There are two broad categories of PhD trainee income: employee income and awarded income. Employee income is W-2 pay, whereas awarded income is any other regular type of income for a graduate student or postdoc, which might be reported on a Form 1098-T in Box 5, a Form 1099-MISC in Box 3, a Form 1099-NEC in Box 1, or a courtesy letter—or not reported at all. For US citizens, permanent residents, and residents for tax purposes (the intended audience for this article), both employee and awarded income are supposed to be reported in the ‘wages’ line on your tax return, i.e., Form 1040 Line 1.
This article was most recently updated on 2/7/2022.
Where to Report Employee (i.e., W-2) Income
Employee income comes will be reported on a Form W-2. The terms used for employees at the postdoc level vary quite a lot, but at the graduate student level the positions are usually called assistantships (research, teaching, graduate, etc.).
Your gross yearly employee income will appear in Form W-2 Box 1, and the income tax that has been withheld from you pay will appear in Boxes 2 (federal), 17 (state), and 19 (local).
Form W-2 contains instructions for the employee (p. 7), which state: “Box 1. Enter this amount on the wages line of your tax return.”
The wages line of your tax return is Form 1040 Line 1, which is labeled: “Wages, salaries, tips, etc. Attach Form(s) W-2.”
The Form 1040 instructions for Line 1 (p. 21) state: “Enter the total of your wages, salaries, tips, etc. If a joint return, also include your spouse’s income. For most people, the amount to enter on this line should be shown in box 1 of their Form(s) W-2.”
Where to Report Awarded Income
Awarded income is not given in exchange for work as an employee, and therefore no W-2 is issued. At the graduate student level, awarded income is usually called scholarships, fellowships, and grants. The titles used for postdocs receiving awarded income vary, but they are not considered employees.
Awarded income will be officially reported to the student on a Form 1098-T in Box 5, on a Form 1099-MISC in Box 3, or on a Form 1099-NEC in Box 1. It also might be unofficially reported on a courtesy letter or not appear on any documentation at all.
- Fellowship and Training Grant Tax Forms
- The Complete Guide to Quarterly Estimated Tax for Fellowship Recipients
Please note that you must calculate the taxable portion of your awarded income for the year. Unlike with a Form W-2, you do not necessarily report exactly the amount that appears on your tax form or courtesy letter. See How to Prepare Your Grad Student Tax Return for more details.
Publication 970 Chapter 1 discusses where to report the taxable portion of scholarships, fellowships, and grants (p. 7):
Form 1040 or 1040-SR. If you file Form 1040 or 1040-SR, include the taxable amount in the total on line 1. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 1.
The Form 1040 instructions for Line 1 (p. 24) state: “The following types of income also must be included in the total on line 1… Scholarship and fellowship grants not reported on Form W-2. Also, enter “SCH” and the amount on the dotted line next to line 1.”
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