Reporting Stipend & Fellowship Income
PhD students receive funding from different sources – stipends, fellowships, grants, scholarships, and wages. Depending on what expenses are paid with the money, will determine whether or not the funding is taxable. Each year during fall orientation, we offer a tax information session for PhD students. For a copy of the presentation, scroll to the bottom of this page.
Resource Tips |
Additional information on how to report different sources of income as a PhD or graduate student has been provided via recorded Zoom presentation by Megan Hutchinson, CPA Tax Partner at Cherry Bekaert LLP.
Consult Bill H.R. 1994 Sec. 106 for the most up to date changes regarding eligible compensation for purposes of Individual Retirement Account (IRA) contributions for graduate and post-doctoral students.
Emily Robert's Blog - pfforphds.com . Emily recieved her PhD from Duke in 2014, and worked with Duke's Personal Finance program while she was a student. She understands the challenges of living on a stipend, and helps PhD students make the most of their money.
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.
Expenses that don't qualify. Qualified education expenses don't include the cost of:
- Room and board,
- 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 1098T 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.
The information and material presented on this website are intended to provide accurate, authoritative, and informative information regarding the subject matter. It is not intended to be a substitute for obtaining the services of a competent professional. It should be understood that the information and material are presented with the understanding that the authors are not rendering professional advice (including without limitation accounting, legal, investment, or other advice or counsel).