Please Introduce Yourself

Jonathan Sun is a second year PhD student in Pathology at Yale University in New Haven, Connecticut. His stipend is $35,000 and it increases annually. When he moved to New Haven, he started by renting a two bedroom, one bathroom apartment with his girlfriend. He was paying about $1,500 monthly for rent.

3:10 What made you think that it would be a good idea to buy a home as a graduate student?

When he began his PhD program, Jonathan had in mind that he would want to buy a home. He thought between his first and second year would be the ideal time to buy. At this point in his PhD, he would know if he would be staying there for five or six years. Emily mentions that it’s a good idea to learn about the neighborhoods before buying a house. Jonathan agrees that it was a good idea to get to know the city and neighborhoods. He shares that if he had bought a home when he first moved to New Haven, he would have chosen a less convenient or less desirable neighborhood.

Further reading: Should I Buy a Home During Grad School?

5:11 Was your interest in buying a home specific to New Haven or anywhere you moved to for your PhD?

The idea of buying a home occurred to Jonathan when he was interviewing at Johns Hopkins. He saw that homes were affordable near Johns Hopkins. He realized that homes could be affordable even on a graduate stipend. When he chose to attend Yale, he did some housing market research on New Haven and saw he could afford homes there.

When Jonathan was interviewing for PhD positions, he met a current graduate student at Johns Hopkins who owned their house. He didn’t meet any graduate student at Yale who bought a home. Jonathan says owning a home as a graduate student is not that common in New Haven. Emily shares that when she was a PhD student at Duke University, it was fairly common for grad students to own home.

7:20 How did you prepare your finances in the months leading up to buying a home?

Jonathan worked on improving his credit. He says that good credit is definitely important. To get a mortgage at a decent rate, or even to get a mortgage at all, he had to have good credit. Jonathan also searched for incentive programs around New Haven. He says he saved about $10,000 with incentive programs. He shares that while Yale University offered incentive programs for employees, he could not qualify for them as a PhD student. He relied on incentive programs instead of savings because he was paying expensive rent in New Haven.

To research incentive programs, Jonathan talked to a real estate agent who pointed him to incentive programs. Shortly after Jonathan arrived in New Haven, he started working with an agent. Jonathan didn’t have connections to an agent when he started to process. He simply dropped into a real estate office and met an agent there.

9:54 What were the steps you went through to buy a home?

Jonathan started looking for houses with agents about three months after he moved to New Haven. He didn’t start seriously looking until six months after his move. He says that even if you don’t have intention to buy right away, it is important to familiarize yourself with the neighborhoods. He was looking at four different neighborhoods around Yale University. He got an idea of price range for homes and who are the neighbors. This process gave him a firm idea of whether he wanted to rent or buy. Most of the time, he looked at houses through private showings with his agent. He went to just a few open houses without his agent.

During Christmas break, Jonathan thought carefully about whether he should pursue buying a home or not. He talked to his friends and family, and it seemed like the right thing to do. He asked his family if they could help with his downpayent, and made sure to have open communication with his family.

Buying a home took at least two months of seriously looking. Jonathan went through some experiences of making an offer but not getting the house. He recalls three homes that he made an offer for, and there were some other situations where he almost made an offer. He didn’t want to settle for a house that he wasn’t satisfied with. However, his offers were outbid or made too late, and this added to the challenge of buying a home. Emily shares that in Seattle, she hears stories about bidding wars and people struggling to get the house they want, then they end up settling for a home that wasn’t all that they wanted.

13:54 How did you balance the process of buying a home with your first year of graduate work?

After his offers on homes were rejected multiple times, Jonathan felt demoralized. He had lowered his standards for a home. But then when he was browsing an online resource, he found a house that looked perfect. This house ended up being the one he bought. He says it was challenging to balance his graduate work with buying a home, but he was glad he did this in his first year rather than in his second year. He shares the example that on the day that he gave his offer, he was giving a presentation on a paper. He barely read the paper because he was so tired, but he still managed to give a compelling presentation. Right after he finished the presentation, he ran off to give an offer on the house. Much of the stressful part of home buying is waiting to get a response on the offer.

16:01 Tell us about the house that you ultimately purchased and live in now.

Jonathan was browsing online on the day before his presentation. He noticed the house was ten minutes away from where he was living. The house had just gone on the market that day. He pushed his agent to get a showing the very next morning. He got to meet the owner and exchanged contact information directly. The owner was a Masters student, and they had a connection. About two hours after the tour of the house, Jonathan gave an offer of $2,000 over the asking price. This was right after his presentation. He asked to receive a response in one day. The next day, someone else made an offer of $5,000 over the asking price with full cash. Jonathan raised the offer to $2,000 over the other offer. Jonathan’s offer was accepted, and he says that meeting the owner in person helped him get the house.

19:06 How was the process of getting a mortgage?

Jonathan didn’t have his mortgage ready until after his offer was accepted. He did have a pre-approval, but this didn’t work out for him. The lenders didn’t understand his financial situation as a graduate student with a stipend. The pre-approval came from a lender with connections to multiple banks. When you make an offer on a house, it is important for the seller to know that you can afford the house. For a pre-approval, the lender does a very brief credit check on you. The pre-approval shows that you can take out a loan of a certain amount. The pre-approval shows the seller that you can take out a loan for the house. Pre-approvals are very superficial, since they do not ask for a W-2. The lender asks for monthly income and proof that you reliably pay rent.

After his offer was accepted, Jonathan first explored incentive programs. He found an incentive program that stipulated if he stayed at least five years in New Haven, the program would pay at least $2,000 per year and contribute to the downpayment. The application for the incentive program took a while. Jonathan says that ideally the application should be done before submitting an offer. The seller wanted to move out three months after the sale, so this gave Jonathan the right amount of time to sort out the finances.

Jonathan qualified for two incentive programs, but he was happy to get just one because the programs were slow to respond. The incentive programs have a list of lenders that you have to use for a loan. The lenders were local banks in Connecticut. Everything seemed like it would work. He submitted all his documents, but about three weeks before closing, he got a phone call saying that they couldn’t pre-approve of his mortgage because the university wouldn’t be able to provide W-2. The university wouldn’t submit a form indicating that his stipend is guaranteed for 3 or 4 years.

Emily explains that there are different types of pay for graduate students. The W-2 is provided for assistantships and this represents a more typical employment situation. Jonathan says he doesn’t know the name of his pay. He gets the 1098-T, and he simply calls his pay a graduate stipend. Emily says that the 1098-T usually means you are funded through an award or outside fellowship. Lenders get confused by fellowship income. Jonathan says his acceptance letter from Yale says his stipend is guaranteed for several years, but the lender wanted the university to sign a form. The university was unwilling to compromise on signing that form that indicated the stipend is guaranteed. Emily says this “guarantee” of income is strange, because even with a W-2, the typical job is not guaranteed for multiple years.

28:15 How did you resolve the problems with the lender?

Jonathan was calling Yale’s financial office daily. He asked for help from the Dean. He started looking at the other banks on the incentive program’s list, because he had a feeling it wouldn’t work with this bank. There were a few banks around the university, so he went in person to the bank. He talked to a mortgage broker in person. They sat down together, and Jonathan filled out the form during the meeting with the mortgage broker at the new bank near the university. Jonathan resolved the situation because he found someone who was willing to work with him through his unique financial situation.

Jonathan said that this bank offered their own portfolio mortgage with their own requirements. It was harder to qualify for, but it came with a lower interest rates. He had little debt and good credit so he could qualify. It was a different type of mortgage than the first lender offered.

Jonathan was really caught of guard by the phone call from the first lender. It seemed fine, then suddenly he got the call, with no easy way to resolve the issue. Closing got delayed from Friday to Monday, but the closing went very smoothly with the new lender.

32:29 How does it feel to be a homeowner and to be a graduate student?

Jonathan says it feels good to come back to his own house. He can rent out some of the rooms. If he rents out two bedrooms of the three bedroom house, he can cover a good chunk of monthly mortgage. He says this is a great financial decision for him. The mortgage is less than what he paid in rent, plus he has the potential to rent out rooms. Two months after he moved in, he started renting out the rooms. He has two tenants and they are covering good fraction of mortgage payment.

Jonathan has to stay in the house for at least five years. He says that in five years, he will definitely be in a better financial situation from buying instead of renting. He bought in a very good location, in the up and coming neighborhood near Yale. He thinks the market value of the home will increase.

35:25 Have you thought about what you will do when you finish your program?

Jonathan says he has two different options after he finishes his PhD. First, if there’s a good market value to sell the home, he can sell it. Second, the location near Yale University will make it very easy to continue to rent the rooms in the house. He doesn’t see himself working in New Haven after his PhD unless it’s for an academic position.

36:24 Final Comments

Jonathan shares that he had a huge budget for his move, but he didn’t spend very much. He estimates he spent less than $1,000 to move into the house. He moved during the summer, so everyone was getting rid of furniture for free. He used his Toyota Corolla to pick up furniture, and hardly spent any money to furnish the house. He is replacing pieces over time as he saves money. He recommends overestimating expenses for a move.

38:44 BONUS INTERVIEW with Sam Hogan, mortgage industry professional.

Emily chats with her brother, Sam Hogan, who works in the mortgage industry. She asks him about solutions for graduate students and postdocs who are receiving fellowship income but want to buy a house.

Further listening: How to Qualify for a Mortgage as a Graduate Student or PhD, Even with Non-W-2 Fellowship Income

Sam Hogan is based out of Northern Virginia. He works for PrimeLending (Note: Sam now works at Movement Mortgage) and he is licensed in all 50 states. He explains what lenders look for in the risk profile. They are looking for the ability to repay, and to see verification of history of the type of employment as well as the likelihood of employment to continue. Sam says that ten years ago, anyone could get a no document loan. This meant anyone could verbally verify their finances, but this practice led to many foreclosures. Now, lenders require written verification of employment.

Sam explains that in Jonathan’s case, the lenders sent a form for verification of employment to the university. On the form, there is a tiny check box that asks if employment is likely to continue. It is a yes/no checkbox. Universities won’t check this box because technically a PhD candidate could discontinue their PhD by going into the workforce or transferring institutions.

Sam shares that the best approach is to document likelihood of continuation of income. This may be in the fellowship offer letter. Conventional loans look for at least three years of guaranteed income. When it comes to approving loans, it is all about the presentation of the buyer. Sam says to work with someone goal-oriented like yourself, who will be able to over-document your income. For example, you can write a letter about why you got the fellowship, and include that even after your PhD you will have income. This approach ensures you have good presentation to the underwriter. Loan approval comes down to one person’s decision, a human’s opinion. He says to work with underwriters who are flexible and will give you personalized attention.

Emily recommends that PhD students and postdocs work with Sam because he understands fellowship income situations. Sam can be contacted by cell phone at 540-478-5803. He can be emailed at [email protected]. His national licensing number is 1491786. He has a Zillow profile under Sam Hogan.

46:28 Conclusion

How to Read Your PhD Program Offer Letter

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Congratulations on receiving an official offer of admission to a PhD program! This is truly an exhilarating period in your academic career. After celebrating your admission and letting the giddiness wear off, whip out your magnifying glass: It’s time to take a close look at your offer letter to figure out what it actually means. Offer letters can be a bit difficult to decipher (sometimes intentionally!), but this is a vital step so that you go into your PhD program with your eyes wide open regarding your financial situation. This article covers how to discern what your program is offering you regarding your stipend/salary, out-of-pocket tuition and fees, the type of pay you receive and whether it comes with a work requirement, health insurance, “guarantees,” and how your funding package evolves as you move through your PhD program.

PhD offer letter

If your offer letter doesn’t answer all the following questions (and you’re seriously considering taking it), turn to the offering department’s administrative assistant (for official answers) and/or current graduate students (for this-is-how-things-actually-work answers).

Gross Stipend/Salary

Right away your eye might be drawn to a phrase like “Your total financial aid package is worth…” and some huge number like $50,000 or $90,000. Don’t be distracted by it! You need to know what your actual pay will be – what is usually referred to as your stipend. The letter should delineate between your stipend and the cost of the tuition and fees paid on your behalf. The important take-away is what’s going into your pocket (before taxes) as this is the money that will pay your living expenses and fund your financial goals.

Tuition and Fees (Your Responsibility)

If your offer letter includes funding, it should say that some aspect of your tuition and/or fees will be paid on your behalf. However, when determining how much money you actually get to keep at the end of the day, you have to know: Are you responsible for paying any (partial) tuition and fees out of your own pocket? For example, perhaps your tuition is being paid on your behalf, but out of your stipend you are expected to pay a relatively small fee. Don’t be impressed by huge numbers in tuition and fees being paid for you! What matters is how much you have to pay out of your own pocket; ideally $0 or close to it!

Source of Stipend

Your offer letter will likely tell you the source(s) of your stipend: an assistantship or fellowship. One of the key differences between these two types of funding is whether there is a work requirement.

Fellowships do not have “work requirements,” and to maintain them you are generally just expected to make satisfactory progress toward your degree with respect to your coursework and dissertation progress.

Assistantships do have a work requirement; you are technically an employee of your university. Research assistantships with your dissertation advisor usually allow you to combine your work requirement with your dissertation research (with some exceptions). Teaching and graduate assistantships require you to teach or perform some other kind of service for your university (most often officially capped at 20 hours/week), after which you are free to work on your coursework and/or dissertation.

It’s vital to know whether you have a work requirement in your first year or really any requirements to maintain your funding (e.g., attending a seminar series, submitting progress reports). If you don’t meet those requirements, your funding could be revoked.
Your stipend offer letter should clearly state what your work requirement is or whether you need to secure one prior to the start of the school year. For example, you might be offered funding from a teaching assistantship, but it could be still up to you to actually arrange with a professor to TA a certain course.

Knowing about a work requirement will help you properly envision how you’ll spend your time during your first year in your PhD program.

Duration of Stipend

Your offer letter should tell you over what period you will be paid your stipend. Ideally, the answer is 12 months, although carefully note if the source of the stipend changes during that time. (For example, I was paid in my first 9 months of graduate school by a training grant and in the next 3 months by a research assistantship, and this was all spelled out in my offer letter.) If the offer letter says the stipend lasts any period shorter than 12 months, you need to follow up: Does that mean you actually won’t be paid (you’ll have to plan financially for that, obviously) or that you are going to have to secure other funding after the initial period?

Who Pays What for Health Insurance?

Health insurance is a huge issue for graduate students, and universities handle it differently. The key answers you need from your offer letter are:

  • Will you have an opportunity to buy student health insurance through the university? (Almost certainly the answer is yes.)
  • What is the yearly premium for the student health insurance?
  • If you sign up for student health insurance, is the premium paid on your behalf (similar to tuition and fees) or do you pay (part of) it out of pocket?
  • Are dental and vision insurance bundled along with health insurance, or would you have to buy them separately?

Even if you plan to stay on your parents’ insurance for some years at the start of your PhD, it’s important to understand what you may be paying for premiums once you switch to insurance through your university.

Is There a Guarantee?

Does the word ‘guarantee’ appear anywhere in your offer letter, e.g., is your funding guaranteed for 2 years, 5 years? A guarantee is nice to have, but it shouldn’t necessarily be a deal-breaker. If you don’t have guaranteed funding throughout your PhD (which might very well go beyond 5 years!), find out from current students whether students all pretty much stay funded or whether funding becomes tight/competitive in later years.

What Happens after the First Year?

Probably of the most important things to know about funding during your PhD is what happens in later years. A PhD is long, after all, and your offer letters might only discuss funding in the first year. Your offer letter might include hints of funding changes in the future, such as by saying you received a first-year fellowship or one-time bonus, or saying that your funding source will change starting in your second year.

You should be particularly wary of your stipend decreasing after your first year due to a one-time/first year-only bolus of money (a promotional offer, so to speak). It would be quite painful to find out at the last minute that your stipend is going down and have to scramble to adjust your living expenses. Better to build your life and budget around your ongoing stipend amount and use the first-year increase for one-time expenses or savings.

If you are seriously considering accepting an offer, you should definitely inquire about what funding looks like in the second and following years. The departmental administrative assistant may not be able to say for sure what will happen in your case, but he/she and current students can tell you the precedent.

  • What will my after-tuition/fees stipend (and its term) be in my second and subsequent years (lower, higher, pretty much the same)?
  • What will the source of my funding be in later years, and am I responsible for securing it? (For example, in your first year you might be funded from a training grant so you can rotate among potential advisors, but starting in your second year you must secure a research assistantship with your dissertation advisor.)
  • Are yearly cost-of-living raises typical?

Don’t be dazzled by a pumped-up first-year offer if the reality behind it is a department where students compete with one another for limited funding and you’re paid the same stipend in your fifth year that you were in your first!

You can see that to properly understand your funding during your PhD you need a lot more information from your stipend offer letter than just the number that will hit your bank account each month! Again, you only need to investigate beyond the offer letter to the degree that you are considering accepting the offer (most likely based on other factors). But even if you don’t care about money at all, I strongly encourage you to find answers to these questions for the program that you ultimately accept before you commit to a lease or move.

Form 1098-T: Still Causing Trouble for Funded Graduate Students

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Form 1098-T is issued to many (though not all) graduate students and reflects some of their higher education income and expenses. Until this year, the 1098-T was rife with problems for funded graduate students, and in many cases caused more confusion than it clarified. The 1098-T underwent a makeover in 2018, which corrected the worst of these problems. However, the shift could cause funded PhD students to owe a larger-than-expected amount of tax in 2018.

1098-T problems

Further reading: How to Prepare Your Grad Student Tax Return

What Is Form 1098-T?

Form 1098-T is a tax form generated by educational institutions to communicate the education-related expenses and income associated with an individual student. It reflects the transactions in the student’s account (e.g., Bursar’s account) from a given tax year. The form’s primary use is to document the amount of money a student (or the student’s parents) may be able to use toward an education tax benefit.

The 1098-T underwent a makeover for tax year 2018, and it has improved significantly. However, some of the issues with the prior version of the form are still causing problems in 2018. This article outlines those problems and their solutions.

What Does the 1098-T Communicate?

A few of the fields on the 1098-T are most relevant to funded PhD students.

Box 1 Payments Received

This box reflects the amount of money paid on your behalf or by you for tuition and related fees. For example, if your department pays for your tuition, the amount of the tuition will show up in Box 1.

Box 2 Amounts Billed

This box is no longer in use in 2018, but many (most?) universities used it until 2017. Box 2 also reflects tuition and related fees, but it is a sum of the charges billed in the tax year rather than the amounts paid. A bill could be issued in one tax year and not be paid until the subsequent tax year.

Box 5 Scholarships and Grants

This box reflects the scholarships, fellowships, and/or grants received by the student in the tax year. The money that paid your tuition and fees will show up in this box. The fellowship (or other non-compensatory income) that paid your stipend or salary may or may not be included in this box.

Box 7

This box is checked if any bills or payments for a term beginning in January through March of the following tax year were included on the current year’s 1098-T. For example, if your university received payment in December for a term starting in January, this box will be checked.

Box 9

This box is checked if you are a graduate student.

The remainder of this article reviews the problems with the 1098-T and how they can be ameliorated.

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Problem #1: Academic Year and Calendar Year Misalignment

Box 7 concerns the misalignment between the academic year and the calendar year.

Bills and Payments to Your Student Account

Ideally, the bills and payments for a given term will all show up on the 1098-T for the same calendar year in which the term falls.

Each fall term is like that: you may be billed or make a payment a month or two prior to the start of the term, e,g., in August for a term starting in September, but all the charges and scholarships and payments are done in the same calendar year.

However, for spring terms, you may be billed and perhaps make payments at the end of one calendar year for a term beginning in January to March of the next calendar year. In this case, the 1098-T for the earlier tax year is the one that reflects those expenses, and if a tax benefit is in order, it can be taken in the earlier year.

Historical Billing Practices for the 1098-T

In 2017 and prior, this caused a significant though largely unnoticed problem for funded graduate students (or anyone receiving scholarships): A university could post a bill for a spring term in December of the prior year, for example, and not post the scholarship that paid that bill until the start of the term in the later calendar year. That means that the earlier year would have an excess of expenses in Box 2, while the later year would have an excess of income. If not corrected, this could result in a tax deduction or credit in the earlier year and excess taxable income in the later year.

Imagine a typical fully funded graduate student at a university that had its accounting system set up this way and that used Box 2 on the 1098-T. (This was a common scenario.) In the student’s first calendar year, there would be two semesters of expenses billed but only one semester of scholarships posted. If the student used the numbers from the 1098-T without correction, he would be eligible for a tax break in that first year (or his parents would take it if he were a dependent). Each subsequent calendar year would have an equal number of terms of expenses and scholarships posted, which would probably result in small, not very noticeable discrepancies between the expenses and income. However, in the student’s final year, the system would catch up, and there would be scholarships posted with no corresponding expenses, resulting in excess income and excess tax due. In some cases, the extra tax due could exceed the value of the tax break taken in the earlier year. (Not to mention that if the student were a dependent in that first year his parents would have received the tax break, whereas he has to pay the extra tax himself in the last year.)

The correction that should have been performed throughout these years when a scholarship and the expense the scholarship paid showed up on different years’ 1098-Ts is to match up in the same calendar year the expense billed with the scholarship that paid the expense. Typically, that would mean not using an available tax benefit in an earlier year and preferring to use it in the later year that the income came in. When the expense and the scholarship that pays the expense are used in the same calendar year, the scholarship can be made tax-free using the expense if it is qualified. Specifically, you would report the relevant qualified education expenses in the later year rather than the earlier, meaning that the 1098-T in both years would be inaccurate / need adjustment.

What Changed in 2018?

Starting in 2018, Box 2 has been eliminated. This means that all universities now have to report payments received for tuition and related fees in Box 1. If the university switched its reporting system between 2017 and 2018, Box 3 is checked.

This is a much better system going forward for funded graduate students. It means that when a scholarship is posted to the student account to pay for tuition and related fees, that amount will show up in Box 5 and Box 1 in the same year, since they are the same action. It doesn’t matter if that happens in the same calendar year as the term or an earlier calendar year, because they will always be reported together.

However, this change causes two potential problems in 2018 for students at universities that made this switch.

1) If a charge was billed at the end of 2017 for a term stating in the first three months of 2018 and the bill was paid in 2018, the same expense will show up on both the 2017 and 2018 1098-Ts, first in Box 2 and then in Box 1.

Therefore, anyone receiving a 1098-T with Box 3 checked must determine whether one or more of the expenses summed in Box 1 was already used to take an education tax benefit in 2017. If that is the case, the expense cannot be used again in 2018.

2) This change in accounting systems also may force the unbalancing issue I described earlier for students finishing grad school. 2018 could be the year that there is excess income with no expenses available to offset it (after correction). If this happens, the student can either choose to pay the extra tax in 2018 or file amended returns going into the start of grad school when this problem originated (up to 3 years) to match up all the prior scholarships and expenses properly. This would still result in extra tax paid now, though it may be less than if the problem remained unamended.

The good news is that after catching up in 2018 if necessary, starting in 2019 the 1098-T will be much more straightforward.

Problem #2: Qualified Education Expenses Are Incomplete

The tuition and related fees reported on the 1098-T are not quite synonymous with the “qualified education expenses” you use to take an education tax benefit. In fact, there are different definitions of qualified education expenses depending on which benefit you use. Most likely, the amount listed in Box 1 is the amount of qualified education expenses the student has under the most restrictive definition for the Lifetime Learning Credit or the American Opportunity Tax Credit.

The definition of qualified education expenses for the purpose of making scholarship and fellowship income tax-free is more expansive. It includes certain required fees and expenses that were excluded from the definition of QEEs for the other education tax benefits, such as student health fees and required textbooks purchased from a retailer other than the university.

To find these additional qualified education expenses, check your student account, bank account, and saved receipts. Then, net them against your excess scholarship and fellowship income to make the income tax-free.

Problem #3: Not All Students Receive One

When Box 5 of the 1098-T exceeds Box 1 for a given student, the university does not have to generate a 1098-T. Some universities, as a courtesy, generate 1098-Ts for all students regardless of the Box 5 vs. Box 1 balance. This inconsistency generates confusion among graduate students and leads to the information in the student account being ignored.

Conclusion

It is clear that the 1098-T was not designed with funded graduate students in mind. Ideally, the 1098-T would be completely redesigned or a new form would be created to assist graduate students in preparing their tax returns. Until that happens, the 1098-T is not an independently useful document as it must be considered alongside the transactions inside and outside of the student account. The makeover to eliminate Box 2 was an improvement; at least starting in 2018, the 1098-T is no longer grossly misleading.

This Postbac Fellow Saves 30% of Her Income through Simple Living and a SciComm Side Hustle

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In this episode, Emily interviews Maya Gosztyla, a postbac fellow at the National Institutes of Health in Rockville, MD who saves approximately 30% of her income from her stipend and freelance science writing income. Her goals for funding her PhD program applications and upcoming move to grad school and wedding motivate her to keep her expenses low and sustain her side hustle. Maya gives great financial advice for PhDs in transition into and out of grad school.

Links mentioned in episode

postbac savings rate

0:00 Introduction

1:15 Please Introduce Yourself

Maya Gosztyla graduated in May 2018 from Ohio State. She majored in Neuroscience and Molecular Genetics. She started as a postbac at National Institutes of Health (NIH) right after graduation. She is mainly focused on drug discovery research. Her interests are in neurodegenerative diseases in particular. She is applying to PhD programs, with intent to begin her PhD program in Fall 2019. Maya is relieved that she does not have to balance undergraduate coursework with time spent on graduate applications. She also has more time for the interview weekends, which Emily says can be a fun experience.

2:33 What is your income? Where do you work and live?

Maya’s postbac annual salary is $30,000. She works at NIH location in Rockville, Maryland. The cost of living in this location is fairly high, because she is in the Washington DC metro area.

3:26 What was your financial situation coming into your postbac position?

Maya didn’t have any student loans. She says she treated filling out scholarship applications like a full time job, so she was able to fund her entire junior and senior years of undergraduate education. She didn’t spend all of her scholarship stipend during senior year. She has emergency savings fund of about $7,000 since she graduated from college.

4:25 Do you apply the same mindset from your undergraduate scholarships to your graduate school fellowship applications?

Maya says she has been applying to many graduate school fellowships. She applied to the National Science Foundation Graduate Research Fellowship Program (NSF GRFP), the National Defense Science and Engineering Graduate Fellowship (NDSEG), and one example of a school specific fellowship is the Knight-Hennessy Scholars at Stanford University. In addition to her graduate school applications, she has been sending in many applications to go after award money in full force. Emily assures that this strategy is a great idea, because you are certain that you will get paid for your graduate work.

5:58 Where did you move from? How did you manage your finances during your move?

Maya’s rent during college was $350 per month. In Rockville Maryland, her rent is $850 per month. Maya says what helped her most during her move was making a really detailed budget. She used several cost of living calculator websites. Additionally, she doesn’t have tax withdrawn from her postbac stipend, so she had to estimate quarterly tax.

She was in shock when she moved from the inexpensive Ohio city to the much more expensive DC area. She thought she needed to spend as little as humanly possible. For instance, she first moved into a bedroom in a three bedroom apartment. Her portion of the rent was $700 per month, which is the cheapest she could find in the area. She had an hour long commute, and she had to leave the apartment because of a cockroach infestation. Maya advises that people not to choose the cheapest apartment, but to take into account other factors. She says it can be worth more rent money to be closer to work for a shorter commute, and to live in a quality apartment.

Maya used cost of living calculators to get a sense of the maximum expenses she would have in the DC area. She says she spends less than suggested by the calculators. She talked to people who are in the NIH postbac program, because these are people in her age group and income level. At this early career stage, people are willing to share information about income and rent.

10:04 What is your savings rate? How are you saving this amount each month?

Maya is averaging around 30% of her gross income, pre-tax, going into savings. She emphasizes the importance of setting targets and timelines for what she is saving for. One of her specific goals was to pay for PhD program applications, which was well over $1000. She wanted to start an Individual Retirement Account (IRA), since she’s not sure she can have an IRA while she’s in graduate school. Another financial goal is to get married next summer! With her partner, she wants to take a couple of weeks vacation in Europe. She wants to do all of this without tapping into her emergency fund, because she wants to use this fund for her move to graduate school.

Maya has several frugal strategies. She doesn’t have a car, which is unnecessary in DC and major cities. She takes a bus to work, which she says is reliable. NIH will pay for public transit, so she gets reimbursed for her bus expenses. Maya says eating out is really expensive. She cooks almost all of her meals, and she meal preps. She goes out to eat with friends, as a social experience, it’s important to eat food to bond with people. This happens two to three times a month, and they don’t go out for drinks that much either. She views her eating out expenses as paying for access to space and people, and eating food isn’t the purpose. She set a rule for herself that she won’t eat out alone.

She goes to work, gets groceries, finds free stuff to do, and she doesn’t spend on entertainment. Also, she has a side source of income. Maya does science writing as a freelancer. It’s not easy work, but it’s not incredibly technical. She can pick and choose when and what kind of assignments she wants to accept.

15:27 How did you get connected to opportunities for freelance science writing?

Maya started a blog about Alzheimer’s Disease while she was in college. She wasn’t making money from the blog, but she started getting cold emails from people who liked her writing who would commission her for articles. She uses Upward, the freelancing website to find clients. Upward has a fee of 30% from every writing, so she charges more to make sure she doesn’t undercharge for her work.

Emily recommends the academic blogging network on Facebook (now called Gradblogger Connect) as a great resource for people interested in blogging and podcasts.

She doesn’t see science writing as her career. The variable income makes her feel anxious. She’d like to keep writing on the side, because she believes it is important for scientists to write about research for the public. Emily says that a side hustle during the PhD training is useful to figure out if this is what you want to do for your career.

20:37 Do you consider yourself having a financially quiet life?

Maya says that she applies a KonMari method to her purchases. She asks herself questions like, “will getting take out actually make me happier?” She does spend money on flights, because her fiancé lives in Ohio and she travels to see him. Maya observes that people spend money because they feel like they have to. She says it’s not a sacrifice for her to not go out every weekend, because she doesn’t really like alcohol. Emily says that it’s very interesting to apply Marie Kondo’s method to finances, and ask “does this spark joy?” Maya has gone through the introspection to consider what is bringing her high value. When you have low income, you can’t just default to the kind of consumerism you see around you.

23:30 Have you started thinking about how you’ll financially manage the transition to graduate school?

Maya is applying to high cost of living areas, so she feels more prepared for that move. Since she’s lived in the DC area, she will have a better idea of expense in places like Boston and San Francisco. She’s trying not to touch her emergency fund, because she needs it for her moving expenses. She is also trying to make sure that fiancé and her are comfortable in their current low income lifestyle, she wants to avoid the lifestyle creep. Graduate school will be a transition, but Maya will also experience the life transition of combining her lives with her partner.

25:02 Do you have any advice for someone looking at a transition out of college or into graduate school?

Maya says the first thing you have to do is look at what you have and where do you want to be in a month, or year. There is no way to set a savings rate if you don’t have something you’re aiming for. She gives the example that she wanted to save $4,000 for their honeymoon, then she could create a budget with that goal in mind.

She also says don’t forget about taxes. She had lab mates who didn’t know this. They weren’t setting aside money for tax season, and ended up owing. She says you can set up a separate savings account to set aside taxes. Emily says that this blindsides a lot of people. She has created resources on her website to help people estimate their quarterly tax.

Maya says you need to buy things that actually make you happy. She offers the caveat that if something is actually important, like you don’t need to get the cheapest apartment, get one you want. You can keep stock of what you actually care about. Maya wonders if people really know the taste of expensive wine, for example, or if it’s more about expectations. Emily says we may need to shuck the expectations. You have to figure out if something is right for you, if it “sparks joy” for you, and it’s not an expectation that others put on you. Maya says that others don’t pay attention.

Finally, Maya says to keep a really detailed spreadsheet. She used to use Mint, but now she uses a manual spreadsheet, and inputs once a week. She customizes it for her needs.

30:47 Conclusion

Weird Tax Situations for Fellowship and Training Grant Recipients

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One of the most puzzling tax scenarios that is common in academia—but almost unheard of outside of it—is fellowship or training grant funding because it is neither a wage nor self-employment income. Fellowships and training grants, which I call “awarded income,” frequently pay the stipends and salaries of graduate students, postdocs, and postbacs. This post explains the weird tax situations for fellowship and training grant recipients and how to address them. I’ll clarify right up front that you do need to incorporate your awarded income into the gross income you report on your tax return, and you almost certainly will end up paying tax on it (unless your total income is very low or you have lots of other deductions/credits).

weird tax fellowship

This article was last updated on 1/17/2025. It is intended for US citizens, permanent residents, and residents for tax purposes. It is not tax, legal, or financial advice.

Further reading/viewing:

I have to define my terms up front here because “fellowship” is used variously inside and outside of academic research, and these weird tax situations don’t always apply. What I’m talking about is when your income from your academic/research role is not reported on a Form W-2 (and you’re not self-employed).

Often, though not always, winning an external or internal fellowship generates this kind of income. The National Science Foundation Graduate Research Fellowship (GRFP) and the Department of Defense National Defense Science and Engineering Graduate Fellowship (NDSEG) are among the most well-known examples of this type of income at the graduate level for STEM fields. Basically, you’re being paid because you won an award, not because you are directly trading work or time for money. This kind of income can also come from training grants, such as the National Institutes of Health Ruth L. Kirschstein Institutional National Research Service Award (T32), and in those cases you might or might not be labeled a fellow by your institution.

If your income is reported on a Form W-2, whether it’s called a fellowship or not, this post doesn’t apply to you!

Personally, over my time in/near academia, I received awarded income on five occasions:

  • I was postbaccalaureate fellow at the NIH for a year between undergrad and grad school, and my income was reported on a 1099-G.
  • I was on a training grant in my first year of grad school, and my income was reported on a 1099-MISC in Box 3.
  • I won an internal fellowship for my second year of grad school, and my income was reported on a 1099-MISC in Box 3.
  • I was paid from my advisor’s discretionary funds in my sixth year of grad school, and my income was reported on a 1099-MISC in Box 3.
  • I was a Christine Mirzayan Science and Technology Policy Fellow at the National Academy of Engineering, and my income was reported on a 1099-MISC in Box 3.

Receiving Unusual Tax Forms

The way to definitively tell that you’re receiving awarded income is that you don’t receive a Form W-2 at tax time for your income, which was likely paid similarly to a regular salary or perhaps in a lump sum per term. Instead, you might see your income reported on some other strange tax form:

  • Form 1098-T
  • Form 1099-MISC
  • Form 1099-NEC
  • Form 1099-G

There are other possible mechanism for this reporting; these are the four most commonly used by universities and funding agencies.

None of these forms was designed for reporting awarded income and none do it very well, but they do get the job done if you know what you’re looking for.

Form 1098-T

Form 1098-T, which is issued to some students depending on your university’s policies, is sort of a clearinghouse form for the sum of your fellowships/scholarships/grants received (in Box 5) and also the sum of the qualified tuition and related expenses that were paid (Box 1) to your student account. Your fellowship income might be lumped in with your scholarships in Box 5, which makes them a little hard to parse, or Box 5 might only include your scholarships (see next section if so).

The good thing about Form 1098-T if it includes your fellowship income is that it does put front and center two of the important numbers you’ll need to work with when you prepare your tax return, the sum of your awarded (fellowship, scholarship, and grant) income (Box 5) and a subset of your Qualified Education Expenses (Box 1). You don’t really need to know what your fellowship income was independent of your additional scholarship/grant income See Weird Tax Situations for Fully Funded Grad Students for more details about working with Form 1098-T.

Form 1099-MISC

Form 1099-MISC is a slightly confusing form to receive for fellowship income.

Any non-academic who hears/sees that you have income reported on a 1099-MISC is going to think you’re self-employed. Self-employment and contractor income used to be reported in Box 7, which no longer exists following the creation of Form 1099-NEC (see next). Fellowship income usually shows up in Box 3, “Other income.” If you are a grad student or postdoc, you are not self-employed; do not pay self-employment tax!

The instructions for the 1099-MISC tell you to (“generally”) report your Box 3 “Other income” in the “Other income” line on your Form 1040 Schedule 1. There is a precise line on which you should do so: Form 1040 Schedule 1 Line 8r, which is labeled “Scholarship and fellowship grants not reported on Form W-2.”

Form 1099-NEC

The IRS resurrected Form 1099-NEC, which stands for “non-employee compensation,” starting in tax year 2020. All self-employment and contractor income is now supposed to be reported in Box 1.

Unfortunately, a minority of funding agencies are also reporting awarded income on Form 1099-NEC Box 1. Similar to Form 1099-MISC, if you are certain that this income is fellowship or training grant income and not self-employment income, you should report it as fellowship income on your tax return. If you erroneously report it as self-employment income, you will pay self-employment tax (15.3%) and exclude yourself from taking a higher education tax break.

Form 1099-G

Form 1099-G is typically used when the funding body is part of the federal government. The awarded income shows up in Box 6, “Taxable grants.”

Further reading:

Receiving No Tax Forms

Going along with the theme of not receiving a Form W-2 at tax time, you might very well not receive any tax form at all! It’s very common for there to be zero communication between the organization that pays the fellowship and the fellowship recipient. Other times, the fellow might receive what I call a “courtesy letter,” which is just a short, informal letter stating the amount of fellowship money paid.

Further reading: What Is a Courtesy Letter?

Fellows who don’t receive tax forms or whose institutions and funding agencies don’t communicate with them at all about their personal taxes may feel completely adrift. They have no idea where to even start with preparing their tax returns. Many pay no taxes at all (if you know someone like that, send them this article!) since it takes a certain level of awareness of your tax responsibility to even wonder if you need to pay income tax. Even those who suspect they need to report and pay tax on their fellowship income might be daunted by the task of figuring out from scratch exactly how to do that.

Further listening: Do I Owe Income Tax on My Fellowship?

But it’s really a simple process to carry out if you know what to do! You should be able to find the amount of fellowship or training grant income you were paid for the whole year from your bank records. If you’re not a student, you just straight report that number in Form 1040 Schedule 1 Line 8r. If you are a student, you have to work with your other scholarships and qualified education expenses a bit before reporting a number for your awarded income; see Weird Tax Situations for Fully Funded Grad Students for more details.

Further reading: Where to Report Your PhD Trainee Income on Your Tax Return

Quarterly Estimated Tax

In my observation, the great majority of awarded income recipients have the responsibility of paying quarterly estimated tax—and many, many, many neglect to do so. If you need one level of awareness to even understand you’re supposed to pay tax on your fellowship income, you need an even higher level of awareness before you follow through on paying quarterly estimated tax. In fact, if the organization providing you the fellowship didn’t mention this, it’s not a water cooler topic around your department, and/or you’ve never been self-employed or close to someone who is self-employed, you almost certainly wouldn’t know to do it.

The basic principle here is that the IRS expects to receive tax payments throughout the year, not just in April when your tax return is due. If you owe enough additional tax at the end of the year (and don’t qualify for an exception), the IRS is going to demand not only your tax payment but late fees and interest as well.

The main system for sending tax in to the IRS is tax withholding on a normal paycheck. If you don’t do that or your withholding isn’t sufficient, you’re supposed to pay estimated tax. Basically, you send in a payment (no forms need to be filed) to the IRS four times per year to make sure you don’t have too much extra tax due when you file your yearly tax return. You should work through the estimated tax worksheet on p. 8 of Form 1040-ES to figure out if you are required to pay quarterly estimated tax and in what amount; you can also find the instructions for filing it in that form.

Further reading: The Complete Guide to Quarterly Estimated Tax for Fellowship Recipients

Taxable Compensation and Earned Income Tax Breaks

Some of the tax breaks the IRS offers are contingent on the type of income you have, and fellowship income (not reported on From W-2) does not necessarily qualify.

Individual Retirement Arrangement

To contribute to an Individual Retirement Arrangement (IRA), you (or your spouse) must have “taxable compensation.”

Through 2019, the definition of “taxable compensation” did not include fellowship and training grant income not reported on Form W-2. However, starting in 2020, the definition of “taxable compensation” changed for graduate students and postdocs to include fellowship and training grant income even if not reported on From W-2.

Therefore, all types of graduate student and postdoc taxable income, whether reported on a Form W-2 or not, is eligible to be contributed to an IRA starting in 2020.

Further reading:

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) or Earned Income Credit (EIC) is a credit extended to low-income individuals and families. If your household income is quite low and/or you have one or more children, you might be able to receive the credit. As the name implies, you need “earned income” to qualify for the EITC. Unfortunately, fellowship/scholarship income is not considered “earned income” (Publication 596 p. 18). Puzzlingly, having zero earned income disqualifies you from the credit, but having too much non-earned income also disqualifies you from the credit. The definition of earned income also plays into the calculations for the Child Tax Credit and Additional Child Tax Credit.

Dependent Status

When you are trying to determine if you should file a tax return as an independent adult vs. a dependent of your parents, it is more difficult to qualify as independent with fellowship income rather than an equal amount of W-2 income. (This only applies to students under age 24.) While education expenses count as part of the amount of money that goes toward your “support,” scholarships and fellowships that you won do not count as you providing your own support.

Kiddie Tax

Fellowship income counts as unearned income for the purposes of being subject to the Kiddie Tax. If you are under the age of 24 on December 31 and a student, your “unearned” income exceeding $2,500 may be subject to a higher tax rate than the ordinary rate.

Further reading: Fellowship Income Can Trigger the Kiddie Tax