You may have received money or benefits from quite a few sources of the course of a calendar year. Some of that money is taxable income and some of it is not. In this article, we will focus only on the income and expenses related to your role as a graduate student. Those income sources and relevant expenses might be documented by official tax forms generated by your university and/or funding source, but in some cases the university is not required to.
Your sources of income as a graduate student may or may not be readily apparent to you.
The most obvious source of income is your stipend, or the money you are given to pay for your living expenses. Your stipend may be compensatory (given in exchange for work) or non-compensatory (given as an award).
If your stipend is from an assistantship, your university will provide you with a W-2. This type of documentation indicates that your stipend is taxable compensation or earned income.
If your stipend is from a fellowship (or training grant), your university might report your fellowship income officially on a 1098-T in box 5 or 1099-MISC in box 3. However, your university or funding source is not required to report your fellowship to you or the IRS, so it may send you an informal courtesy letter or no documentation whatsoever. This type of documentation or lack of documentation indicates that your stipend is not taxable compensation or earned income. (Any “fellowship” income that is given in exchange for work will be reported on a W-2 and is compensatory.)
A less obvious source of income is the money that pays for your university-related benefits such as your tuition, required fees, and health insurance premium. This money is scholarship income, which is non-compensatory. Similar to fellowship income, the official documentation of scholarship income will be on a 1098-T, but it also may not be reported to you at all.
Related article: What is a 1098-T?
Another important element in this equation is your qualified education expenses. Tuition, for example, is a qualified education expense, while health insurance may not be. You can find a more complete list of qualified education expenses in Publication 970 in each chapter (the definition of qualified education expenses changes with the education tax benefit you are trying to take). Your university may add up your qualified education expenses for the year and report them on a 1098-T, or it may not.
Related article: What are qualified education expenses?
If you don’t receive a 1098-T from your university, you can still figure our your scholarship income and qualified education expenses by viewing the transactions in and out of your student account (which may be termed your Bursar or Cashier’s account or have another name). It’s also a good idea to check the amounts reported on your 1098-T against these transactions. You may have additional qualified education expenses that did not pass through your student account, such as money you spent on required textbooks.
Before you begin preparing your tax return, make sure you can answer these questions:
- What amount of compensatory stipend pay did I receive? What amount of non-compensatory stipend pay did I receive?
- What documentation did I receive or not receive for my stipend?
- Did I have any scholarship income? If so, what is the total amount and is there documentation?
- Did I have any qualified education expenses? If so, what is the total amount and is there documentation?
Use the answers to these questions to help you prepare your tax return.
Parent post: Grad Student Income Tax Guide: 2015 Edition
We at Grad Student Finances are not tax professionals, and none of the content in this section should be taken as advice for tax purposes.
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