Wednesday, March 11, 2009

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).

No comments:

Post a Comment

Corporate Event Planning

Corporate Event Planning by Posh Services Are you looking for reliable Corporate Event Planning Vaughan? First of all Posh Services i...