Taxability of studend stipend

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Subject Author Date Taxability of studend stipend C B 09-03-2009  Re: Taxability of studend stipend Arthur Kamlet 09-03-2009  Re: Taxability of studend stipend GPN Reunion 09-03-2009  Re: Taxability of studend stipend Alan 09-03-2009  Re: Taxability of studend stipend Alan 09-03-2009  Re: Taxability of studend stipend C B 09-03-2009  Re: Taxability of studend stipend Alan 09-03-2009  Re: Taxability of studend stipend John Levine 09-03-2009  Re: Taxability of studend stipend Arthur Kamlet 09-03-2009
Posted by C B on September 3, 2009, 3:05 pm Please log in for more thread options My next door neighbor's son is starting his Ph.D at a local university. His school sent him an email telling him that he would not be receiving a W-2 or a 1099 for his stipend. His first paycheck had city and state taxes withheld but no Federal. Questions: 1. I know the stipend is taxable, but is it subject to self employment tax. 2. If it's taxable, why doesn't the university withhold. 3. How can they get away with not issuing a tax reporting statement? How many of these students are going to know they need to report it? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Arthur Kamlet on September 3, 2009, 3:17 pm Please log in for more thread options >My next door neighbor's son is starting his Ph.D at a local >university. His school sent him an email telling him that he would >not be receiving a W-2 or a 1099 for his stipend. His first paycheck >had city and state taxes withheld but no Federal. Questions: > >1. I know the stipend is taxable, but is it subject to self >employment tax. >2. If it's taxable, why doesn't the university withhold. >3. How can they get away with not issuing a tax reporting statement? >How many of these students are going to know they need to report it? If it's under $600 it does not need a 1099. If it's more, yet less than the tuition, it may not be reportable by the student or taxable. Even if it's treated as an award not as compensation, it should be reported by the university if over 600. -- ArtKamlet at a o l dot c o m Columbus OH K2PZH -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by GPN Reunion on September 3, 2009, 4:45 pm Please log in for more thread options On Sep 3, 3:17 pm, kam...@panix.com (Arthur Kamlet) wrote: > > >My next door neighbor's son is starting his Ph.D at a local > >university.  His school sent him an email telling him that he would > >not be receiving a W-2 or a 1099 for his stipend.  His first paycheck > >had city and state taxes withheld but no Federal.  Questions: > > >1.  I know the stipend is taxable, but is it subject to self > >employment tax. > >2.  If it's taxable, why doesn't the university withhold. > >3.  How can they get away with not issuing a tax reporting statement? > >How many of these students are going to know they need to report it? > > If it's under $600 it does not need a 1099. > > If it's more, yet less than the tuition, it may not be reportable by > the student or taxable. > > Even if it's treated as an award not as compensation, it should be > reported by the university if over 600. > -- > > ArtKamlet  at  a o l dot c o m  Columbus OH  K2PZH A PhD student stipend is about $20,000 a year. It is in addition to the tuition, so it will all be taxable. The tuition and scholarship will be reported on the 1098T. The stipend will not be reported at all, according to the school. So why isn't the school reporting it? And why withhold only city and state? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on September 3, 2009, 5:16 pm Please log in for more thread options GPN Reunion wrote: > On Sep 3, 3:17 pm, kam...@panix.com (Arthur Kamlet) wrote: >> In article >> >>> My next door neighbor's son is starting his Ph.D at a local >>> university. His school sent him an email telling him that he would >>> not be receiving a W-2 or a 1099 for his stipend. His first paycheck >>> had city and state taxes withheld but no Federal. Questions: >>> 1. I know the stipend is taxable, but is it subject to self >>> employment tax. >>> 2. If it's taxable, why doesn't the university withhold. >>> 3. How can they get away with not issuing a tax reporting statement? >>> How many of these students are going to know they need to report it? >> If it's under $600 it does not need a 1099. >> >> If it's more, yet less than the tuition, it may not be reportable by >> the student or taxable. >> >> Even if it's treated as an award not as compensation, it should be >> reported by the university if over 600. >> -- >> >> ArtKamlet at a o l dot c o m Columbus OH K2PZH > > A PhD student stipend is about $20,000 a year. It is in addition to > the tuition, so it will all be taxable. The tuition and scholarship > will be reported on the 1098T. The stipend will not be reported at > all, according to the school. > > So why isn't the school reporting it? And why withhold only city and > state? > There is no federal requirement to withhold income taxes on a stipend paid to a Phd candidate. I believe the reason is that the payment could be used for tax-free benefits (tuition, fees, course related supplies, etc.) and Congress opted not to require withholding. The income is taxable and the candidate is on his own to ensure he meets the estimated tax requirements and/or declares the income and pays taxes. Unless the candidate is required to perform services for the university to obtain the stipend, it is not compensation. It is taxable scholarship income reported on Line 7 of the 1040/1040A. If the candidate is required to perform services for the university, then some part representing compensation has to be reported by the university using the 1099-MISC rules. This amount is self-employment income. Under certain circumstances, the candidate may be treated as an employee and get a W-2. It is quite possible that the state requires tax withholding on such payments. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on September 3, 2009, 5:22 pm Please log in for more thread options Alan wrote: > GPN Reunion wrote: >> On Sep 3, 3:17 pm, kam...@panix.com (Arthur Kamlet) wrote: >>> In article >>> >>>> My next door neighbor's son is starting his Ph.D at a local >>>> university. His school sent him an email telling him that he would >>>> not be receiving a W-2 or a 1099 for his stipend. His first paycheck >>>> had city and state taxes withheld but no Federal. Questions: >>>> 1. I know the stipend is taxable, but is it subject to self >>>> employment tax. >>>> 2. If it's taxable, why doesn't the university withhold. >>>> 3. How can they get away with not issuing a tax reporting statement? >>>> How many of these students are going to know they need to report it? >>> If it's under $600 it does not need a 1099. >>> >>> If it's more, yet less than the tuition, it may not be reportable by >>> the student or taxable. >>> >>> Even if it's treated as an award not as compensation, it should be >>> reported by the university if over 600. >>> -- >>> >>> ArtKamlet at a o l dot c o m Columbus OH K2PZH >> >> A PhD student stipend is about $20,000 a year. It is in addition to >> the tuition, so it will all be taxable. The tuition and scholarship >> will be reported on the 1098T. The stipend will not be reported at >> all, according to the school. >> >> So why isn't the school reporting it? And why withhold only city and >> state? >> > There is no federal requirement to withhold income taxes on a stipend > paid to a Phd candidate. I believe the reason is that the payment could > be used for tax-free benefits (tuition, fees, course related supplies, > etc.) and Congress opted not to require withholding. The income is > taxable and the candidate is on his own to ensure he meets the estimated > tax requirements and/or declares the income and pays taxes. Unless the > candidate is required to perform services for the university to obtain > the stipend, it is not compensation. It is taxable scholarship income > reported on Line 7 of the 1040/1040A. If the candidate is required to > perform services for the university, then some part representing > compensation has to be reported by the university using the 1099-MISC > rules. This amount is self-employment income. Under certain > circumstances, the candidate may be treated as an employee and get a W-2. > > It is quite possible that the state requires tax withholding on such > payments. > I should have added, for completeness, that my answer related to candidates who were US citizens, US resident aliens or nonresident aliens from a country with a tax treaty with the US exempting such income. Any other international student would have taxes withheld from the taxable stipend. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Notetaking stipend February 7, 2008, 1:35 am Re: Best place to report stipend April 14, 2006, 3:26 am taxability of cash-in-lieu? 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