Preparing for Tax Filing

The first step in preparing to file your income taxes at both the federal and state level is to identify all of your sources of income for the year you are reporting for. As students, there are multiple sources of income and respective forms used to report those income amounts.

Tax Forms

For more information about the tax document you received from Duke, click on the name of the reporting document below.

 

W2  |  Wages  (ie/ Teaching Assistant, Work-study, compensatory internships)

---

Issued by Payroll Services to

• All employees of Duke University and Duke University Health System who are US citizens, permanent residents or residents for tax purposes.
• Foreign national employees who are not eligible for or do not claim a tax treaty.
• Foreign national employees whose earnings exceed allowable maximums of a tax treaty.

If you were employed outside of Duke University, you will receive a W2 form if you earned in excess of $600 from that employer or if you had taxes withheld earning any amount from the employer.

If you severed as an independent contractor rather than an employee, you will most likely have received a 1099 form instead.

For more information, refer to the IRS website, “Independent contractor (self-employed)/ or Employee?”

 

1099-Misc |   Scholarships, fellowships, non-compensatory internships & post-doctoral awards with tax withholding

---

Issued by Payroll Services to:

• Students who are US citizens, permanent residents, or residents for tax purposes, and who receive payments through the non-compensatory payment system.
• Any scholarship and fellowship payment for which the student elected to have taxes withheld.
• Postdoctoral scholars and student internship payments.

 

Courtesy Letter |  Scholarships, fellowships, non-compensatory internships & post-doctoral awards without tax withholding

---

Issued by Payroll Services to

• Students who are US citizens, permanent residents, or residents for tax purposes,
• Who receive scholarships or fellowships through the non-compensatory payment system, and
• Who choose not to have tax withholdings taken from their payment.

 

1098-T |   Duke administered financial aid posted directly to the Bursar Account.  (Does not include financial aid administered by third parties)

---

Issued by the Bursar’s Office to

• Students who are US citizens, permanent residents, or residents for tax purposes,

• Students must have taken classes for academic credit in any term that began during the respective calendar year, 

•  The students' account must have had a payment or financial aid award posted in the respective calendar that was applied to qualified tuition and related expenses, and

• The student received financial aid in the form of scholarships, grants, or third party payments that did not exceed the amount of payments for qualified tuition and related expenses posted in the respective calendar year 
  • Students that do not meet the criteria will not receive a 1098-T form. For more information, refer to Duke's Bursar Office . 

If you opted to accept electronic delivery of your 1098T, you can access your 1098T form through the  DukeHub. 

 Duke reports transactions billed for qualified tuition and fees, no information regarding payments made is included on the 1098-T in Box 1 or reported to the IRS. Students should consult banking records, student bills or their student account history on DukeHub for payment information.

Receipt of a Form 1098-T does not establish eligibility for educational tax credits. Similarly, students who do not receive a 1098-T because they do not meet the IRS’ reporting criteria should not automatically assume they are ineligible for these tax credits. Students should consult a tax advisor to determine eligibility. 

Payments from Duke posted to your Bursar account for university billed charges such as tuition and insurance are reported in box 5 as scholarships or grants and should be included when adding up your scholarship and fellowship income.

 

1042S  | Earnings that fall within the scope of a tax treaty, scholarships, fellowships, non-compensatory internships & post-doctoral awards

---

Issued by Payroll Services to

• Issued to foreign national employees who are claiming a tax treaty for earnings that fall within the scope of the tax treaty
• Issued to foreign national students who are not residents for tax purposes or permanent residents who receive scholarship and fellowship payments through the non-compensatory payment system. In some instances, students may receive multiple 1042s forms – one for payments that fall under the tax treaty and another for payments that fall outside the tax treaty.
• Issued to foreign national postdoctoral scholars and non-compensatory internship recipients who are not residents for tax purposes or permanent residents. In some instances, students may receive multiple 1042s forms – one for payments that fall under the tax treaty and another for payments that fall outside the tax treaty.

In some instances, students may receive multiple 1042s forms – one for payments that fall under the tax treaty and another for payments that fall outside the tax treaty.

For more information on taxes for international students, refer to the Duke International Student Center and IRS  websites.

 

Additional tax forms and instructions for completing can be found on the IRS topic section, Forms, Instructions & Publications

 

 

Generally, whether the amount is tax free or taxable depends on the type of expense paid with the funds and whether you are a degree candidate.  To calculate how much of the money you received from Duke is taxable, answer these three questions...

Are you enrolled in a degree program, or are you a non-degree student?

For Degree candidates, in general, those portions of a scholarship, fellowship, or grant used to pay qualified education expenses are classified as a "Qualified Scholarship" and are not includible in the gross income of the recipient under Internal Revenue Code section 117. Any portion of the scholarship, fellowship, or grant that does not pay for qualified education expenses is includible in the gross income of the recipient, which means that it is subject to withholding.

For non-degree candidates, the entire grant is includible in the gross income of the recipient and is subject to withholding. Research grants awarded to post-doctoral research scholars are entirely includible in the gross income of the nonresident alien recipient and, as such, are subject to withholding. However, certain deductions related to the research may be allowable against the gross income. 

•   What is the total amount of income you received from Duke?

For the most part, your income will be reported to you on one of these forms or a combination  --   W2, 1099 MISC, 1098T, Duke Courtesy letter.  Also, be sure to check your and your bursar account.   A credit for your department that pays your health insurance is taxable as health insurance is not a qualified expense.

How much did you pay for Qualified Expenses?

For purposes of tax-free scholarships and fellowships, Qualified Expenses are payments for:

• Tuition and fees required to enroll at or attend an eligible educational institution, and
• Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at an eligible educational institution. These items must be required of all students in your course of instruction.

Additional information on Qualified Expenses can be found on the IRS website.

Expenses that don't qualify

Qualified education expenses don't include the cost of:

• Room and board,
• Travel,
• Health insurance,
• Research,
• Clerical help, or
• Equipment and other expenses that aren't required for enrollment in or attendance at an eligible educational institution.

Most of your qualified educational expenses will be posted to your Bursar account, however, some of your expenses will be ones you paid out of pocket.   If you received a 1098-T from the Bursar’s office, it will only report the amount of qualified educational expenses billed to your account. The amount you paid may be different.  You’ll need to check your Bursar account to determine how much of these expenses were actually paid.    Payments received from  Duke's Employee Travel and Reimbursement Department and used for Duke Business are generally not taxable.  However, if the funds are used for independent research they are generally considered taxable. 

Reporting the taxable portion 

When it comes time to prepare for tax filing, the general approach for reporting your scholarship, fellowship, or stipend is to add up all of your awards or different types of scholarship income and subtract the qualified expenses paid for using those funds.

Amounts used towards qualified expenses DO NOT need to be reported as income. The amounts remaining and used for non-qualified expenses would be reported as income for the purposes of filing taxes.

Resources at Duke

Duke Law VITA Program: The Law School of Duke University has participated in the Federal Government’s Volunteer Income Tax Assistance program to help low-income individuals file their taxes. For undergraduate students and other Duke affiliates looking for assistance on basic or simple tax returns, meaning they do not have any special circumstances that would warrant additional forms and services beyond the 1040 filing paperwork, appointment scheduling will typically go live in mid-January.

Though walk-ins are accepted when time permits, it is advised that you make an appointment to meet with an IRS volunteer through the VITA program.

Please note: The Duke Law VITA program is no longer able to assist graduate and professional students with the tax filing process.

Resources Online- Federal Income Taxes 

For individuals who feel comfortable navigating the filing process more independently, the IRS offers a free electronic filing option. 

Other free and low-cost filing options include:

Turbo Tax 

H&R Block 

Credit Karma 

Tax Slayer 

If you are unfamiliar with how to file your taxes, first refer to the IRS website. Follow up the information provided by the IRS with different checklists and tips from other personal finance website and blogs.

Here are some to get you started:

Nerd Wallet

The Simple Dollar

Credit Karma

Personal Finance for PhDs

RESOURCES ONLINE- STATE INCOME TAXES

In addition to filing responsibilities for federal taxes, you may be obligated to file taxes at a state level as well. Instances where you may need to file state income taxes include: 

• You have filed federal income taxes 
• Your income is above a specific threshold 
• You are due a state tax refund 
• You are eligible for certain state tax credits 

Since many students attend college outside of their home states, another common question you may encounter when you file is whether or not you will need to file in more than one state. Instances where you could be required to file in more than one state include: 

• You have officially changed permanent residences within the same calendar year 
• You work in one state and live another 
• You have earned state-based income, such as from a rental income or even the lottery 

Even if you need to file with more than one state, it may not mean that you will be taxed twice. Generally, your home state will allow a credit against state income tax for the income taxes paid to another state on the same income.

To determine your tax liability and how many states you may need to file with, refer to the tax information on each state's respective government site: 

 

*The following states do not have state income tax in place: 

• Alaska
• Florida
• Nevada
• South Dakota
• Texas
• Washington
• Wyoming

**New Hampshire and Tennessee have some exceptions for state income tax obligations as well 

Resources for estimated tax and quarterly tax payments 

In certain situations, students may need to pay estimated taxes on a quarterly basis and do not just need to prepare for a tax obligation on an annual basis. Per the IRS, this can occur if the type of income you earn does not rqeuire withholding, such as being self-employed, or if you do not calculate high enough withholdings to be assessed on your income. For more information on Estimated Tax and Quarterly Tax Payments, please refer to the IRS topic page on Estimated Taxes.

Additional information on Estimated Taxes and its impact on graduate students can also be found on the Personal Finance for PhDs website