arnold@umcp-cs.UUCP (02/03/84)
The rules for teaching and research assistant stipends are loosely
stated below: There is an official IRS publication on Stipends,
Scholarships, and Grants.
According to the IRS in order to have your assistantship stipends
Tax-exempt you need:
1) Working towards a degree.
2) The work you are doing for your stipends is part of your
work for the degree.
3) Everybody going for that degree has to do similar work
whether they are paid to do the work or not.
4) The work your are being paid for is a serves to you not
the paying agent.
Most teaching assistantships will be considered to be taxable
income, since they are a service to the school not to you.
Most research assistantships can get tax-exempt status, one
needs a letter from their department stating why they are
tax-exempt. (This can cause havoc latter when income averaging
or IRA filling).
For teaching assistants there is some hope - one can claim
only the taxable income that an equivalent student would get
for teaching but not on an assistantship.
Example: at the U of Md. a T.A. works 20 hours a week, the
going rate of pay is $5.00 an hour for compatible work
by the U.'s pay scale there for only $100 per week is
taxable the rest is stipends to live on. This does not
help much since U of Md. T.A.'s only make $140 per week
but it helps.
When filling your stipends or part of it as tax-exempt income
you need a letter from your department as for the reasons why.
There is not section on the IRS tax form for this type of exemption
it has been recommend to use the Alimony line for your tax-exempt
income and claim your entire w-2 income on the gross income line.
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Arnold Miller, U of Maryland, College Park Md.
UUCP: {seismo,allegra,brl-bmd}!umcp-cs!arnold
CSNet: arnold@umcp-cs ARPA: arnold@marylandjreuter@cincy.UUCP (Jim Reuter) (02/08/84)
Here at U. of Cincinnati, the tax exempt status of grad. students is entirely up to each department. My department (EE) has chosen to give all full time grad students on assistanceships tax exempt status, whether they are doing funded research, teaching, lab assistance, or whatever. This is partly because assignments change frequently and are chosen somewhat arbitrarily, so this prevents some people from getting screwed because they got the wrong assignment. This is probably also partly because survival on $500-$600 a month BEFORE taxes is rough enough. The German department, which my sister was in, chose to give tax exempt status to nobody, and they paid even less! In EE, each student gets a letter which very generally states that the student is getting paid for REQUIRED activities which PRIMARILY BENEFIT THE STUDENT, etc. A bit fuzzier picture is painted on undergrad co-op income. A few bold students have tried to claim this as tax exempt for the same reasons, some with temporary success (my roommate is being audited for his 1981 return). As far as filling out the tax form, I was instructed to simply not put the untaxable income on the form at all, rather than trying to find a place to subtract it. The IRS can figure out the discrepency between the W-2 and the claimed income with the help of the enclosed letter. The local IRS office has confirmed this, and even done this successfully. Jim Reuter (decvax!cincy!jreuter)
hyder@hammer.UUCP (02/14/84)
One word of WARNING. If you take the money as tax exempt while
you are a graduate student it may be impossible for you to income
average for the first few years out of graduate school. The process
for getting the right to income average back would involve amending
returns back four years; and payment of interest and penalty.
If there is ANY way for you to do it and survive, pay the taxes as
a graduate student. The savings in your first year with the
computer industry would allow repayment of hefty loans to stay
alive.
In any event, if you decide to take it as exempt make sure you read
the (free) IRS publication on income averaging. There are a couple
of other ways around it that may apply. Like working for four years
before graduate school ( after your 21st birthday ).
Paul Hyder {...!tektronix!tekecs!hyder}jreuter@cincy.UUCP (Jim Reuter) (02/24/84)
Of course, one of the problems with income averaging is that the government is considering doing away with it as one method of increasing tax revenues. This would really shoot down your method if such a thing happens soon. Jim Reuter