[net.taxes] Taxes on salaries received while on TA or RA

wally@cornell.UUCP (Wally Dietrich) (04/04/84)

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> > If you take a tax exemption this year, you might not be able to income
> > average for the next four years, which can hurt you much more than paying
> > taxes now.
>
> I don't get it.  If I take the exemption now, how does that prevent
> me from income averaging?  If it reduces my current taxable income, it
> should make it EASIER to average in the future, no?
>
> Alan Silverstein

In order to income average you have to provide 50% of your own support for
the previous four years.  That's what makes it hard to income average.
Support includes food, housing, and all the things you would expect, plus
tuition if you are a student.  You can't count scholarships and fellowships
as support provided by yourself and I believe the IRS puts tax-exempt TA and
RA money in the same category.

                                Wally Dietrich

cas@cvl.UUCP (Cliff Shaffer) (04/05/84)

If you take a tax exemption on TA/RA pay, it is true that you probably
will not be able to income average.  I realized this a couple of weeks
ago, so I sat down and tried to figure out the difference between
taking the exemption for four years vs. paying on my RA grant and income
averaging.  I found that it is better to keep the money (particuarly if
you put it in a money market account) then it is to income average.
Under the most optimistic of future employment conditions, it is better
to income average... but not until the third or fourth year after
graduation.  So I decided to keep the money - who knows when I may need
it?
		Cliff Shaffer
		rlgvax!cvl!cas

honey@down.UUCP (code 101) (04/06/84)

an anonymous source close to code 101 reports that there is widespread
cheating on this point.  if all else fails there's always "oh really,
mr. auditor?  well, excuuuuuuuse me!"
	peter honeyman