fellowship

This Grad Student Fellow’s Frugal Lifestyle Enables a High Savings Rate

June 29, 2026 by Jill Hoffman Leave a Comment

In this episode, Emily interviews Michele Remer, a 4th-year PhD candidate at Michigan State University and repeat podcast guest. Michele breaks down her budget, detailing her top five largest expenses: rent, groceries, utilities, restaurants and social events, and transportation. During grad school, she has found ways to decrease her spending on some necessary expenses, which has allowed her to intentionally increase her spending in other areas of higher value. Due to her frugality and her National Science Foundation graduate research fellowship award, Michele has maintained a very high savings rate, which she puts toward her Roth IRA, taxable brokerage account, and student loans.

Links mentioned in the Episode

This Grad Student Fellow's Frugal Lifestyle Enables a High Savings Rate

Teaser

Michele (00:00): I’m just like, okay, I send my money here to, uh, pay off the debt, or I send to my savings account to save up, to pay off debt, or I’m sending it to my investment accounts. And so it’s not super exciting once you’ve got it set up, but I think that’s a good thing because then you just kind of get to live your life while it’s all happening in the background. So as long as you kind of have your expenses figured out, which is really nice.

Introduction

Emily (00:34): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (01:03): This is Season 24, Episode 2, and today my guest is Michele Remer, a 4th-year PhD candidate at Michigan State University and repeat podcast guest. Michele breaks down her budget, detailing her top five largest expenses: rent, groceries, utilities, restaurants and social events, and transportation. During grad school, she has found ways to decrease her spending on some necessary expenses, which has allowed her to intentionally increase her spending in other areas of higher value. Due to her frugality and her National Science Foundation Graduate Research Fellowship award, Michele has maintained a very high savings rate, which she puts toward her Roth IRA, taxable brokerage account, and student loans.

Emily (01:49): You’re probably listening to this podcast because you’re interested in improving your own practice of personal finance, and you want to learn the best PhD-specific strategies. Well, you don’t have to listen through the entire episode archive to do so. Instead, go to PFforPhDs.com/advice/ and enter your name and email there. You’ll receive a document that contains short summaries of all the answers ever given on the podcast to my final question regarding my guests’ best financial advice. The document is updated with each new episode release. Plus, you’ll be subscribed to my mailing list to receive all the latest updates there. Again, that URL was PFforPhDs.com/advice/. You can find the show notes for this episode at PFforPhDs.com/s24e2/. Without further ado, here’s my interview with Michele Remer.

Will You Please Introduce Yourself Further?

Emily (02:59): I am delighted to have back on the podcast today, Michele Remer. We, she first gave an interview for us in season 13, episode 8, published in 2022. At that time, Michele had just started graduate school at Michigan State University. She’s now finishing up her fourth year. During today’s interview, we’re gonna do a budget breakdown episode. So we’re gonna get to hear about Michele top five expenses, some other things she has going on in her finances, and we’re also gonna talk about how those certain expenses and so forth have changed over the last few years. And so it’ll be really interesting if you wanna go back and listen to that earlier episode to get that time point, to get the time point right now to get the um, how Michele summarizes that things have changed over that period of time. So Michele, thank you so much for volunteering to come back on the podcast. It’s great to have you. And will you please introduce yourself a little bit further for the audience?

Michele (03:47): Yeah, I can. Hi everyone. Um, like Emily said, I am doing my PhD and so I’m doing it at Michigan State University and I’m now a PhD candidate after passing my comps last semester. So officially went from student to candidate. Um, my undergrad degree was in environmental biology and now in my PhD I am in the Fisheries and Wildlife Department. And then, um, before starting my PhD, I worked a few seasonal jobs, one of which was volunteering with AmeriCorps, which I talked about in the previous episode. So that kind of gave me some good experience for learning how to save money and, um, knowing that going into this field I wouldn’t necessarily be making a ton of money.

Current Fellowship Income, Additional Income, and Household Size

Emily (04:31): Well, again, it’s wonderful to have you back. Um, okay, so let’s talk about today. Uh, you’re at Michigan State. Tell us a little bit about yourself, your household, if there are any other people or beings involved with that. Um, and you have an assistantship, do you have a fellowship? What’s going on with your income?

Michele (04:49): Yeah, so I, like I said, I go to school at Michigan State University, so that’s located in East Lansing. I actually live in the Lansing area as that is a bit more affordable, not living like super close to campus, relatively. Um, and then I’m also on fellowship currently and have been throughout my time at Michigan State. And I currently have one roommate in a shared house that I’ve lived in since the beginning of grad school. But this has changed from when I first started since originally we had three grad students in this house, but we’ve gone down to having only two people now.

Emily (05:26): Yes, I remember, I mean, your interview has really stood out for me over these years as you having this like ace in the hole with how much your, how much your rent was at that time <laugh>. So we’re gonna talk about the rent amount when we get there. Actually we’ll talk about the roommate situation too when we get to talking about rent. But good to know you’re living with one other person in a house in Lansing. Um, can you tell us what is your stipend income, your, your fellowship income, and then do you supplement your income in any way?

Michele (05:50): Yeah, so I was very lucky. I was fortunate to receive the GRFP and I was also lucky in the sense that I received it after the stipend increase went up from $34,000 up to $37,000, which in Lansing is very nice income to have. Um, and then, so I’m currently at the last year of the GRFP and that’ll be transitioning back into a university fellowship. So my income will actually go down, um, starting in September, but I will be supplementing that with another job over the summer helping out, uh, one of my committee members with some field work. And so it’s not quite making up the difference, but it’s getting me a little bit closer, which is nice.

Emily (06:32): So you’re anticipating coming off the GRFP, you’ve taken these measures to try to supplement your income currently, but in the past several years, have there been any points when you’ve made additional income?

Michele (06:43): Yeah, so throughout my time in grad school I’ve had what I call several small little side hustles that I’ve had. So that’s included opening, um, bank accounts to get the bonuses. Chase had one, I think last year that you got additi- an additional $900 if you open the checking and the savings account with them. And to, you just have to, to avoid having a fee, you just have to make sure you have direct deposit set up with them. And then I also did that for our local credit union at MSU. They had a similar thing when I first started grad school, so I think I got like an extra $100 from that. And then another thing that I’ve done is I open credit cards when I know that I have a big expense coming up. So in order to get like those travel bonuses, so like for my health insurance for instance, when I, I have to pay that with a credit card and so then that way I’m not spending my own money on trying to get these travel rewards.

Michele (07:36): And so that’s been also really nice. I haven’t done it too many times, probably just, uh, like twice maybe. But it has been nice to get a little bit more like travel points in that sense and then to cover various research projects or other professional development opportunities like conferences. I’ve applied and gotten some smaller fellowships through the university and I’ve also like volunteered at a conference to get lower registration before in the past. So just a few different ways to kind of, even though like with conferences it’s kind of sometimes a gray area between like who’s gonna cover it, it, it’s helpful for making sure that you have that and it looks nice in your CV, so.

Emily (08:14): Yeah, I love that you mentioned those specific avenues. Um, because they’re available to everybody. Like I don’t wanna speak out of return about visa regulations and so forth. So always international students need to be careful about what kinds of, um, avenues they pursue for earning additional income. But go back to my previous episode with um, Frank Alvillar and Sheena Connell about whether or not credit card rewards and those kinds of things, banking bonuses would be okay or not typically. Um, so go check that out. But none of these are gonna violate like the terms of your fellowship. They’re not going to, you know, rub your advisor the wrong way to be, you know, pursuing a credit card or like volunteering at a a conference. Those are absolutely very, very accessible ways for people to supplement your income and not ones that take hardly any time. I would classify those as passive, um, pursuits for increasing your income. So I love those suggestions. I hope that people um, take them to heart if they are looking for a little like marginal ways to either decrease some expenses or increase their income a little bit. When you were last on the podcast, I know we talked about your Roth IRA, so I wanna hear an update on what your current financial goals are, um, and how they’ve changed over the past few years.

Current Financial Goals, a 20% Savings Rate, and Debt Repayment

Michele (09:25): Yeah, so for the investing side of it, the Roth IRA, I’ve continued to focus on maxing it out. Um, even with the increases in the, I guess the floor for the Roth IRA, I think now you can do up to $625 a month, um, which is really nice that I’ve, with the GRFP been able to afford investing that. Um, and so that’s something that I try to prioritize when I can. If there’s like certain months where I’m not able to, then obviously I wouldn’t invest it. But that’s something that I’ve continued to prioritize.

Emily (09:59): Yeah, I think we’re up to $7,500 on an annual basis in 2026. I think that’s correct. And so with your income of $37,000 you’re looking at, that’s just about a 20% investing rate off of your gross income rate. So that’s pretty high for a graduate student. I know you’re about to say you’re working towards other goals as well. So just wanna put that touch point in there of like, okay, already like you have a relatively like very high savings rate for your current position. That’s awesome. Okay. You’ve got the Roth IRA, you’ve maxed it out even with the increases along the way. What else?

Michele (10:32): Yeah, so then with, if I do have like extra money at the end of the month, besides on top of the Roth IRA, I’ve been doing the a taxable brokerage, um, which that’s just obviously not as tax advantaged as a Roth IRA, but it still is helpful, especially for me. I’m not planning on buying a house anytime soon. The market is <laugh> not the best and I don’t know exactly where I’ll be. So I don’t really have a plan of purchasing a house in the next like five years or so and so, and I’m probably gonna continue renting. And so for me, I think it makes more sense for me to put additional money into, uh, investing rather than leaving it in a savings account. And then, um, the other thing that I did wanna mention that I just recently got a Fidelity credit card. This one don’t worry, no annual fee involved, but you, it gives you extra rewards if you, uh, invest in their Fidelity account, which can be your Roth IRA or a taxable brokerage. Um, and it’s also really nice if you charge any of your reimbursements for conferences or like I said was saying health insurance on there, you can get a pretty sizable percentage back or I think it’s like 2%, but when you’re paying that much, it’s a pretty big chunk of money, um, which is nice. So.

Emily (11:49): I love that idea as like, ’cause you mentioned opening credit cards for like, like signup bonuses. Um, I love the idea of having a baseline amazing cash back in a sense card like this Fidelity card is.

Michele (12:01): Yeah, I’ll say amazing is kind of a relative term, but <laugh>, it’s,

Emily (12:05): Yeah, but, but 2% for cashback card

Michele (12:07): Even $100 extra is so nice. So.

Emily (12:08): Yes. It is awesome. And then when you’re not working on a signup bonus, falling back and like always using that 2% cards great plan.

Michele (12:15): Yeah. Uh, which is really nice because I’ve found after doing a few of the annual fee cards, it’s, it gets to be kind of annoying to deal with and like having to remember to cancel it eventually if like you don’t, aren’t getting the enough rewards to kind of cover the cost.

Emily (12:31): Okay. So we talked about your Fidelity relationship and that’s great. Um, what else have you been working towards?

Michele (12:37): Yeah, so besides the investing, I’ve been working towards debt repayment. So I had a sizable chunk of student loan debt from my undergrad university since I went to, um, a private like liberal arts school. And so for that I, I borrowed from the federal government and then I also borrowed from a few family members who luckily had money saved up for me to go to school. And so as of right now, and I think in about three months I’ll have repaid my debt to my family members, which is awesome because I did not want to have to like owe them money anymore.

Emily (13:16): That’s incredible. And actually it’s particularly incredible that you’ve accomplished this during graduate school. So can I ask about, I don’t know, whatever you’d like to share, like either the starting balance or um, how much you’ve been paying on a monthly basis? Has it been regular or irregular? Like how has that relation-, that repayment relationship worked?

Michele (13:35): Yeah, so for this relationship, so it’s my parents, I, um, send them the money through, we have like a shared checking account kind of set up or I guess it’s like a shared bank account set up for this. So I send them like a set amount every month. And then also what I was doing at the beginning of grad school when I, I had extra money too because I just like didn’t want to owe them all this money. I think it probably started out at around like maybe 8 or $9,000. And so I was sending them like extra money as like I saved it up. And then I also, um, was just doing like a base of like a hundred dollars a month, um, just because I didn’t want to have to pay them back this money and I wanted them to have it back as soon as possible. And so that’s been really nice to basically by the end of grad school have, have that debt paid. And then for my other debt that’s through the federal government, I only took out the subsidized loans that I was offered. So that means like I didn’t pay any interest during grad school. And so for that I put it into like a kind of like a CD ladder when I had the, the rates were good, I would put it into a CD. And so then that way I’ve saved up like a large chunk of money to hopefully pay back, if not all of it, by the time the interest payments like come due, then I’m gonna be pretty close to paying off the debt. So I’m excited for that too. <laugh>.

Emily (15:05): Yeah. That’s incredible and I love that you’re introducing this idea of a CD ladder to the audience. It’s not something that, I don’t know that I’ve ever discussed on the podcast before. Um, but basically I love this approach because as you said, when we’re dealing with subsidized loans, not accruing any interest, you do not need to take any action and like your money is gonna be doing better for you literally in a savings account or a CD ladder or you know, money market account. I, I like that you’re not investing it. Right. I like that you’re not taking a lot of risk with it because you know, yes, this is gonna come due. Yes, I do wanna make these payments, um, pay it off quickly once you know it’s back in repayment. So I love that you’re not taking risk with it, but you’re doing as best as you can in terms of the interest rate, um, in the meantime. So wonderful approach. And another point of congratulations of wow, like look at all that you’ve accomplished financially during graduate school, like maxing out the IRA yearly, you know, getting ready or almost completely repay your student loan debt. Like that’s a lot to do as a graduate student.

Michele (16:07): Yeah, I’ve been really fortunate just the way everything lined up with the GRFP and um, also just, I mean we’ll get into my expenses, but I’ve also been able to keep my expenses relatively low as well, which is a good thing to be able to meet all these goals. And I will also say that I became a big fan of Mr. Money Mustache in <laugh>, uh, during grad school. And his approach really helped me be like, okay, how do I lower my expenses as much as possible, um, and kind of make sure my money is going to the right avenues. So.

Emily (16:43): Um, I’m not a big follow of follower of Mr. Money Mustache, obviously I have listened to him plenty of times and quite familiar with him, but, um, what I like about his approach is it’s really about finding satisfaction in a lower spending lifestyle. So it’s not about staying in your mind in a, um, a state of deprivation. It’s really about finding joy in simplicity and a low spending lifestyle. And I do think it’s quite compatible with the situation that graduate students are forced to be in, at least for a period of time. So I’m glad you found something that kind of like helped you with your overall, you know, disposition towards this financial stuff during graduate school. Um, is there anything you’d like to add about these, um, various goals that you’ve had or how they’ve shifted over the course of graduate school?

Michele (17:29): That’s the other thing is that it’s pretty boring when you’re doing like your finances in a, like a healthy way, I guess. Just like, okay, I send my money here to uh, pay off the debt or I send to my savings account to save up to pay off debt or I’m sending it to my investment accounts. And so it’s not super exciting once you’ve got it set up, but I think that’s a good thing because then you just kind of get to live your life while it’s all happening in the background. So as long as you kind of have your expenses figured out, which is really nice,

Emily (18:01): I think that’s very insightful. Healthy finances are boring. Like once you get it sorted out, you put everything on autopilot. Um, they’re boring, but that’s a good thing. Like you said, you can shift your attention away from those financial elements. You don’t have to pay a lot of attention to it once you have your decisions made and your system set up and then you’re free to <laugh> do anything else with your mind and your time. Um, so I think that’s very insightful. It’s not something that has to consume you continually, forever and ever and it shouldn’t, it shouldn’t be exciting, honestly, like you said, I mean I find it nice over time, you know, check the investment balance periodically, especially if things are going well, you know, in the market. Yeah, go ahead and check it. If things are not going well, don’t check it. <laugh> don’t look, you don’t need to know.

Michele (18:41): Yeah, it’s, it’s kind of crazy too just when, when you do get to like a stable place and you’re able to invest regularly, just looking back at my account over the past five years, it’s like, wow, like I didn’t think that this would add up to this much, you know, with the compound interest and this payments that I’m making. So yeah, it’s very satisfying. I will say once, I know not every grad student is able to contribute as much as I am, but even like if you can’t contribute until you graduate, like just starting out now is also, um, still gonna be help people out in the future.

Budget Breakdown: Housing

Emily (19:20): Okay. Let’s dive into those five, those top five expenses. Um, and feel free also to share how they’ve changed over the course of time in graduate school. Um, and I know number one is gonna be housing, it’s always housing for everybody. Um, so share about the rent payment that you’re making and share about how you only have one roommate now instead of two, like before. What’s going on with that?

Michele (19:42): Yeah, so basically when I started, um, the rent was probably, I mean I couldn’t really have gotten cheaper rent somewhere else, but it was $375 a month, which is insane <laugh>. Um, but it was $375 a month because we had three grad students living in a shared house with like one bathroom, one kitchen. And so that’s kind of why we decided. We had one roommate who graduated and moved out and she lived in like the top floor, which she was a trooper for living up there because it, it was like an A frame and so it’s not like a super great spot if you’re tall like me, I have to kind of lean when I go up there. Um, and so we were, my other roommate and I were still living here. We were deciding if we wanted to have someone else on the lease, but our other roommate had graduated and moved out. So we had the summer to our ourselves and during that time we were like, well, it’s really nice like sharing the bathroom with one less person, not having as much, um, to think about like the kitchen space as much. Like we still kind of had to plan around like our meal prepping around each other, but it wasn’t quite as bad as it was with three people since we didn’t do like a, we didn’t like cook together, we all cooked individually. So that was also a challenge. And so based on that and we both, my roommate, uh, who I lived with for the past three years was also on the GRFP, so we decided okay, we could probably swing to having just two of us. So that meant that our rent, it’s gone up slightly more since then, but currently it’s at $600 a month. So it’s still very affordable compared to other places around us as well and like living by ourselves would’ve been.

Emily (21:22): So your, the whole house is $1200 a month and you and your roommate are each playing paying half.

Michele (21:29): Yep. And so that roommate that I mentioned, she graduated in December, so she moved out and then, um, we, I think technically she’s my current roommate is like subletting her portion of the lease, but we’re gonna resign it in for the next year and then that’s gonna go up slightly to 630 a month each. So it’s going up by $60, which my landlord apologized, but I was like, it’s really not that much compared to like other places because he had like his property tax go up in his like rental fee. So.

Emily (22:00): Sure. And I’m also doing some quick mental math, um, that’s around 20%, right? Maybe a little over 20% of your gross income a little bit higher if we’re talking about net income, but really quite again, quite manageable. Like nobody is feeling rent burdened right on 20%.

Michele (22:17): No, no, it’s been, it’s a pretty affordable rent I would say. I know that, um, like some of my friends who live alone, they’re paying around like, um, eight to 900 a month for theirs. And so then there are other grad students though who are in like a shared housing situation. I think that’s pretty common for Michigan State at least.

Emily (22:42): Yeah, well I can see that even though you’ve elected to pay more in rent than you absolutely could have, um, still seems super affordable. Hopefully you’re getting use out of the space and you like only sharing with another person, like you said. Um, anything else you wanna talk about in terms of your rent expense?

Michele (22:57): It helps that, I’ve had great roommates who like, I think living with other grad students is really helpful ’cause you know, they’re all gonna be like respectful and um, kind of respecting your time. And also like that you’re also like both maybe working from home sometimes if you need to. So I think it, it’s really nice when you have like great roommates and I, I, I also prefer that because it helps you save money in other ways too if you’re, if we’re talking about like the financial side of it, but also like, I think the emotional side of it is great too to have someone like living with you. But um, it’s also nice like, you know, you can have your roommates like give you a ride to the airport if needed or pick you up from somewhere or like, just like take care, water your plants. My previous roommate had a cat and she never had to pay for a cat sitter ’cause I would always take care of her cat for her. So yeah, it’s just things like that, it’s just very useful to have a roommate I think. And I, I enjoy living with roommates. So.

Commercial

Emily (23:56): Emily here for a brief interlude. Would you like to learn directly from me on a personal finance topic, such as taxes, goal-setting, investing, budgeting, or designing your financial life, each tailored specifically for graduate students and postdocs? I offer live workshops, asynchronous online courses, and cohort-based programs on these topics, and I’m now booking for the 2026-2027 academic year. If you would like to bring my content to your institution, would you please recommend me as a speaker or facilitator to your university, graduate school, graduate student association, medical school, postdoc office, or postdoc association? My workshops are usually slated as professional development or personal wellness. Orientations, postdoc appreciation week, or close to the start of the academic year would be a perfect time for tax education or general personal finance content. Ask the potential host to go to PFforPhDs.com/financial-education/ or simply email me at [email protected] to start the process. I really appreciate these recommendations, which are the best way for me to start a conversation with a potential host. The paid work I do with universities and institutions enables me to keep producing this podcast and all my other free resources. Thank you in advance if you decide to issue a recommendation! Now back to our interview.

Budget Breakdown: Groceries

Emily (25:28): Let’s talk about your grocery expense. I know that’s number two on your list. Um, so tell us about your grocery spending.

Michele (25:35): Yeah, so I just looked at it for the last month, which it came up to $250. I would say that’s pretty average for me. I did go to a conference in like the beginning or at the end of April. And so like that was all covered by like a travel award. So I think it’s usually ranges between like $250 and $350 a month depending on like how much I’m spending or like if I have to do like a restock or something like that. And I will say I’m vegetarian so that also helps me save a lot of money too ’cause I’m not buying meat. So yeah.

Emily (26:08): Definitely. What do you find are other ways? ’cause I know yes meat is expensive, but so is dairy, so are nuts. So are, you know, other things, there are categories there that are expensive as well. Can you share anything about the way that you eat? Like do you have certain go-to meals or do you uh, batch prepare things? How does that work?

Michele (26:27): Yeah, so I guess I’m trying to think about like my day. So like for breakfast I usually just have the same thing. I have like two eggs with toast, so it’s pretty basic and I kind of know where to get like cheap, the cheap bread now, well I’d say cheap bread. Cheaper bread. I like don’t wanna get the like just tiny squares of white bread. I like to get good stuff. But um, yeah, like Trader Joe’s, we just got one of those in East Lansing, so I usually go there for that. Um, and then for lunch and dinner it’s usually like I will cook like on the weekends and then also like maybe on like Wednesdays or if I have time during the week and then I’ll just have my leftovers for both lunch and dinner. And then I also do what I call my bridge meals. So I’ll get like something like gnocchi at Trader Joe’s or some other frozen meal that if I’m like traveling or coming back and I don’t wanna make sure that I’m not ordering like takeout or something like that, I’ll have that ready to go. Um, and then that helps me too. And then as for the meals that I’m cooking, they’re usually, uh, pretty basic, some variety of having like beans or lentils with veggies and so those are all pretty cheap. Um, I do also do protein shakes, so that’s a little bit more just because I’m getting like protein powder and Greek yogurt and things like that. But, um, another way that I’ve saved some money on groceries too is I, I wish that I’d realized this sooner, but one of the grocery stores near me has a 10% off like discount for students. So you, with your student id, you can get um, 10% off groceries, which is really nice.

Emily (28:06): I hadn’t heard of that before actually. That’s amazing. Is it like a co-op or like locally owned or?

Michele (28:10): It’s actually one of the Meijers, but it’s like oh, the downtown location. And I think that maybe they were having issues like getting people to go there because it’s a little bit of the way for some people maybe, but yeah, I think, I’m not sure why they’re offering it, but I saw the sign and I was like, I have my student ID.

Emily (28:29): I was just gonna ask how you found out about it. So it wasn’t like another student who gave you that tip, you just saw a sign at the store?

Michele (28:34): Yeah, I literally just saw a sign at the store, so now I’ve been telling all my friends like, you guys should go here and get this 10% off with your student Id <laugh>.

Emily (28:41): Yeah, that’s amazing. What a good, I mean it’s a good idea for them, um, because yeah, most people don’t, I mean if you’re really frugal you would shop at multiple different places, but most people don’t shop that way. And so it makes sense to try to capture like people’s, you know, become the primary shopping destination for more people.

Michele (28:58): Yeah. And then the other way I save money on, on groceries, well is kind of getting into transportation, but I like to bike to go to the store <laugh>, so ah, um, that also saves you money because then you’re not buying anything that’s really bulky. So like, I’m not buying like pop or I guess, sorry, soda, um, Midwestern coming out, but um, things like that or, uh, any other like seltzer water, things like that I’m usually not purchasing. So.

Emily (29:27): Um, I would imagine also cuts down on impulse purchases if you’re looking at your, your backpack or your bags or whatever you’re using to carry the groceries. Um, I have a strategy that I now use, which is like, I very rarely physically go into grocery stores. I do all online ordering and then do pickup, um, which keeps like the impulse purchases at a minimum.

Michele (29:46): Yeah, <laugh>. I will say that I, I’m not always going to the store with my bike so I, there is times where the impulse purchases still do come through, but it’s also just like a very enjoyable way to spend like a Saturday morning or afternoon even though the stores are kind of busy at that time, but it’s like a nice little bike ride to get there. So at least for me when I’m going to certain stores it’s like, um, like a nice trail. So

Budget Breakdown: Utilities

Emily (30:14): Yeah, I love to hear about that. Your next expense you told me is utilities. Lots of different utilities under that umbrella. Tell us about those expenses. Um, what they amount to typically and how they’ve changed.

Michele (30:25): Yeah, so those have gone up obviously since we have one less person. That was kind of when we were deciding if we wanted to have only two people live, the utilities, that was our sticking point because those can get quite pricey. So I looked at my past month and it came up to around $200, so that’s with electricity, water heating, cooling, internet, trash. And I also include my phone bill in that. So for like the first, obviously the phone bill I’m paying on my own, but everything else is split between my roommate and I and those are pretty variable just because, well I guess like the electricity and the water usually stays pretty, um, similar but like the heating and cooling, it’s more expensive in the winter here in Michigan to heat the house. And then we usually try not to use the AC unless it’s like super hot outside in the summer. And then the internet and the trash are also like pretty affordable. Um, I’ve actually managed to save money on utilities for the internet by switching from like a different provider. And then I also lowered the internet speed because most of the time, unless you’re like playing a lot of video games or something, you don’t need the speed that they give you as like the baseline. So yeah, that’s my utility bill.

Emily (31:49): Yeah, I love that you were, you know, conscious of that evaluating it because stuff like internet bills, they’re not the biggest things in your budget, but as fixed expenses, if you can just put in the like 30 minutes of effort or whatever it’s gonna take to like research it and, and call the company or chat with them or what have you, um, then you can sometimes get that bill lowered and very little effort, very long payoff like throughout the course of at least the next year. So that’s awesome. Have there been any other ways that you’ve decreased your spending on utilities over time?

Michele (32:23): Yes. So some of these people might not wanna do because they do take a little bit of extra time, but some ways that I’ve been able to lower my utility bills has been um, I line dry my clothes, which is obviously a lot easier when you’re in the house, but the dryer is kind of an energy hog.

Emily (32:41): I did that too during grad school.

Michele (32:42): Yeah, I actually, um, yeah, I have some like hanging up downstairs right now, but yeah, I just gotta, gotta time it if you like, need your like clothes at a certain time, like you gotta do like a day in advance, but it’s pretty easy. And then the other thing, um, my roommate who moved in probably doesn’t know what she’s getting herself into, but uh, I layer up in the winter, so kind of try to reduce heating bills by lowering the thermostat. Um, I think that’s a pretty obvious one. But then also in the summer, like running fans and keeping the blinds closed, um, like I said also the internet, but then my other thing I did was in Lansing at least the trash is you pay dependent on like the size of your trash and so I switch it to like the smallest size possible that only comes every other week. So that’s another way that I save money,

Emily (33:33): Another fixed expense that you managed to lower and as long as you’re confident you can like meet those, you know, those limits then that’s great.

Michele (33:41): Yeah. And then the last thing that just happened recently that I’m super excited about, I don’t actually know it’s gonna affect my energy bills at all, but, uh, I kept kind of pestering my landlord about our dishwasher and we just got a new one. And so even if it’s to save us money, it’s, it’s better because it’s a lot quieter so, and I don’t have to try to clean it as often. So yeah, that’s some ways to that I’ve done that. Well then I guess also the, um, for electricity, I don’t know if this is the case, like if it’s the same hours in other places, but our utility provider has like, uh, off peak and on peak hours, so we try to run like our bigger stuff like the dishwasher and the washing machine during those off peak hours.

Budget Breakdown: Restaurants & Social Activities

Emily (34:27): Definitely. Alright, then let’s move on. What is your fourth largest expense each month?

Michele (34:33): Yeah, so this one, the next two are kind of variable, but for this past month it was, um, $160 for restaurants and other social activities. So like this past semester I was the social chair and so I, I hosted some like department happy hours or I guess co-chair. And so that was, you know, we , would go out to like some bars and get like a drink or two and then also just going out to eat with friends as well.

Emily (35:03): And has that changed over the course of time?

Michele (35:05): Yeah, I would say that I, when I first started grad school I was a lot more frugal with those like kinds of social activities. I tried to limit them a little bit more, like tried to have people over at my house rather than going out as much. But now I’ve been that I feel like I’m in a better financial position. I have been going out to eat more often. Um, and then I guess another thing that I’ve started doing is I’ve been doing some sports leagues, so do like, um, adult volleyball or um, sand volleyball as well. So those have like higher costs to them as well, but they’re pretty affordable I would say, especially spread over the like the weeks that you’re participating in them.

Emily (35:50): I just love this that, you know, getting this picture of you at the beginning of graduate school and now four years in, like you’ve found ways to spend less in certain areas. You’ve also decided that it’s worthwhile to spend more in certain areas and still along the way you’ve done all this investing in debt repayment and it’s absolutely wonderful. So I’m very glad to hear that, you know, you’re putting your dollars where you value them.

Michele (36:10): Yeah, it’s, it is definitely like an adjustment because I feel like for so long, like you, like I said, I, I volunteered for AmeriCorps and then in undergrad I was like just saving money all the time and so it’s been nice to be like, okay, I have a little bit of breathing room now and kind of let loose a little bit more with some of my like, like I can go out to eat more often now. So it’s been nice.

Emily (36:36): I think we should do another follow up interview in another four years when you have a proper salary <laugh>, like, we’ll see, we’ll see where you are then. Are you, like, are you still very low spending or have you managed to, you know, moderate with the newer income or are you going crazy with investing? Like, yeah, we’ll let’s put a pin in that and, and return to it. Um, okay, your fifth, uh, highest expense in your budget? What’s that?

Budget Breakdown: Transportation

Michele (36:57): Yeah, so this one was also higher for this month because I went on a trip but, or kind of a trip I went home to visit family. Um, the transportation was $125 and so this usually is closer to $70 for car insurance and gas. But like I said, I like to bike a lot, so my gas is usually pretty low, which is also good for the current gas prices.

Emily (37:23): So it sounds like you have a paid off car, right? Can you tell us about your car?

Michele (37:28): Yeah. Okay. So for the car, it’s basically the same one that I’ve been driving since high school and like I said, my parents are very generous and so they made sure that me and my siblings each had a car. Um, and yeah, I basically don’t put any miles on it. I just use the car basically for like big trips and then if I do need to, like I’m going to those volleyball leagues that are kind of further away from campus then I’m driving to those things. But I, I try to keep my driving to minimum, which also is, is the money, but also because I’m really cognizant about my carbon footprint being in the Fish & Wildlife department. So I, I try not to drive as much as I can.

Emily (38:07): I see. And another way that you have found a kindred spirit in Mr. Money mustache because he definitely writes a lot about not owning a car or minimizing your car usage. So how do you commute to campus?

Michele (38:19): Yeah, I, I bike to campus so I have, the way I do it, I have like, um, a mountain bike that I put like a rack on the back and then I have two like bike bags that I attach. So it’s plenty of room for like my laptop and any other things I need to bring like books or um, like a change of clothes if I’m going to like work out or something like that. So yeah.

Emily (38:42): Have you thought about getting rid of the car entirely and if so, what, why are you keeping it?

Michele (38:48): I have thought about getting rid of my car, but I don’t want to because it’s very hard to live in the US without a car. Um, just like I said for those times where I am doing like a trip or something. And then also for those times where I’m traveling a bit further on to the outskirts of town, it’s basically if I just like worked and stayed at home, I wouldn’t need it. But since I do value those social activities then I do still need the car.

Emily (39:20): It is great. I feel like for something like this where it’s like, yeah, I get some marginal utility out of it. It’s not like a daily thing. It’s good that it’s falling to number five on your list and it sounds like some months it might be even lower, right? ‘Cause in particular you had a trip that you took this month, so in some months it might even be outside of the top five. Um, and that’s about the right size for something that is like, yes, this enhances my life in some, some way. It’s not totally essential. So it’s good that it, you know, that it is a paid off car and that the insurance doesn’t sound like it’s too expensive and, and you’re not using it that much. So the, the operating costs are not very high.

Michele (39:54): Yeah, I will say I did use it more this past semester than I have in the past just ’cause it was a particularly intense Michigan winter um, so I drove to campus a bit more than I usually do and um, just kind of had it on retainer a bit more than I usually do. But yeah, I’ve been usually like biking through the winter too. So.

Emily (40:17): How do you park on campus when you do drive?

Michele (40:20): My office is kind of on the outskirts so um, it’s kind of far away and so it’s not like, um, as big of a deal for me to park over there than it would be so I kind of just risk it on getting a ticket <laugh>. Um, and usually I, so far I’ve been fortunate but for my office parking, but if I am going on further onto campus, I pay, there’s like a pay by plate option so I’ll pay like five bucks or whatever it is for however long I’ll be on campus.

Emily (40:51): Gotcha. So once again, the car comes into use and these like occasional, okay the weather’s particularly bad occasional scenarios. Um, great. So that’s your backup plan for getting to campus is you have your car and you can <laugh>, um, skirt the parking regulations since there don’t seem to be any consequences <laugh>.

Michele (41:10): Yeah, well there is, um, there’s tickets but I somehow have avoided the parking attendants, um, just because it’s kind of for off the beaten path for them. But yeah, ’cause I think it wouldn’t really be too much, but um, the grad students are always doing that calculation like, how many tickets <laugh> would I need to get before getting a parking pass? So, so far it’s kind of the math that’s worked out for me.

Best Financial Advice for Another Early-Career PhD

Emily (41:35): Gotcha. Well we’ve run through your top five expenses. I mean, I’m just so pleased that like you’ve, you know, honed in what’s, what’s of value to you over time that you’ve obviously had these great financial accomplishments, you know, especially coming up in another year, whatever the timeframe is on your graduation, you can really say, wow, look at all these things I accomplished financially during graduate school. It’s incredible. We will wrap up with the question that I ask all of my guests and I know I asked it of you before, but what is your best financial advice for another early career PhD? And it could be something that we’ve touched on today already or it could be something completely new.

Michele (42:11): Yeah, so I have a few things. When I was thinking about what my best financial advice would be, the first thing is to track your spending as I think it’s really helpful to plug any holes where you don’t realize where you’re spending more money. Like for me, I’ve been spending more recently on going out to eat than I have in the past. And so the way that I’ve done that is I’ve mentioned Fidelity a lot because I use them for basically everything, but um, they have this really nice thing where you can connect all your credit cards to one location and so that way you can kind of automate the tracking. Um, and like if you, you could also probably add in like if you’re Venmo people or using cash for something, then you could track it that way as well. And then another thing that I probably, I think that was my last, last time I was on, I talked about the Roth IRA, but I recommend not only sending money to your Roth IRA but making sure that you’re depositing funds into a, some sort of fund because I, I have talked to people in the past who have only put it into the account and not invested in it. And so just gotta make sure that you realize that it’s not a normal bank account and you need to invest the money. So those are my two big pieces of advice.

Emily (43:24): Yeah, so mistake I literally made with Fidelity with the first IRA that I opened, I don’t know, hopefully their interface has changed <laugh> in the intervening time, but I for sure made that mistake. Also, I’ll say that at the time mutual funds were the thing to invest in and there were higher minimums. Now we have ETFs and it’s a little bit more flexible. So another thing to look out for to make sure that you know, you’re investing appropriately and that your money is not just sitting in a money market account.

Michele (43:50): Yeah, yeah. I’ve helped, um, multiple people like set up their Roth IRAs, so I’m always like, okay, make sure you have to pick one of these funds now. And I try to, I think people get overwhelmed by choosing, so I’m just okay if here pick one of these three <laugh>, they’re all basically the same though. So

Emily (44:07): Yeah, definitely. Um, I list this when I teach about getting started with investing, I list this as like a separate step. Like one send over the money, two, make sure it’s inve- like a few days later. Like make sure that it’s actually invested where you intended for it to go. And it’s not just randomly like you missed a step there. It’s a whole other thing you have to consider. Um, absolutely. Well Michele, it’s been so great to have you back in the podcast. I’m so delighted by this update and thank you again for volunteering. It’s been great to speak with you.

Michele (44:36): Yes. And thank you for having me on again. I appreciate it and thank you for all of the great work that you do with this podcast and helping everyone out with learning how to <laugh> navigate finances as a grad student.

Emily (44:46): Yeah. Thank you for saying that.

Outro

Emily (44:58): Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by me and show notes creation by Dr. Jill Hoffman.

The Tax and Retirement Effects of Receiving Fellowship Funding

February 6, 2023 by Meryem Ok Leave a Comment

In this episode, Emily interviews Dr. Jamie Lahvic about her experience being funded by fellowship during grad school at Harvard and her postdoc at the University of California, Berkeley. Regarding the tax complications of being on fellowship and the lack of retirement benefits, Jamie and Emily outline the issues, discuss possible solutions, and suggest advocacy avenues for instigating change. Listen through the end of the interview for the Big Questions regarding the true nature of fellowships and employment.

Links Mentioned in the Episode

PF for PhDs: Set Yourself Up for Financial Success in Graduate School (Workshop)
PF for PhDs S14E3 Show Notes
PF for PhDs Episodes on Fellowship Income Tax
- S2 Bonus Episode 1: Do I Owe Income Tax on My Fellowship? (Expert Discourse with Dr. Emily Roberts)
- S6E9: How This Grad Student Fellow Invests for Retirement and Pays Quarterly Estimated Tax (Money Story with Lucia Capano)
- S12E6: How Fellowship Recipients Can Prevent Large, Unexpected Tax Bills (Expert Discourse with Dr. Emily Roberts)
- S14E1: Five Ways the Tax Code Disadvantages Fellowship Income (Expert Discourse with Dr. Emily Roberts)
- S14E2: How This Grad Student Fellow Resolved an Expensive Tax Bill in His Favor (Money Story with Matty Dowd)
PF for PhDs Quarterly Estimated Tax Workshop
FreeTaxUSA
PF for PhDs Tax Center
PF for PhDs S4 Bonus Episode 1: Fellowship Income Is Now Eligible to Be Contributed to an IRA! (Expert Discourse with Dr. Emily Roberts)
PF for PhDs Episodes Where Grad Students Discuss Contributing to a 403(b)
- PF for PhDs S13E2: This PhD Student-Nurse Is Confident in Her Self-Worth (Money Story with Brenda Olmos)
- PF for PhDs S13E8: This First-Year PhD Student Prioritizes Investing While on Fellowship (Money Story with Michele Remer)
Future of Research
PF for PhDs S2E3: Using Data to Improve the Postdoc Experience (Including Salary and Benefits) (Expert Interview with Dr. Gary McDowell)
PF for PhDs Subscribe to Mailing List (Access Advice Document)
PF for PhDs Podcast Hub (Show Notes)

S14E3: Image The Tax and Retirement Effects of Receiving Fellowship Funding

Teaser

00:00 Jamie: Because I often felt, you know, in addition to like the confusion and the frustration and wondering what to do, that I don’t know, it felt like an emotional hit. I felt unvalued when I’m put into this weird little category where my earnings don’t make sense and I can’t open an account and I can’t figure out how to pay taxes. And I went on this really kind of rollercoaster from feeling like, “Oh, I’m a valued scientist and worker in this field,” down to like, “Oh, nobody really cares about me or the type of work that I’m doing.”

Introduction

00:38 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. This is Season 14, Episode 3, and today my guest is Dr. Jamie Lahvic. We discuss Jamie’s experience being funded by fellowship during grad school at Harvard and her postdoc at the University of California, Berkeley. Regarding the tax complications of being on fellowship and the lack of retirement benefits, Jamie and I outline the issues, discuss possible solutions, and suggest advocacy avenues for instigating change. Listen through the end of the interview for the Big Questions regarding the true nature of fellowships and employment.

01:43 Emily: If there are any prospective PhD students listening—and I hope there are—I want to point you to a new workshop I’ve been publishing in installments throughout this academic year, Set Yourself Up for Financial Success in Graduate School. Now that we’re in admissions season, the modules are getting really exciting and immediately actionable. The two most recent modules are titled “Decipher and Compare Your Offer Letters” and “How to Negotiate Your Stipend and/or Benefits.” One from last fall that you might want to check out as you’re evaluating the cities your offers are in is “Stipends vs. Cost of Living.” I sincerely want you to go into grad school with your eyes wide open regarding the financial realities and in the strongest financial position possible for the program you choose. I hope you will check out the workshop and enroll in the modules that will help you accomplish that. Go to pfforphds.com/setyourselfup/ for more information. You can find the show notes for this episode at PFforPhDs.com/s14e3/. Without further ado, here’s my interview with Dr. Jamie Lahvic.

Will You Please Introduce Yourself Further?

03:01 Emily: I have joining me on the podcast today, Dr. Jamie Lahvic. Super delighted to have Jamie here. We actually met at a conference last summer. I’m recording this in November, 2022. So, we met at the Graduate Career Consortium Annual Meeting, which was in July, 2022. We ran into each other during like a break or something, and we just started chatting and we had this electric conversation about funding, about fellowships, about benefits, about systemic issues that need to be addressed. And I just wanted to capture some of that magical conversation here on the podcast. So, Jamie, I’m super delighted to have you on. Will you please introduce yourself to the audience?

03:42 Jamie: Sure! My name is Jamie Lahvic. I am currently working as a Program Officer at the National Institute on Aging, where I focus on some policies as well as programs related to graduate students, postdocs, and early career faculty. But today I’m kind of excited to talk about my own personal experiences as a graduate student and then a postdoc. So, I went to grad school at Harvard Medical School studying biomedical sciences and then I moved on to UC Berkeley to do a postdoc in cancer biology. And I wrapped up that postdoc in 2021.

04:18 Emily: I’m really excited to see all these different perspectives from you being at a private university, a public university, now in government. Like, this is awesome! And I’m of course going to share some of my own limited experience as well. But we’ve both had some observations about these issues about the finances and the benefits and so forth that are offered to graduate students and postdocs as employees or as fellows. So, I want to, for the listeners just to introduce them. I have a framework, this is not necessarily the way that everybody talks about this, but in my mind there are sort of two broad classifications that graduate students and postdocs can fall into. One is as an employee. The way you know that you’re an employee especially if you’re a citizen or resident, is if you receive a W-2 <laugh> at tax time, that’s like really indicative that you’re an employee.

05:04 Emily: So, you have this employer/employee relationship with the university and that may cause different benefits and so forth to be offered to you. The other classification, a little harder to name, a lot of people use the term fellowship, but not only things called fellowships could fall into this classification. So, I broadly call it awarded income when your income comes from an award that you received. Could be certain types of grants, could be a fellowship, could be some other things. So, that’s the language we’ll be using. We’ll just say fellowship for shorthand, but that basically just means non-employee or at least under the, you know, the timing and circumstances of receiving that award, you’re a non-employee.

Switching Between Grad Student Funding Sources

05:37 Emily: Okay. With that clarification out of the way, let’s talk about, you know, your personal experiences, my personal experiences with being an employee and/or being a fellow during grad school and postdoc. So, we’ll probably take this like topically. What would you like to share? What you know surprised you about maybe switching between these two types of funding? What issues did they bring up? Go ahead.

05:59 Jamie: Sure. Yeah, so as a graduate student, I was never an employee. I was always either paid a student stipend coming straight from the university or then a fellowship stipend once I got an NIH fellowship. So there, it still was a really complicated process. I remember being very surprised first year as a graduate student to try to figure out how to pay taxes, how to pay estimated taxes every year. And it seemed to become more complicated every year, especially because once I got my fellowship, some of my money would come from the fellowship, some of it would come from the university. Those would come in separate paychecks. And then later on once I was teaching I would get a third paycheck to cover the teaching that I was doing. And throughout all of that, I never received a W-2. Every now and then I would receive a 1099 for the teaching, but they were kind of inconsistent in whether they would send that. So come tax time, I kind of never knew what I should even do. So, that was a big struggle.

07:01 Emily: Yeah. Let’s talk about the tax issue for a minute longer, because I mean, you probably know this is like part of the bread and butter of my business now because so many graduate students and postdocs are running into confusion around the tax issues. And basically, I mean we will link in the show notes some episodes I’ve done on this in the past, but it basically boils down to like when you’re an employee, your employer has certain responsibilities in terms of telling you how much money you’ve been paid and how much money they withheld on your behalf and so forth. And once you get into this weird non-employee status, they simply don’t have those legal responsibilities in the way that they do for employees. And so, universities take like all these different approaches. And you’re saying even within Harvard, different pools of money were being reported in different ways.

07:46 Emily: And so, yeah, of course, that gets confusing for the recipient when the vast majority of our like, I mean already the U.S. tax system is so complicated to navigate, but if you step outside of the simple like employee world, it gets even harder to find, you know, the support and the resources that you need. That’s part of why I do what I do. But yeah, tell me a little bit more about how you dealt with these like challenges or complications of not having income tax withheld, for example, or like the reporting inconsistencies?

Team Effort for Taxes

08:15 Jamie: Yeah, I think a lot of the students kind of banded together to help each other. I remember we had one really proactive student who would post in our year’s Facebook group four times a year saying, “Remember, pay your estimated taxes.” And I was like so grateful to get that reminder because I was so caught up in, you know, rotations and qualifying exams and whatnot. I just couldn’t think about remembering to do this. So, just having somebody send a reminder was amazing. And then we did a lot of talking to each other to try to fill out the forms correctly. I think I was a few years into graduate school when I found your website and some of your tips, and I remember that being just amazing and just feeling like that’s something that was, you know, it’s complicated but once it’s laid out it is relatively simple. It is the type of information that the university could have given us that they never really did because they wanted to stay away from giving tax advice and they’re not a certified public accountant, and that type of thing. So, it felt like the students were on our own to try and figure it out.

09:17 Emily: Yeah, I think that again, while the universities don’t have again this legal requirement to issue tax forms that make sense, or whatever, I do think it’s really helpful when they try to address this as much as they’re able to. And I mean, I hear a lot of pushback when I work with uni–not a lot. Some places I hear pushback like, “Oh we really can’t, you know, give tax advice and so forth.” And I try to kind of make the point like, “Well, you on your own or me, like we could talk about this without it being advice.” Like we can just talk generally about how estimated tax works and what these different reporting things that are going on are. And that’s what I do like with my quarterly estimated tax workshop. Again, we’ll link it in the show notes. And so, a lot of times universities contract with me to provide that because they feel like that shifts some liability off of them and onto me and they’re more comfortable with that.

10:07 Emily: But again, just giving a little bit of education and some reminders and tips and so forth is not, to me, giving advice, because really it is ultimately up to the individual to figure this out. Like I’m not sitting down with anyone filling out their forms, like they’re still doing that on their own. I’m just providing guidance on how to do so. So, I guess this is kind of turning into an ad but like if the listener <laugh>, if you listeners are on fellowship and you want your university to help you, tell them about what I offer, because they may feel more comfortable working with me then doing this, you know, with an internal employee who, you know, might expose them to some liability.

Added Hardship of Inconsistent Tax Reporting

10:41 Emily: Okay. Estimated tax and reporting stuff, all a difficulty of being on fellowship. Anything more you’d like to add about that? Or should we move on to a new talking point?

10:52 Jamie: I just thought it, you know, in addition to kind of the confusion, it can sometimes cause real hardship. Like for me for instance, I didn’t receive a 1099 for my final chunk of teaching that I did in my like final year as a graduate student. And so, in between doing that teaching and like the spring and into summer semester, I got a postdoc. I moved across the country, I had started a whole new tax, you know, qualification as an employee there. And then when it came time to do taxes, I honestly completely forgot about the money I had gotten paid in the previous spring. Because I never received any kind of 1099, any kind of documentation, and I just didn’t pay taxes on it. And I think I like woke up in the middle of the night sometime like three months later and went like, “Oh my god, I made like thousands of dollars <laugh> that I didn’t pay any taxes on.” And then like on my own, I had to then figure out how to adjust my taxes. I had to pay a penalty for the amount that I, you know, had failed to pay previously. And at the time, like I had just spent all of this money to move cross country. I was making a postdoc salary. Like I really didn’t need to be paying any extra penalties on my taxes for that type of thing.

Potential Changes at the University Level

12:04 Emily: Absolutely. I mean, good for you for doing the amended return and everything, because I know some people will just kind of let it go after that point. But you really don’t want to let it go like multiple years and then have the IRS, I mean I know it’s rare, but it can happen that they can come after you, and then it’s an even bigger problem. So, good that you took care of it. But I think kind of what we’re saying here is just like communication, <laugh> communication is helpful around this topic. So, we’ve talked about this problem, various problems related to taxes. What are some things that could change at the university level, state level, federal level, whatever it is, to alleviate these problems?

12:41 Jamie: I mean at the university level, my understanding is that even if you’re not an employee, the university can still give you a 1099 for the money that you’ve made, and that universities, as far as I know, kind of choose whether or not to go through that step and send out those 1099s. So, I think that’s a major thing that just having a very clear document makes filing your taxes easier. You know, that’s something that like TurboTax and similar basic tax filing software knows how to work with. So, I think that would make a huge difference for a lot of students.

13:12 Emily: So, I actually did experience this during graduate school, so I’ve had a couple periods of my life where I was on fellowship. But when I was at Duke, Duke actually did manage to withhold income tax on behalf of at least me. I don’t know if every type of fellowship it was available, but at least for me, about half my years I was on this like non-employee kind of income. So, they were able to withhold on my behalf, and they did issue a 1099-MISC (Miscellaneous) at year’s end. So, that helps with like the problem you just identified of like, you know, a year and a half goes by and you’ve forgotten about some chunk of your income. Yes, that does help with that problem. The issue that it causes <laugh> is that the 1099 is most widely recognized as a self-employment income kind of document.

13:59 Emily: And so, then there’s, I feel like there’s even more burden on the recipient to properly communicate what this is with their tax software or their tax preparer. So, if they know to do that and they know that they’re not supposed to pay self-employment tax on this income, then it can work out. As a reporting document, it’s okay, but I would say, you know, nine times out of 10, people don’t know that it’s not self-employment income or maybe they know that, but they don’t know how to communicate that. And they don’t check that, they don’t understand how it’s going to affect their return. Anyway, so it can cause an even bigger mess. So like, I hesitate to say that that is the best solution. I mean really to me, I would say the 1098-T is the best form that we have as of now.

Reflections on an Adjusted 1098-T and Streamlined Tax Reporting

14:50 Emily: Although I would love it if there was just an adjusted 1098-T or a different kind of form that really could fully reflect the fellowship like situation. Because again, the 1098-T, while it’s used by many universities, they’re not required to issue one if you have more of this box five grant income than you do box one, like the educational expenses and charges. So, if they would just issue it all the time, I think that would be helpful. But even going beyond that, like this is now like a federal level kind of thing. Like if there were a different form or the 1098-T itself were somehow different, that would be even more clear.

15:26 Jamie: Totally. Yeah. Yeah, and I know anecdotally, I eventually switched over from like the TurboTax software to I think FreeTaxUSA that has a great little box to check that said you know, is this income, are you like, are you a graduate student or postoc rather than an undergraduate? Because I think it’s typically with that 1098-T where they’re trying to like not take out taxes on the portion that you’ve used to cover scholarly expenses, which applies to like an undergraduate who’s receiving, you know, tuition reimbursement, but not to a graduate student. So, I could imagine at the federal level, you could create a little box like that on the 1098-T, right? To check here if this is a graduate or postdoctoral level fellowship, right? Or check here if this money is not being used to cover tuition and scholarly expenses. It would be nice.

16:20 Emily: I think this is both like maybe a reporting option at the federal level, but also it comes down to the university level and how, like which department is the one that’s like processing these paychecks. And you are, like saying how you did about your various different incomes from Harvard, that indicates to me that like maybe payroll was issuing some of this, maybe financial aid was issuing some of this. And like having these different siloed departments separated from one another communication-wise means that things are not streamlined and you get different types of forms and maybe for you, maybe you were on different pay schedules for, you know, different sources. Yeah. So, having like a single department that handles like all, you know, income for graduate students and postdocs, whether it is payroll income for employees, whether it is, you know, non-employee income, that might help. I don’t know, maybe that’ll cause other problems too, but like right now, again, the universities are not really set up to handle this in a streamlined, or at least, I don’t want to say broadly. Some universities are not set up to handle this in a streamlined manner. Maybe others have it a little more figured out. I don’t know.

17:23 Jamie: I know actually when I got paid at UC Berkeley, it was more like that. So there, I was eventually on a fellowship as well, but I received one paycheck per month. And it was kind of interesting because, you know, I would receive my lump monthly salary or stipend from the fellowship, but only a little portion of that would get taxed. So, there would be like a little tiny bit of tax taken out, and then the rest of it was untaxed. But it at least came to me on like one single paycheck where it was very clear how much tax had been withheld, and then I could run the numbers when it came time to pay the estimated taxes on the rest.

17:59 Emily: So, it sounds like you were still receiving a pay stub. Even though a portion of this is employee. Yeah, that’s perfect. I mean, I kind of always tell people who are employees like, “Okay, look at your last pay stub, even before you receive your tax forms. Look at your last pay stub.” Maybe you have to access it through your payroll system or whatever, but you can find out how much tax was withheld. But again, those pay stubs are not generated usually if you’re a non-employee. But it sounds like Berkeley has this figured out, so I’m really happy to hear that. I would, yeah, I would love to be able to come up with like, I don’t know best practices, like which universities are using the best practices. So like, Duke has something figured out over here, Berkeley has something figured out over here. Like, I don’t know, maybe there’s a way to again, promulgate these best practices among these different universities and financial whatever, backend stuff.

18:44 Jamie: Yeah, and you know, I think great groups to kind of connect to for that are unions. Within the UC system, we have a strong postdoc union. And I think they had done a lot of pushing, you know, both on how much you get paid, but also a lot of these minute policies about how you get paid. And so I wouldn’t be surprised if the more streamlined system came about because of pressure from the union. And I’d be interested to know what other, you know, grad student unions and postdoc unions are where they’re having successes.

19:13 Emily: Yeah, I’m super glad to hear that. Exactly. Like sort of giving a voice to these, well, you might not know, but the downstream effect of this like decision that you’ve made, the way you’ve set up the system is it’s causing these problems.

Commercial

19:28 Emily: Emily here for a brief interlude! Tax season is in full swing, and the best place to go for information tailored to you as a grad student, postdoc, or postbac is PFforPhDs.com/tax/. From that page I have linked to all of my tax resources, many of which I have updated for tax year 2022. On that page you will find free podcast episodes, videos, and articles on all kinds of tax topics relevant to PhDs. There are also opportunities to join the Personal Finance for PhDs mailing list to receive PDF summaries and spreadsheets that you can work with. The absolute most comprehensive and highest quality resources, however, are my asynchronous tax workshops. I’m offering four tax return preparation workshops for tax year 2022, one each for grad students who are US citizens or residents, postdocs who are U.S. citizens or residents, postbacs who are U.S. citizens or residents, and grad students and postdocs who are nonresidents. Those tax return preparation workshops are in addition to my estimated tax workshop for grad student, postdoc, and postbac fellows who are U.S. citizens or residents.

20:43 Emily: My preferred method for enrolling you in one of these workshops is to find a sponsor at your university or institute. Typically, that sponsor is a graduate school, graduate student association, postdoc office, postdoc association, or an individual school or department. I would very much appreciate you recommending one or more of these workshops to a potential sponsor. If that doesn’t work out, I do sell these workshops to individuals, but I think it’s always worth trying to get it into your hands for free or a subsidized cost. Again, you can find all of these free and paid resources, including a page you can send to a potential workshop sponsor, linked from PFforPhDs.com/tax/. Now back to the interview.

Advocacy Avenues for Grad Students and Postdocs

21:28 Emily: The last kind of question in this area, and you just mentioned one of the advocacy avenues: unions. Can you think of any other advocacy avenues that graduate students and postdocs might be able to use to make these kinds of changes that we’re talking about?

21:45 Jamie: I mean, even outside of a formal union, I’ve seen a lot of success from graduate students and postdocs just banding together and working together on these things. Whether that is kind of peer-to-peer advice and providing resources, or working together as a group to request something from your department, from your university. You know, I have so many memories of like trying to do my taxes, trying to fill in the forms, and getting like frustrated and upset and not knowing what to do. And I think like you have peers who can help you through some of those things and at least to help you feel supported.

22:25 Emily: Now, I don’t know exactly what avenue this is, but I have noticed over the years that I’ve been studying federal taxes for, you know, as in how they affect graduate students and postdocs, that there have been changes. The 1098-T has gone through actually a big remodel in the last few years. The Kiddie Tax went through a slight change with the Tax Cuts and Jobs Act. So, there have been other changes that have been made that makes me realize that changes possible. Now, I don’t know what the avenue is for letting someone know, <laugh> that you want a change to happen. Maybe it’s contacting your representative or your senator or whatever. We can talk about some of the advocacy around like retirement stuff that happened a few years ago in a moment, but the change can happen. I’m just not clear exactly how you communicate, you know, this advocacy at the federal level.

23:09 Jamie: Yeah, that’s a good question. I mean, I know I’ve been on like the IRS website looking for like from their resources, like what is their advice for people in these situations. And what I found was only a few lines, right? Like not a lot of detail. So, I would love to see, you know, coming directly from the IRS some more clear advice around these types of situations. And I do know that government agencies put out things like RFIs, requests for information, and they do have various sort of feedback channels, so trying to find those for the IRS or for your state tax departments could be one way to go about it.

(No) Access to University Retirement Accounts

23:48 Emily: Okay. Future project for me. Okay, well I just alluded to retirement accounts, so let’s talk about that next. What’s been your experience with being offered or not being offered access to university retirement accounts?

24:01 Jamie: Sure. So, as a graduate student, I didn’t have any option for any kind of retirement account. And my understanding was that from legal sort of tax reporting purposes, I wasn’t able to open an official retirement account. So, in graduate school I was making like just enough money to save up a little bit and I did start buying like some mutual funds with that. And then as a postdoc, I did have a retirement account offered. However, I started out by like not really contributing very much to it at all because I was living in this really high cost-of-living area with not a lot of income. And then I actually found out as I was going through the fellowship application process that I was going to be losing that retirement contribution once I got a fellowship coming in. So then I sort of, at the last minute just before my fellowship came in, I like maxed out all my contributions as best as I could for like the last few months and tried to top it off. But then the fellowship came in and those accounts kind of sat stagnant for the rest of my postdoc. So, that was a frustrating thing to see. And it’s definitely been really nice now for a little more than a year I’ve been in, you know, a real job with very solid you know, federal government retirement accounts. So, that’s been nice to watch those finally like properly growing.

25:26 Emily: Yeah, it’s been my observation that if you’re not an employee, you do not have access to the 403(b) or 457. I actually don’t know why this is the case, but I’ve never seen an exception to it. Like yeah, I guess it has to do with like the rules behind what kinds of money can be contributed to a 401(k) or a 403(b), 457, these kinds of accounts. What I mentioned earlier, and you probably know this is, at the end of 2019 with the SECURE Act, there was a definitional change. So, 2019 and prior, fellowship-type income not reported on a W-2 was not permitted to be contributed to an IRA, an individual retirement arrangement. But that definition of what kind of money is allowed to be contributed to an IRA was changed by the SECURE Act.

26:18 Emily: And so 2020 and forward, you can contribute fellowship income not reported on a W-2, if you’re a graduate student or postdoc, to an individual retirement arrangement. I don’t know why a similar definition change could not occur for 403(b)s, 457s, et cetera. I just know that I’ve never seen it. I’ve never seen a non-employee be offered access to that particular benefit. Furthermore, at the graduate student level, it’s just very, very rare. Not totally unheard of, but rare, that a graduate student employee is offered access to those accounts. It does happen from time to time, but usually not. I’ve had a couple podcast episodes, and we’ll link in the show notes, where people have talked about as a graduate student contributing to those types of accounts. But again, it’s not common.

27:00 Jamie: I didn’t know actually about that change to the SECURE Act. Like I was still a postdoc in 2020 and I had had that IRA that I had opened like just before my fellowship started. But yeah, I definitely wasn’t contributing to it in 2020 and 2021. I had no idea that that was a possibility.

27:17 Emily: Yeah, I don’t think it was, I mean I talked about it a lot, but just like generally speaking, people make that assumption, right? That graduate students and postdocs are usually not able to contribute to a retirement account. So, why would we even have the conversation about whether they’re allowed to or not? Thankfully, someone was having the conversation because there was a change, right? Because I mean I remember that Senator Elizabeth Warren was a sponsor of this bill. There were other co-sponsors. It came up multiple times in the Senate and the House and it just never passed, multiple years, until it was rolled into the SECURE Act. There were a lot of other changes going on with how retirement accounts were being treated. So, it was kind of rolled into that and I’ll link in the show notes a couple of episodes we did right around that. But again, people make these rules. So, if people at the federal level decided that graduate student and postdoc non-employee income was legitimate in whatever, you know, little tax benefit they’re trying to offer, then it could become legitimate and maybe universities also would follow suit and start to offer that benefit. I actually don’t know why graduate students would be excluded from 403(b)s and 457s. Does it cost the university anything? Like a little more administrative burden to extend those benefits? I honestly don’t know why they wouldn’t for those students who can.

28:34 Jamie: Yeah, especially if it’s not a question of matching, if it’s just a question of contributing your own earnings into this account, right?

28:41 Emily: We can dream, Jamie, that there would ever be a match <laugh>. That’s a couple more steps down the road. No, some postdocs do receive matches or actually, I don’t know about you for being a postdoc in the UC system, but the UC system has a defined contribution level for their employees. I don’t know if it applies to postdocs, but in any case you might get that as an employee and then lose it if you, you know, then switch over to fellowship at a non-employee.

29:06 Jamie: Yeah, I believe in the UC system, I never got any kind of match, but I did have access to that 403(b) as well as I think a DCP.

29:15 Emily: Yeah.

“Non-Employee” Fellowship Income Legitimacy

29:16 Jamie: But yeah, I think it’s interesting that you describe it as like the legitimacy of being an employee and the legitimacy of that income. Because I often felt, you know, in addition to like the confusion and the frustration and wondering what to do that, I don’t know, it felt like an emotional hit. I felt unvalued when I’m put into this weird little category where my earnings don’t make sense and I can’t open an account and I can’t figure out how to pay taxes. I remember having like some really sharp juxtapositions between attending a professional conference and like giving a talk and talking to PIs in my field and having people really excited about the work that I was doing and then coming home a week or two later and trying to figure out some of my financial life and it being so confusing and seeing that there was just no support set up for it. And I went on this really kind of roller coaster from feeling like, “Oh, I’m a valued scientist and worker in this field,” down to like, “Oh, nobody really cares about me or the type of work that I’m doing.” So, I think it can have an emotional hit as well.

30:24 Emily: I’m so glad that you shared that. I think this is how we started our conversation at GCC actually, that fellowships and similar kinds of awards are supposed to be so prestigious.

30:35 Jamie: Exactly.

30:36 Emily: It’s supposed to be such an honor. It’s supposed to be based on your merit that you’ve received this. And yet the downstream effects are, well now you’ve been unclassified as an employee and your benefits are reduced. And I don’t know, maybe at some point in the past, the money made up for it. Like maybe you could make more as a fellow, which could make up for some of these issues. But I don’t know that that’s so much the case now. I was actually just seeing on Twitter today that like, you know, fellowship awards on certain grants are set at such a level that they’re below the minimums the universities have to pay their own graduate students and postdocs. So it’s like, well if you’re not even making more and the university has to make up some deficit in the award that you’re receiving, like what is the point of this when it has these negative implications later on?

31:27 Jamie: Yeah, absolutely. I mean I think the point for, well you know, it’s a point for your PI, right? It saves them some money out of their budget, and otherwise it’s a line on your resume. You got this prestigious award, congrats. Here’s some prestige. Right?

Inherent Value of a Fellowship

31:44 Emily: This almost reminds me of like, I don’t know, I’m thinking like crypto, like a currency. Like it only has value because we’ve decided it has value, it doesn’t have inherent value. If it came with more money that would be inherent value, but would it still be actually worth it? How much money would it take to make up for some of these deficits that we’re talking about?

32:04 Jamie: That’s a good question, yeah.

32:05 Emily: Right. So like, not only is it maybe the retirement stuff that we mentioned. Now on the tax front, you’re not necessarily paying more in taxes, it’s just more difficult. But I will say there are certain tax benefits I know at the federal level that you’re not eligible for if you have only this non-employee kind of income. So for example, the earned income tax credit, which is supposed to be for low-income individuals, usually with children, multiple children who are not making enough money, they have to have “earned income.” And under that definition, as of now, 2022, fellowship income is not considered earned income. So, you can’t get the earned income tax credit. You also can’t get the child and dependent care tax credit, which was so valuable in 2021. It was massively increased in 2021. You can’t get it if, let’s say even if you’re married to someone else, let’s say I ran into this situation literally I had a question from this married couple, both postdoc fellows, could not take this tax benefit because they did not have earned income under the definition. Now, graduate students can take it because students have an exception. But postdocs, everybody forgets about the postdocs!

33:08 Jamie: Everybody forgets the postdocs, it’s true!

33:11 Emily: Postdocs don’t have this exception <Laugh>. Everybody forgets that postdocs exist and yet for some, in some career paths, you can spend just as much time as a postdoc as you will as a graduate student, maybe even if not more. It’s a very important life stage. There’s family formation going on, and yet they’re excluded from some of these benefits. And like we were just saying, it comes back to is this fellowship income considered earned income? And that term earned income is used all over the tax code or the way the tax code is interpreted. Now, it used to be used for retirement account contributions, then the term was changed, taxable compensation, then the definition of taxable compensation was changed to include fellowship income. So, why can’t this term earned income be changed to include this type of income? I think this brings up a bigger, even bigger, bigger question though, which is like what is earned income?

Earned Income: Great Expectations

34:04 Emily: What is the responsibility that you have when you receive this non-employee income? What’s the responsibility that your employer has to you or your non-employer has to you? What’s the responsibility you have to your non-employer? So, if you’re an employee, you’re expected to work and produce certain outputs, whether it’s teaching, research, whatever. If you’re receiving a fellowship, it’s much less clear what the outputs are supposed to be. You have to have outputs to continue to be on the fellowship. But what are they exactly? And I think that lack of definition is what’s going into this earned income, not, you know, fellowship income not being considered earned income.

34:39 Jamie: Yeah, no, I think you’re right about that and I think that’s how this ties into kind of bigger labor questions, right? About our graduate students. Should they be classified as employees? Are they workers or are they students? And these are, you know, big things that have big implications across the U.S. and especially for universities on not just tax status but on a lot of things about how academics do their work and how academics get paid.

35:08 Emily: I’m so thankful for this conversation because it’s really like stretching me to think about these like bigger issues exactly as you were just saying. Whether we’re on fellowship or whether we’re employees, is there actually a difference there? Why are these differences encoded at the university level, at the federal level, state level, if they don’t have much meaning to us at the functional day-to-day, month-to-month, year-to-year. I know I mentioned earlier about half my time as a graduate student was spent as an employee, half as a non-employee. Functionally, what is the difference between what I was doing one year versus another year? It felt all pretty much the same to me.

35:45 Jamie: Yeah, and I think I remember it being sold to me as if you receive a fellowship, you have more independence from your PI because you’re bringing in your own money so you can be more independent in, you know, what experiments you do or how you drive your project. But in actual experience of my own or talking to other people, their level of independence was really just dependent on their PI and how that PI ran their lab. And I didn’t know anyone who was able to be more empowered because they had the fellowship or were able to push back on PI demands because of the fellowship.

36:22 Emily: I did see people who received fellowships be able to switch labs when possibly that wouldn’t have been the case otherwise. They were more attractive to that PI like accepting them. And they could, you know, take some time to get up to speed or whatever, again, without some maybe output expectations of being on a different kind of grant or whatnot. But I think you’re right, you know, we’re both kind of speaking coming from like the biological sciences kind of research. There’s so much overhead, there’s so much cost to that. How much money is the student really bringing in versus how much is their research overall costing the PI and the university? And so, if that ratio is not that great in the student’s favor, I don’t think there’s much independence that they can advocate for. Now, if your cost of doing research is like pretty much only your salary if you don’t have those kinds of overhead from doing like wet lab experiments and so forth, then maybe there’s a better argument here about independence from the PI. And I think in the humanities fields, some of them, at any rate, my understanding from talking with people is that like they have a lot more independence anyway in their research questions. And so a fellowship could be even more in that direction. But, yeah, I do think this is very, very field dependent.

37:32 Jamie: Yeah, I think that makes a lot of sense.

Future of Research

37:35 Emily: Well, this conversation has been so invigorating. Is there anything else that you want to share about your experiences or your observations or advocacy avenues that we can encourage listeners to take?

37:46 Jamie: I mean, I always love to tell people to check out the organization Future of Research. I used to serve on their board of directors and it’s a really great non-profit that kind of helps students and postdocs come together and crowdsource information and advocacy plans and push the field of research forward from the point of view of these early-career folks.

38:08 Emily: Excellent. And we will link in the show notes an interview that I did with Dr. Gary McDowell, the former director of Future of Research where we talked about post-doc salaries and post-doc work environments and how to, you know, choose a supportive PI and these kinds of questions. That’s excellent. Well, Jamie, I’m so glad that we got this interview out on the podcast that it didn’t just have to stay in the halls of the GFF conference, but that’s where great ideas are born with these like mixings and so forth and it was great to meet you in person and yeah, to be able to record this for the podcast listeners. So, thank you so much for coming on!

38:44 Jamie: Thanks, it was wonderful talking to you!

Outtro

38:51 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

Why Is My Fellowship Tax Bill So High?!

April 8, 2022 by Emily 1 Comment

Hi! I’m Dr. Emily Roberts, the founder of Personal Finance for PhDs. I’m a financial educator specializing in graduate students, postdocs, and PhDs in their first Real Jobs. My website is P F f o r P h D s dot com. The contents of this video are for education purposes only and should not be considered tax, legal, or financial advice for any individual. This video answers the question: why is my fellowship tax bill so high?

Introduction

I’m assuming that you found this video because your tax software or tax preparer has delivered some really, really unwelcome news, which is that you owe a large amount of tax this year, perhaps $1,000, $2,000, $3,000 or even more. And you are panicked because that is a huge amount of money for a graduate student or postdoc to come up with!

This is unfortunately a very common occurrence for graduate students and postdocs whose stipends or salaries are paid from fellowships or training grants and not reported on a Form W-2.

Specifically, this video is for postbacs, graduate students, and postdocs who are US citizens, permanent residents, and residents for tax purposes who are attending a university or training program in the US. Furthermore, all or part of your income is not reported on a Form W-2. I’m going to refer to you as a “fellow” in this video, although that might not be exactly the term that your university uses.

In this video, I will explain why graduate student and postdoc fellows often face these large tax bills. I’m going to focus on federal tax alone. In the companion video, What to Do When Facing a Huge Fellowship Tax Bill, linked in the description below, I step through what you should do if you are facing a high fellowship tax bill.

In all likelihood, the reason that you have a high tax bill due is that your fellowship is taxed as ordinary income but you were not having income tax withheld from your paychecks. I’m going to break that statement down now so that you can fully understand it.

Links Mentioned

What to Do When Facing a Huge Fellowship Tax Bill
Do I Owe Income Tax on My Fellowship? [podcast episode]
How to Complete Your Grad Student Tax Return (and Understand It, Too!) [workshop]
Free course on fellowships and income tax [email]

Point #1: Your fellowship is taxed as ordinary income.

Point #1: Your fellowship is taxed as ordinary income. What this means is that the federal government taxes fellowship income that you receive as your stipend or salary at the same rate that it taxes employee income.

I’m hand-waving a little bit here and making some assumptions, but this is roughly correct. I’ll point you to a resource in a moment to help you get this exactly right if you’re interested.

The general point is that your stipend or salary is subject to income tax in the same way that employee income is. That is to say, part of it tax-free thanks to your deductions, part of it is taxed at 10%, part of it is taxed at 12%, and if you were particularly well-paid, perhaps some is taxed at one or more even higher rates. These are the ordinary income tax rates.

The taxability of your fellowship income may come as a surprise to you, because there are endemic rumors running around universities that fellowship income is not subject to income tax. Sometimes even tax professionals say the same thing, although they are mistaken. Fellowships used to be exempt from tax, but that changed with tax reform in the 1980s.

If you want more discussion about the taxability of fellowships, I encourage you to listen to my previous podcast episode on the subject, titled Do I Owe Income Tax on My Fellowship?, which you can find linked in the description below.

One additional quick note is that you should not pay self-employment tax on your fellowship income. Assuming that you’re not otherwise self-employed, if you see that your tax return includes a Schedule C for your fellowship income and/or there is an amount listed on Schedule 2 Line 4, that means that something has gone dramatically wrong with the tax preparation process. It is vital that you correct that error before filing your return.

I told you a moment ago that I was hand-waving over some details about how fellowship income is taxed. Your taxable income from a fellowship might not be exactly the same as your stipend or salary. It could actually be slightly more or less, depending on your individual circumstances. If you are a graduate student and want to go really in depth with this material or are trying to correct the self-employment mistake I just mentioned, I encourage you to join my paid tax workshop, How to Complete Your Grad Student Tax Return (and Understand It, Too!), which is linked in the description below.

Point #2: You weren’t having income tax withheld from your stipend or salary.

Point #2: Despite the fact that your fellowship income is taxable, you weren’t having income tax withheld from your stipend or salary. The vast majority of universities and institutes do not withhold income tax on fellowship income.

Universities are required to withhold income tax on behalf of their employees. Employee income is reported on a Form W-2. But you are not an employee with respect to your fellowship income, so the university has no obligation to withhold income tax on that income, and the majority do not.

Here are some common scenarios that graduate students and postdocs face:

1) You were an employee, either at your university or elsewhere, in the first part of the calendar year, but then you switched onto fellowship income with the new academic year. In that case, you had income tax withholding on your income in the earlier part of the year, but it stopped when your funding source changed. Also vice versa, you could have switched from fellowship income to employee income mid-year.

2) You received fellowship income for the entire calendar year, and you had no income tax withholding during the year.

3) You had two concurrent sources of stipend or salary income, one from an employee position and one from a fellowship. You had income tax withheld on the employee portion, but not the fellowship portion. Even though you had withholding through the entire calendar year, it wasn’t enough to cover both sources of income.

I understand that you may be frustrated that your university or institute did not withhold income tax on your behalf. I wish that they all would offer this benefit. The very least they could do would be to give you a heads up that they’re not withholding income tax but that you still may have a tax liability, but I’m guessing because you found your way to this video that they did not. And I’m really sorry that you’re in this situation.

Point #3: Your tax return compares your calculated tax liability for the year with the income tax withholding that the IRS received during the year.

For most households in the US, their income tax withholding exceeds their income tax liability, so after they file their tax returns they receive a tax refund. That’s the excess money that they paid in through the year being refunded to them.

The opposite can also happen. When your tax liability exceeds your income tax withholding, you are expected to pay the balance when you file your tax return.

Conclusion

Now you can see why you’re facing this large income tax bill. You had taxable income, but no tax was withheld or not enough was withheld, and the IRS now expects you to pony up the difference.

After you finish this video, I encourage you to watch the companion video linked below, What to Do When Facing a Huge Fellowship Tax Bill, especially if you are unable to pay the entire bill right away.

If you would like to learn more about income tax on fellowships, I please register for my free email course on the subject, linked below. You can also find it at PFforPhDs.com/fellowshiptax. It is going to explain the previous points in even more detail and point you to lots of additional resources.

Again, I’m very sorry that you’re facing a high fellowship tax bill. I wish things hadn’t played out the way they have, but please know that you will get through this, and ultimately this will be just a small hiccup in your financial journey.

What to Do When Facing a Huge Fellowship Tax Bill

April 8, 2022 by Emily 1 Comment

Hi! I’m Dr. Emily Roberts, the founder of Personal Finance for PhDs. I’m a financial educator specializing in graduate students, postdocs, and PhDs in their first Real Jobs. My website is P F f o r P h D s dot com. The contents of this video are for education purposes only and should not be considered tax, legal, or financial advice for any individual. This video will show you the steps to take when you are facing a high tax bill due to your fellowship income.

Introduction

This is unfortunately a very common occurrence for graduate students and postdocs whose stipends or salaries are paid from fellowships or training grants and not reported on a Form W-2.

In this video, I will share with you the steps you should take when facing a high tax bill, both to address the current bill and also avoid getting into the same situation again next year. In the companion video, Why Is My Fellowship Tax Bill So High?!, linked in the description below, I explain why PhD fellows often face high tax bills.

Links Mentioned

Why Is My Fellowship Tax Bill So High?!
How to Complete Your Grad Student Tax Return (and Understand It, Too!) [workshop]
Quarterly Estimated Tax for Fellowship Recipients [workshop]
Taxpayer Advocate Service [website]
Free course on fellowships and income tax [email]

Step 1

Step 1: Don’t panic! IRS agents are not going to break down your door and haul you off to jail over this tax bill. You can manage this. Take a deep breath. I’ve interviewed several graduate students and PhDs on the Personal Finance for PhDs podcast who were in this exact situation, and they all found that the IRS was pretty reasonable to work with.

Part b to this step, which I want you to keep in mind throughout this whole process of resolving your bill, is to stay in contact with the IRS. Don’t stick your head in the sand about this matter. File your return on time, respond to the letters they send you, even if you can’t pay right away. Falling out of communication is tempting, but it’s kind of the worst thing you could do.

Step 2

Step 2: Double-check your tax return. I want you to be sure that it’s correct and that you really do owe that much income tax.

I told you in the companion video, Why Is My Fellowship Tax Bill So High?!, that fellowships are taxed as ordinary income. That means that you should pay the same amount of tax on your taxable fellowship income that you would on that amount of employee income.

Use an income tax calculator like the one pictured from smartasset.com. It’s not going to be super precise in calculating your tax liability, but it should get you in the right ballpark. If you have one or more dependent children, choose a calculator that takes that into account. Enter your pertinent details.

Take a look at the calculated federal income tax.

Compare that amount to the total tax line on your Form 1040. Are they fairly close, maybe within 10%? If that’s the case, your tax return passes this quick check, and it’s likely that you do owe that large tax bill.

However, if your tax liability from your tax return is much higher, like double or more, what the calculator said, that’s a major red flag. You need to go through your return with a fine-toothed comb to figure out whether something went awry in the preparation process. I would be suspicious that your fellowship income has been confused with self-employment income.

If you are a grad student and would like to learn more from me about how to prepare an accurate tax return, join my paid tax workshop, How to Complete Your Grad Student Tax Return (and Understand It, Too!), which is linked in the description below.

Step 3

Step 3: File your tax return and pay what you can. You can wait until Tax Day if you like, but do file by the deadline. Pay as much as you comfortably can, but do not put your bill on a credit card or anything similar.

If you have existing savings, how much should you put toward this bill vs. keep for yourself? My opinion is that you should treat IRS debt, which is what this bill is on the verge of becoming, similar to how you should treat credit card debt. That is to say, keep a small emergency fund of $1,000 to 2 months of expenses, and put any cash savings above that level toward paying this bill. That means forgoing investing and repaying lower-priority debts until it is paid. If you are familiar with my 8-step Financial Framework, I would place this bill in Step 2.

If you can completely pay the bill without dipping into your small emergency fund, that’s great! You’ll still need Step 4, though, so keep watching the video.

If you can’t pay the bill in full, keep working the steps.

Step 4

Step 4: Update your budget.

Your next step is not to get in touch with the IRS regarding paying your outstanding balance, although you should do that soon. First, you need to figure out your budget for this year.

In Step 4a, I want you to figure out how to stave off a large, surprise tax bill at this time next year.

If you are still on fellowship and still not having income tax withheld from your paychecks, I actually recommend that you figure out your tax bill for the current tax year before you commit to a payment plan for the tax year that has already ended.

That starts with estimating how much tax liability you will accrue on your fellowship income in this tax year.

You can use a calculator that I made, which you will receive after registering for my short, free email course at PFforPhDs.com/fellowshiptax/. Alternatively, you can use a calculator like the one I referenced in Step 2.

Figure out how much money you will need to set aside from each of your current fellowship paychecks to pay your tax bill for the current year. Build that number into your budget.

I recommend opening a separate savings account nicknamed Tax and setting up an autodraft from your checking account into the savings account for the correct amount of money immediately after you receive each paycheck. Then, when it comes time to pay your tax bill for the current year, you’ll have the money ready. This is what I call a system of self-withholding.

In Step 4b, you should determine if you are required, in the current tax year, to make estimated tax payments on a quarterly basis.

You do this by filling out the Estimated Tax Worksheet on p. 8 of Form 1040-ES. The worksheet is a high-level draft of your tax return. At the end, it will tell you whether you are required to make estimated tax payments and if so in what amount. The payment deadlines for each quarter are in mid-April, mid-June, mid-September, and mid-January of each year. If you are required to make these payments, your system of self-withholding will keep you on track to be ready to make them.

If you would like my teaching and support in how to fill out the Estimated Tax Worksheet and handle common scenarios that PhD trainees encounter, join my paid tax workshop, Quarterly Estimated Tax for Fellowship Recipients, which is linked in the description below.

In Step 4c, you will reassess your budget. You need that savings rate to go toward your current year’s tax bill, but you also need to know how much you can feasibly put toward your previous year’s tax bill on a monthly basis going forward. It’s vital to know the maximum that you can realistically pay to the IRS on a monthly basis for that bill prior to setting up a payment plan with them.

Specifically, there are two types of plans, short-term and long-term. If you can adjust your budget so that you will pay off your entire past year’s bill within 120 days, you can opt for the short-term plan. If you can’t, you’ll opt for the long-term plan.

Sidebar here: I said earlier that you shouldn’t put your tax bill on a credit card. That is generally speaking good advice, because the typical interest rate on a credit card is far higher than the interest rate the IRS will offer you.

The one maybe-possibly exception would be to put the bill on a promotional 0% interest rate credit card. You should only consider this if you’re 1,000% confident that you will pay the entire bill before the promotional period ends and the interest rate jumps up. Compare the fees for using such a card, if you qualify for one, with the fees and interest the IRS will charge you over the period you expect to hold the debt.

I don’t love the option of using a credit card to pay this bill, but I also don’t love you being in debt to the IRS. Either way, it’s a high-priority debt that you should strive to pay off quickly.

Step 5

Step 5: Make a plan with the IRS. Now that you know how much you can afford to pay toward your previous tax bill and whether you’re able to opt for a short-term plan, you’re ready to set up a payment plan with the IRS. Make sure that the required amount of payment is set at less than what your budget tells you that you can afford.

The best website I’ve found to help with this process is the Taxpayer Advocate Service, which is linked in the description below. It explains all of the options the IRS will give you so you can decide which is the best fit. For example, if you owe less than $10,000, the guaranteed installment plan gives you three years to pay the debt. Once you have assessed all your options, get in touch with the IRS to set up your payments. If this is your first time being late on paying your tax bill, you can ask to have any penalties waived.

Step 6

Step 6: Follow through. Pay the IRS on the schedule you agreed to, and in fact try to pay them even sooner! Again, following my Financial Framework, I recommend that you get creative with your budget to funnel as much money as you can toward your IRS debt and any other high-priority debts you may have. Consider this a financial sprint with a definite end point, after which you can take your foot off the gas a smidge.

Conclusion

I hope hearing those steps helped calm you down and show you that there is a path through this situation. You are not the first nor will you be the last graduate student or postdoc to get on a payment plan with the IRS, if it comes to that.

If you haven’t yet, I encourage you to watch the companion video linked below, Why Is My Fellowship Tax Bill So High?!, to understand how this situation came about.

If you would like to learn more about income tax on fellowships, I please register for my free email course on the subject, linked below. You can also find it at PFforPhDs.com/fellowshiptax. This will really help you if you are continuing on fellowship in the current year.

Again, I’m very sorry that you’re facing a high fellowship tax bill. It may take you some time to completely resolve the issue, but you will get through it and nothing terrible is going to happen in the meantime. The IRS is fairly reasonable to work with. Good luck to you.

Is Fellowship Income Eligible to Be Contributed to an IRA?

February 6, 2022 by Emily 27 Comments

Update 2/22/2022: Great news! The point of this article has been fulfilled because the IRS re-revised Publication 970 for tax year 2021 to reflect the current tax code, which permits taxable graduate student and postdoc income, whether reported on a Form W-2 or not, to be contributed to an IRA.

Publication 970 p. 5 NOW states: “Individual retirement arrangements (IRAs). You can set up and make contributions to an IRA if you receive taxable compensation. A scholarship or fellowship grant is generally taxable compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. However, for tax years beginning after 2019, certain non-tuition fellowship and stipend payments not reported to you on Form W-2 are treated as taxable compensation for IRA purposes. These include amounts paid to you to aid you in the pursuit of graduate or postdoctoral study and included in your gross income under the rules discussed in this chapter. Taxable amounts not reported to you on Form W-2 are generally included in gross income as discussed later under Reporting Scholarships and Fellowship Grants.”

The rest of this article is unchanged from its original publication date on 2/6/2022.

Believe it or not, I look forward to the release of each new version of the IRS’s Publication 970, which covers how fellowship and scholarship income is taxed. I read it thoroughly and make sure that what I teach is in line with it. However, when I opened up the new 2021 version a few days ago, I was disappointed to read on p. 5: “Individual retirement arrangements (IRAs). You can set up and make contributions to an IRA if you receive “taxable compensation” (formerly “earned income”). Under this rule, a taxable scholarship or fellowship grant is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement.” Disappointed doesn’t really touch the depths of my feelings… I was momentarily devastated! I’ve been telling you for over two years now that fellowship income is eligible to be contributed to an IRA regardless of how it is reported or not reported at tax time. Was I wrong? Let’s explore the relevant texts. I have great respect for the IRS publications and find them very useful, but they are not the final word on tax law… the tax code is.

Further reading/listening:

Pre-2020 Status

You must have “taxable compensation” to contribute to an IRA in a given tax year. You can contribute up to the cap for that year ($6,000 in 2019-2022) or your amount of taxable compensation, whichever is lower.

Through tax year 2019, with respect to PhD trainee income, only income reported on a Form W-2 was considered “taxable compensation.”

The text from the 2019 version of Publication 970, Tax Benefits
for Education, reads on p. 5: “Individual retirement arrangements (IRAs). You can set up and make contributions to an IRA if you receive taxable compensation. Under this rule, a taxable scholarship or fellowship grant is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. For more information about IRAs, see Pub. 590-A and Pub. 590-B.”

Similarly, the text from the 2019 version of Publication 590A, Contributions to Individual Retirement Arrangements (IRAs), reads on p. 6: “Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2.”

This text is very clear and reflects the widely held understanding of eligibility for IRA contributions. It was very disappointing for many members of the PhD community; winning a fellowship often comes with a pay raise and therefore an enhanced ability to save for retirement, yet those recipients were barred from making IRA contributions. Keep in mind, these fellowships were taxable as ordinary income, just not considered taxable compensation for IRA contribution purposes. I didn’t like this rule, but I taught it as part of my personal finance material.

The Graduate Student Savings Act

Somehow, the plight of graduate students and postdocs who received fellowship income was heard! The Graduate Student Savings Act proposed to change the definition of taxable compensation. It was put before Congress as a bill in 2016, 2017, and 2019.

An excerpt of the fact sheet for the Graduate Student Savings Act of 2019 reads: “While fellowship or stipend income is taxed by federal and state governments, it doesn’t qualify as “compensation,” meaning that none of a student’s fellowship funds can be saved in an IRA… Many postdoctoral fellows… also receive taxable fellowship income, yet these fellows are also barred from using their fellowship income to contribute to tax-preferred retirement accounts. The Graduate Students Savings Act of 2019 would ensure that any graduate student or postdoctoral fellow who is
paid for their work or their studies can save a portion of their stipend in an IRA.”

While not using super specific or technical language, this excerpt makes clear the intent of the bill: to allow “any graduate student or postdoctoral fellow who is paid for their work or their studies” to contribute to an IRA, i.e., change the definition of taxable compensation.

Graduate Student Savings Act was not successful in being passed as an independent bill in any of those years. Then, in 2019, it was included in the SECURE Act.

The SECURE Act

The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) is described by Investopedia as a “far-reaching bill includes significant provisions aimed at increasing access to tax-advantaged accounts and preventing older Americans from outliving their assets.” It was signed into law on December 20, 2019.

The Graduate Student Savings Act was included in the SECURE Act. Here is the relevant text from the bill:

“SEC. 106. CERTAIN TAXABLE NON-TUITION FELLOWSHIP AND STIPEND PAYMENTS TREATED AS COMPENSATION FOR IRA PURPOSES.

“(a) In General.—Paragraph (1) of section 219(f) of the Internal Revenue Code of 1986 is amended by adding at the end the following: “The term ‘compensation’ shall include any amount which is included in the individual’s gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study.”.

“(b) Effective Date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2019.”

This expands the definition of taxable compensation for the purposes of contributing to an IRA beyond what is reported on a Form W-2. To me, this definition clearly includes taxable fellowship and training grant income paid as stipends and salaries not reported on a Form W-2.

The Tax Code (2021)

From the current Internal Revenue Code section 219 on Retirement Savings, section (f)(1) reads:

“(1) Compensation For purposes of this section, the term “compensation” includes earned income (as defined in section 401(c)(2)). The term “compensation” does not include any amount received as a pension or annuity and does not include any amount received as deferred compensation. For purposes of this paragraph, section 401(c)(2) shall be applied as if the term trade or business for purposes of section 1402 included service described in subsection (c)(6). The term “compensation” includes any differential wage payment (as defined in section 3401(h)(2)). The term “compensation” shall include any amount which is included in the individual’s gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study.”

Again, I read this as any type of grad student and postdoc salary or stipend with no clauses about being reported on a Form W-2. The language is very similar to how IRS Publication 970 describes fellowship income on p. 5: “A fellowship grant is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research.”

The Internal Revenue Code does seem, to me, to reflect the intent of the Graduate Student Savings Act of expanding the definition of taxable compensation with respect to graduate student and postdoc income beyond what is reported on a Form W-2.

The 2021 Publications

Publication 970

As I stated at the start of this article, Publication 970 disappointingly has not changed its tune on the definition of taxable compensation. It says the same thing in 2021 that it did in 2019 as if the Graduate Student Savings Act had never passed.

Publication 590-A

Publication 590-A, to its credit, now has some mixed language regarding taxable compensation and fellowship stipends and salaries. I’ll compare the 2018 and 2021 versions of this publication.

The 2018 version of Publication 590-A contains exactly one reference to fellowship income on p. 6 in the section titled What Is Compensation?: “Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2.”

The 2021 version of Publication 590-A contains this language on p. 6 in the section titled What Is Compensation?: “Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2.” So no change there.

However, further down in the same section it says: “Graduate or postdoctoral study. Compensation includes any income paid to you to aid you in the pursuit of graduate or postdoctoral study.”

Are they trying to draw a distinction between “any income paid to you to aid you in the pursuit of graduate or postdoctoral study” and “scholarship and fellowship payments”? What could “any” income mean if not, at least in part, fellowship payments?

To further muddy these waters, Publication 590-A includes Table 1-1, Compensation for Purposes of an IRA. The 2018 version of this table doesn’t mention either fellowship income or graduate or postdoctoral study. The 2021 version lists “taxable non-tuition fellowship and stipend payments” as included in the definition of taxable compensation.

This language in the table is consistent with both employee and non-employee graduate student and postdoc income, again, with no mention of a Form W-2 reporting requirement.

Furthermore, the 2021 version of Publication 590-A says under the Reminders section on p. 2: “Certain taxable non-tuition fellowship and stipend payments. For tax years beginning after 2019, certain taxable non-tuition fellowship and stipend payments are treated as compensation for the purpose of IRA contributions. Compensation will include any amount included in your gross income and paid to aid in your pursuit of graduate or postdoctoral study.”

I am not sure what “certain” means in this paragraph. “Non-tuition fellowship and stipend payments” reads to me as stipend or salary as long as your tuition is being paid by another source of funding. “Any amount included in your gross income and paid to aid in your pursuit of graduate or postdoctoral study” reads to me as both your employee income (reported on a Form W-2) such as from a graduate assistantship position or postdoctoral employee position and taxable non-employee (not reported on a Form W-2), often sourced from a fellowship or training grant.

My Conclusion

My conclusion is that the very clear language in Publication 970 and Publication 590-A excluding taxable fellowship and scholarship income from the definition of taxable compensation unless it is reported on a Form W-2 is not consistent with the spirit of the Graduate Student Savings Act or the current tax code. The changes made by the SECURE Act to the tax code included in the definition of taxable compensation “any amount which is included in the individual’s gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study.” To me, this means that if you receive a taxable stipend or salary as a graduate student or postdoc, even if it is not reported on a Form W-2, it is taxable compensation for the purpose of contributing to an IRA.

What Do You Think?

I am really struggling with this and I honestly want to know: Do you see a flaw in my reasoning? Is there some difference between “fellowship” and “any income paid… in the pursuit of graduate and postdoctoral study”? Leave a comment here or email me ([email protected]). I am open to the idea that there is something I don’t see or understand. Or let me know if you agree with me.

What Can We Do?

If my argument is valid and the text in IRS Publication 970 and Publication 590A (in part) is incorrect, what can be done? Hit me with your ideas for getting this text updated.

My initial idea is to write to the offices of the Senators (Elizabeth Warren, Mike Lee, Ron Wyden, and Tim Scott) who sponsored the Graduate Student Savings Act to see if they can clarify why the IRS’s language in these publications doesn’t reflect the change the Act brought about. Do you have any other ideas?

The big win for our community was getting the Graduate Student Savings Act passed. The follow-through on that win is making sure that people (and tax software/preparers) know about the change so that graduate students and postdocs can functionally contribute to IRAs.

Fellowship and Training Grant Tax Forms

February 2, 2022 by Emily Leave a Comment

There is no single correct IRS tax form on which to report PhD trainee fellowship and training grant stipends and salaries. Universities and funding agencies take different approaches, which often confuses grad students, postdocs, and postbacs. This article shares the crowd-sourced information on how universities and funding agencies are reporting fellowship and training grant income.

Please contribute to this project by filling out this survey to have your tax form included in this article—and share the survey as well.

I have included the number of entries that I’ve received for each type of tax form.

Further reading:

Tax Year 2025 Survey Results

External Fellowships

National Institutes of Health (NIH)

Continuing Education Training Grant (T15)

The T15 has not been reported in any way (2 entries)

Ruth L. Kirschstein Institutional National Research Service Award (T32)

The T32 has been reported on a:

Form 1098-T Box 5 (1 entry)
Form 1099-MISC Box 3 (1 entry)

It has also been not reported in any way (4 entries)

Ruth L. Kirschstein Postdoctoral Individual National Research Service Award (F32)

The F32 has been reported on a:

Courtesy letter (1 entry)

It has also been not reported in any way (1 entry)

National Science Foundation

Graduate Research Fellowships Program (GRFP)

The GRFP has been reported on a:

Form 1098-T Box 5 (5 entries)
Form W-2 (1 entry)
Form 1099-MISC Box 3 (1 entry)

National Aeronautics and Space Administration

Future Investigators in NASA Earth and Space Science and Technology (FINESST)

The FINESST has been reported on a:

Form 1098-T Box 5 (1 entry)

NASA Space Technology Graduate Research Opportunity (NSTGRO)

The NSTGRO has been reported on a:

Form 1098-T Box 5 (1 entry)

Association of Public Health Laboratories/Centers for Disease Control and Prevention

Public Health Laboratory Fellowship Program

The Public Health Laboratory Fellowship has been reported on a:

Courtesy letter (1 entry)

National Institute of Food and Agriculture (USDA)

Animal Reproductive Microbiomes Training Grant

The Animal Reproductive Microbiomes Training Grant has been reported on a:

Form 1098-T Box 5 (1 entry)

Internal Fellowships

North Carolina State University

The Goodnight Doctoral Fellowship has not been reported in any way (1 entry)

Princeton University

Funding for graduate students has not been reported in any way (1 entry)

University of Michigan

The Rackham Merit Fellowship has been reported on a Form 1098-T Box 5 (1 entry)

Tax Year 2024 Survey Results

External Fellowships

National Institutes of Health (NIH)

Continuing Education Training Grant (T15)

The T15 has been reported on a:

Form 1098-T Box 5 (1 entry)

Intramural Research Program: Postdoctoral Research Training Award (IRTA)

The postdoc IRTA has been reported on a:

Form 1099-G in Box 6 (1 entry)

Ruth L. Kirschstein Institutional National Research Service Award (T32)

The T32 has been reported on a:

Courtesy letter (2 entries)
W-2 (1 entry)

Ruth L. Kirschstein Predoctoral Individual National Research Service Award (F31)

The F31 has been reported on a:

Form 1099-MISC Box 3 (2 entries)

It has also been not reported in any way (1 entry)

Linked Training Award (TL1)

The TL1 has not been reported in any way (1 entry)

National Science Foundation

Research and Mentoring for Postbaccalaureates in Biological Sciences (RaMP)

The RaMP has been reported on a:

Courtesy letter (1 entry)

Graduate Research Fellowships Program (GRFP)

The GRFP has been reported on a:

Form 1098-T Box 5 (2 entries)
Courtesy letter (1 entry)

It has also been not reported in any way (2 entries)

National Aeronautics and Space Administration

Future Investigators in NASA Earth and Space Science and Technology (FINESST)

The FINESST has been reported on a:

Form 1098-T Box 5 (1 entry)

It has also been not reported in any way (1 entry)

American Institute of Indian Studies

Junior Fellowship

The Junior Fellowship has not been reported in any way (1 entry)

National Institute for Occupational Safety and Health

Occupational Health Psychology Total Worker Program

The Occupational Health Psychology Total Worker Program funding has not been reported in any way (1 entry)

Internal Fellowships

Harvard University

Funding (stipend) for doctoral students still in coursework has not been reported in any way (1 entry – told to use paystub for reporting to IRS)

Northwestern University

The First-Year Fellowship was reported on a courtesy letter (1 entry – letter was requested by recipient).

Stanford University

Funding (stipend) for doctoral students has been reported on Form 1098-T Box 5 (1 entry).

University of Connecticut

The Jorgensen Fellowship has not been reported in any way (1 entry).

University of Pennsylvania

The Educational Fellowship has not been reported in any way (1 entry).

Vanderbilt University

Funding (stipend) for doctoral students has been reported on Form 1098-T Box 5 (1 entry).

Non-tuition scholarship awards (e.g., health insurance, health fee award) have been reported on Form 1098-T Box 5 (1 entry).

Tax Year 2023 Survey Results

External Fellowships

National Institutes of Health (NIH)

Dissertation Award (R36)

The R36 has not been reported in any way (1 entry).

Intramural Research Program: Postdoctoral Research Training Award (IRTA)

The postdoc IRTA has been reported on a:

Form 1099-NEC Box 1 (1 entry)

Ruth L. Kirschstein Institutional National Research Service Award (T32)

The T32 has been reported on a:

Form 1098-T Box 5 (3 entries)

It has also been not reported in any way (2 entries).

Ruth L. Kirschstein Predoctoral Individual National Research Service Award (F31)

The F31 has been reported on a:

Form 1098-T Box 5 (2 entries)
Form 1099-MISC Box 3 (1 entry)

National Science Foundation

Graduate Research Fellowships Program (GRFP)

The GRFP has been reported on a:

Form 1098-T Box 5 (2 entries)
Form W-2 (1 entry)

It has also been not reported in any way (1 entry).

Internal Fellowships

Harvard University

The Prize Fellowship has not been reported in any way (1 entry).

Mayo Clinic Graduate School of Biomedical Sciences

Funding (stipend) for doctoral students has been reported on Form 1099-MISC Box 3 (1 entry).

Ohio State University

The Presidential Fellowship has not been reported in any way (1 entry).

Smithsonian Institution

The postdoctoral Smithsonian Institution Fellowship Program (SIFP) has not been reported in any way (1 entry).

University of Nevada, Reno

The Bilinski Fellowship has been reported on Form 1098-T Box 5 (1 entry).

University of Virginia

The Diversity, Equity, and Inclusion Dean’s Doctoral Fellowship has not been reported in any way (1 entry).

A graduate research assistantship position has not been reported in any way (1 entry).

The Raven Fellowship has been reported on Form 1099-MISC Box 3 (1 entry).

Tax Year 2021 Survey Results

National Institutes of Health (NIH)

Ruth L. Kirschstein Institutional National Research Service Award (T32)

The T32 has been reported on a:

Form 1098-T in Box 5 (5 entries)
Courtesy letter (3 entries)

It has also been not reported in any way (3 entries).

Ruth L. Kirschstein Individual Predoctoral NRSA for MD/PhD and other Dual Degree Fellowships (F30)

The F30 has been reported on a:

Form 1098-T in Box 5 + Form W-2 in Box 14 (1 entry)

Ruth L. Kirschstein Predoctoral Individual National Research Service Award (F31)

The F31 has been reported on a:

Form 1098-T in Box 5 (2 entries)
Form W-2 in Box 1 (1 entry)

It has also been not reported in any way (1 entry).

Ruth L. Kirschstein Postdoctoral Individual National Research Service Award (F32)

The F32 has been not reported in any way (1 entry).

Individual Predoctoral to Postdoctoral Fellow Transition Award (F99/K00)

The F99/K00 has been not reported in any way (1 entry).

Intramural Research Program: Postdoctoral Research Training Award (IRTA)

The postdoc IRTA has been reported on a:

Form 1099-G in Box 6 (1 entry)

NIH Oxford-Cambridge Scholars Program

The Oxford-Cambridge Scholarship has been reported on a:

Form 1099-G in Box 6 (1 entry)

National Center for Advancing Translational Sciences Clinical and Translational Science Awards (CTSA) Program TL1

The CTSA TL1 has been reported on a:

Form 1099-MISC in Box 3 (2 entries)

Clinical Connections-Connecticut (CNC-CT)

The CNC-CT has been not reported in any way (1 entry).

Molecular Biophysics Training Grant

The Molecular Biophysics Training Grant has bee reported on a:

Form 1098-T in Box 5 (1 entry)

National Science Foundation (NSF)

Graduate Research Fellowships Program (GRFP)

The GRFP has been reported on a:

Form 1098-T in Box 5 (13 entries)
Form W-2 Box 1 (1 entry)
Courtesy letter (1 entry)

It has also been not reported in any way (5 entries).

Postdoctoral Research Fellowships in Biology (PRFB)

The PRFB has been not reported in any way (1 entry).

Department of Energy (DoE)

National Nuclear Security Administration (NNSA) Stewardship Science Graduate Fellowship

The NNSA Stewardship Science Graduate Fellowship from the Krell Institute has been reported on a:

Courtesy letter (1 entry)

Department of Defense (DoD)

National Defense Science and Engineering Graduate Fellowship (NDSEG)

The NDSEG has been reported on a:

Form 1099-NEC in Box 1 (1 entry)
Courtesy letter (1 entry)

Science, Mathematics, and Research for Transformation (SMART)

The SMART Scholarship has been reported on a:

Form 1099-MISC Box 3 (1 entry)

The National Academies

Ford Foundation Predoctoral Fellowship

The Ford Foundation Predoctoral Fellowship has been reported on a:

Courtesy letter (1 entry)

Henry Luce Foundation

Clare Boothe Luce Fellowship

The CBL Fellowship has been not reported in any way (1 entry).

Simons Foundation

The Simons Postdoctoral Fellowship has been reported on a courtesy letter (1 entry).

Internal Fellowships

Cornell University

A fellowship for first-year rotating students has been reported on a Form 1098-T in Box 5.

Harvard University

The Prize Fellowship has been not reported in any way (1 entry).

Indiana University

The University fellowship has been reported on a Form 1098-T in Box 5 (1 entry).

Mayo Clinic

The Mayo Foundation for Medical Education & Research Fellowship has been reported on a Form 1098-T in Box 5 + Form 1099-MISC in Box 3 (1 entry).

Rochester Institute of Technology

A graduate research assistantship position has been reported on a Form 1099-MISC in Box 3.

University of California, Berkeley

The Chancellor’s Fellowship has been reported on a Form 1098-T in Box 5.

University of California, San Diego

The Summer Training Academy for Research Success (STARS) Fellowship has been reported on a Form 1098-T in Box 5 and a courtesy letter (1 entry).

University of Connecticut

The Jorgensen Fellowship has been not reported in any way (1 entry).

University of Michigan

The Rackham Merit Fellowship has been reported on a Form 1098-T in Box 5 (1 entry).

University of Pennsylvania

The Dean’s Fellowship in the Graduate School of Education has been reported on a Form W-2 in Box 1 (1 entry).

University of Southern California

The Merit Fellowship has been reported on a Form 1098-T in Box 5 (1 entry).

University of Virginia

The Diversity, Equity, and Inclusion Dean’s Doctoral Fellowship has been not reported in any way (1 entry).

Washington University in St. Louis

The WM Keck Postdoctoral Fellowship has been reported on a courtesy letter (1 entry).

Please contribute to this project by filling out this survey to have your tax form included in this article—and share the survey as well.

Want more tax content specific to graduate students, postdocs, and postbacs?

Visit the Personal Finance for PhDs Tax Center.

Workshop: How to Complete Your Grad Student Tax Return (and Understand It, Too!)

Workshop: Quarterly Estimated Tax for Fellowship Recipients