As was foretold, we've added advertisements to the forums! If you have questions, or if you encounter any bugs, please visit this thread: https://forums.penny-arcade.com/discussion/240191/forum-advertisement-faq-and-reports-thread/
Options

Uni Student Tax Question

Ace1208Ace1208 Registered User new member
edited July 2008 in Help / Advice Forum
Hey there,

Recently I have found out that I will be receiving a $3000 stipend for some research that I'll be doing over the next couple weeks and I had fully expected them to take out taxes like they have with all the other checks I've ever received throughout the years but they didn't withhold any taxes.

Do I not need to pay taxes on this stipend or does that depend on how much I make this year? I work roughly twenty hours a week during the school year to support myself and I think I made around $7000 last year.

Another issue that was brought up was whether I had any tax liability, after some research I'm not sure if I do or not but I know that I have been paying taxes ever since I've started working and always received a refund after filling.

It's important to me whether or not I need to pay taxes on this stipend as I am on a very tight budget and need to know whether or not to keep some money around for when I file my taxes next year.

I've poured over the IRS website but nothing seems to be clicking in response to my question so if anyone knows or could help I would really appreciate it.

Thanks!

Ace1208 on

Posts

  • Options
    JoeUserJoeUser Forum Santa Registered User regular
    edited July 2008
    A couple of questions to start off: you're in the US? Are you a citizen? Is the stipend from your university?

    JoeUser on
  • Options
    DrFrylockDrFrylock Registered User regular
    edited July 2008
    Note: I am NOT a tax attorney or advisor.

    As I understand it, in the US, any money that is not directly applied to educational expenses (e.g., tuition or fee reimbursements, or books) is taxable. See here:

    http://www.finaid.org/scholarships/taxability.phtml

    So if you're spending the $3000 on room and board, or meals, or gas for your car, you have to pay taxes on it. Just because they did not take taxes out does not mean you don't have to pay them. This money is treated like regular income.

    Whether or not you have to file a return at all depends on many factors, see here.

    Now you're supposed to pay taxes on your income as it comes in. Thus, if you don't pay taxes on your income now, you may end up paying a penalty at the end of the year for not withholding enough. The calculation for whether there's a penalty involved depends on a number of factors. If you want to be safe, the appropriate thing to do is file estimated taxes with the Fed and your state, if appropriate. Here, you basically send the IRS a check now, guessing as to how much tax you'll owe (you can guesstimate based on your current tax bracket and so on). At the end of the year, you report this as estimated tax paid.

    DrFrylock on
  • Options
    Ace1208Ace1208 Registered User new member
    edited July 2008
    Yes I am in the US and have been a resident my entire life. The stipend is through the Ohio State University however that is only for the summer. During the normal school year I attend a separate university in Idaho.

    I most definitely work during the school year in order to pay for living expenses so at what point do I cross the line into making to much money so that I have to pay taxes?

    This whole sending a check now business sounds incredibly annoying and I know very little about taxes and don't really have access to anyone who does. Are there tax professionals readily available during this time of the year?

    God I just wish they would have taken the damn taxes out before they paid us then I wouldn't have to worry about this. Seems kind of lazy on the schools part and no one really knows what to do about it.

    Thanks very much for the replies so far though.

    Ace1208 on
  • Options
    GdiguyGdiguy San Diego, CARegistered User regular
    edited July 2008
    DrFrylock wrote: »
    Note: I am NOT a tax attorney or advisor.

    As I understand it, in the US, any money that is not directly applied to educational expenses (e.g., tuition or fee reimbursements, or books) is taxable. See here:

    http://www.finaid.org/scholarships/taxability.phtml

    So if you're spending the $3000 on room and board, or meals, or gas for your car, you have to pay taxes on it. Just because they did not take taxes out does not mean you don't have to pay them. This money is treated like regular income.

    Whether or not you have to file a return at all depends on many factors, see here.

    Now you're supposed to pay taxes on your income as it comes in. Thus, if you don't pay taxes on your income now, you may end up paying a penalty at the end of the year for not withholding enough. The calculation for whether there's a penalty involved depends on a number of factors. If you want to be safe, the appropriate thing to do is file estimated taxes with the Fed and your state, if appropriate. Here, you basically send the IRS a check now, guessing as to how much tax you'll owe (you can guesstimate based on your current tax bracket and so on). At the end of the year, you report this as estimated tax paid.

    IANAL (I am a grad student that has to deal with this stupid crap though)

    Stipends are treated as just general income, so yeah, if they don't withhold (which apparently a lot of places don't, it has something to do with something something (they don't withhold anything from our stipends, which we've bitched about every single year and always get some mumbled reply about why it's not possible about)), you're technically supposed to play estimated taxes on a quarterly bases (goddamnit, I forgot to send in June's) to both federal and state... federal is the 1040-ES form (I believe), state you'll have to look up unless you're in CA

    As for penalties - at least for federal, *usually* the penalty is that you have to pay interest on the money you were supposed to have paid them, and I don't *think* there is a major additional penalty (especially if you're at all reasonable about paying them - possibly they'll be meaner if you pay totally nothing until april 15th)

    However, there's a couple extra factors to consider here - the penalties have to do with not paying 1/4 of your TOTAL yearly tax burden at each quarter. If you're making extra money that's being withheld, and they're withholding way too much (likely for someone making ~10k total), they may be withholding enough that you may be alright already (withholding is basically just your employer automating the estimated tax payment for you). If you really want to do this you're going to have to do a mock-up of your taxes for this year, figure out your total taxes due this year, and then figure out how much you're already paying the irs/state

    *edit

    You probably need to double-check this (again, not a lawyer at all), but you're probably ok for at least the state of Ohio, in the sense that I'd be somewhat surprised if making $3k puts you into a bracket of paying any state taxes at all. You may have to look into whether you have to report that income in your home state as well, though

    Gdiguy on
Sign In or Register to comment.