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Questions & Answers

Question: What do I need to declare as income? Stipends, travel grants, fellowships, loans?
Answer: Loans are not income, so no taxes on it. There may be a tax benefit when you pay the interest on the loan.
Fellowships are income, and you report the income on the wages line and add it to any w-2 income you receive. This income is not subject to social security taxes.
Stipends are income and you will either receive a w-2 (wages) or a 1099-misc (contract work is self-employment requiring Schedule C and Schedule SE).
Travel grants could be income or not. Contact the grant administrator to see if your particular travel grant will be reported to IRS as W-2 (wages), 1099-misc (contract work) or reimbursement of expenses (not reportable to IRS as income).

Question: What part of fellowship income is tax exempt?
Answer: Fellowship income is reported the same as w-2 wages, but is not subject to social security. In the same way as w-2 wages, your standard deduction and personal exemption amounts are not taxable. For a 2006 tax return, if you are single and can claim your own personal exemption, then your standard deduction is $5150 and your personal exemption is $3300. If your income (from all sources) is greater than your standard deduction, then you are required to file a tax return… even if you do not owe taxes. You may find your fellowship income on a W-2 or on a 1098-T, depending on the administration of the fellowship.

Question: If I do not receive a W-2 for internship Stipend income, can I assume the income is not taxable?
Answer: I would assume that you did not receive your mail. Call the administrator for the stipend and verify that no W-2 was sent. Because some stipends are not taxable, you need to verify with the source to determine the tax reportable status of this money.

Question: How do I report fellowship income if I have no Social Security number? I came to this country in September, got a fellowship and now have to file a tax return.
Answer: Complete your tax return and report your fellowship on the W-2 wages line. Complete a W-7P request for a taxpayer ID. Mail these together to IRS. They will process the request for a taxpayer ID and then process your tax return.

Question: How do I report income from more than one state? How do I become a California resident?
Answer: IRS does not care what state you reside in. So for your federal tax return, just combine your income (w-2 wages).


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Residential Status: Resident
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Income From Salary (Section 12)

Total Exempt Taxable
Rs. Rs. Rs.
Basic Salary xxxxxx --------- Xxxxxx
Overseas Allowance xxxxxx --------- Xxxxxx
Dearness Allowance xxxxxx --------- Xxxxxx
Cost of living Alloawance xxxxxx --------- Xxxxxx
Bonus xxxxxx --------- Xxxxxx
Commission xxxxxx -------- Xxxxxx

Salary Xxxxx Xxxxxx

House Rent Allowance (when only Allowance is given) Xxxxx -------- xxxxx
Rent Free Unfurnished/Furnished Accommodation
when Option is given
House Rent Allowance
45% or MTS/Basic Salary Whichever is Higher

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sale tax

Important Supporting Concepts and Tables

Zero-rated Supplies
The supplies which are taxed at the rate of ‘0%’ are called zero-rated supplies these are:-
Exported goods
DTRE (Duty and Tax Remission Exports)

Exempted Sales
Exempted supplies means locally sold goods which are purchase in previous month

Commercial Exporter
Commercial exporter means a registered person who has no manufacturing facility of his own and exclusively makes zero-rated supplies or ‘same stated goods’.

Same Stated Goods
Same Stated goods mean goods purchased by a commercial exporter or manufacturer cum exporter against tax invoice for export as such.

Section 8B(I) SRO 647(1) 2007
Under this section Total input tax should not exceed 90% of the total output tax. It is a maximum limit of input tax in general case. Normally it is given when sales are made to Registered person. However there are some exceptions to the section:
Exception to the section.
This section 8B (1) shall not apply in case of;
Commercial importer
Whole seller

Fair Tax


The FairTax eliminates the tax bias against investment.
Under the FairTax, savings and investments are not taxed at all. As Americans save more money, the pool of funds in lending institutions grows. When you add to this the flood of capital currently trapped offshore, we realize a huge increase in the pool of capital, thereby causing the cost of borrowing funds to drop.
The FairTax dramatically increases investment levels compared to the current income tax system.
Investment is important to all wage earners because of the relationship that exists between real wage rates and the level of capital investment per worker. In fact, the most significant contributing factor to achieving higher real wages is the level of capital investment per worker. A worker or farmer, for example, is more productive if he has more machinery and equipment to work with, particularly new equipment that incorporates the latest te…