Taxes 101 for Domestic Grad Students Workshop (March 24, 2021)
This webinar provided a basic overview of graduate aid and expenses to help you understand income tax filing as a graduate or professional student including how to get started and needed documentation. Brought to you by Mind Over Money, GLO and SFCU.
Quick Tax Essentials
- Taxes are typically due on April 15 for income earned in the previous calendar year. The IRS has extended the 2020 federal tax filing deadline to May 17, 2021. State filing and payment deadlines vary and are not always the same as the federal filing deadline. Check with your state tax agencies for those details.
- For tax purposes, “income” includes any money you receive through paychecks, stipends, and assistantships, and may also include some funds from scholarships or fellowships.
- Many students will receive refunds from taxes that have been withheld throughout the year.
- You do not have to pay taxes on funds from your scholarship, fellowship, or other grant that are used to pay for tuition and any fees, books, supplies, and equipment required for your courses. These are referred to as qualified educational expenses.
- You do have to pay taxes on amounts disbursed or paid to you for stipends and assistantships. You also have to pay taxes on funds used for incidental expenses, such as room and board, travel, and non-required equipment. These are referred to as non-qualified expenses.
- Look into the American Opportunity Credit, Lifetime Learning Credit, and Student Loan Interest Deductions.
- Consult your 1098T form from Stanford if you (or your parents) are applying for the American Opportunity Credit or Lifetime Learning Credit. 1098T Guide
- Use your Account Activity data in Axess to determine your aid income and qualified expenses for each tax year (not the 1098T).
- Keep your W2 and/or 1099 from your employer.
- Stanford does not withhold state taxes on your behalf. You may be expected to file a California state tax return.
More Information and Resources
Taxes 101: A Mind Over Money Learning Module that guides you through the basics about income taxes, paycheck deductions, education tax considerations, and how to file your taxes.
Undergrad Taxes 101: A video tutorial with Michael Spencer, FLI Program Associate and Class of 2020
Grad Taxes 101: A video tutorial with Karen Cooper, Financial Aid Office; Suzi Weersing, School of Humanities and Sciences; and Angela Amarillas, Mind Over Money
Quick Tax Essentials for International Students
- International students need to determine if they are considered residents or non-residents for tax purposes as that will determine what forms are needed to file. See the IRS Substantial Presence Test.
- If you received scholarship over the cost of tuition and fees, you may be required to pay U.S. and California income tax.
- Depending on your home country's tax treaty status, the University may have withheld estimated federal income taxes from your scholarship disbursements. (Stanford Financial Aid Office may have paid the withholding on your behalf.) You are encouraged to file a U.S. income tax return as you may be eligible for a refund.
- If federal tax withholding has been paid on your behalf you will receive form 1042-S from Stanford in March reporting scholarship amounts received and taxes withheld. You will need this document to file your federal income tax return.
More Information and Resources for International Students
Tax Considerations for Non-Resident Alien Students, Scholars and Fellows: Information regarding tax exemptions, tax forms, rules regarding taxation of university support
Bechtel International Center's Tax Info: Tax filing requirements and resources for international students, including webinars and software for filing federal taxes.
Tax Tips from the Director of University Tax Compliance
1. Be honest. Keep good records. Document your deposits as well as your expenses. If audited, be organized to move the audit along quickly. Rehearse your audit. Only answer the questions that you are asked. Be nice to the auditor. You do have appeal rights.
2. Make sure you timely pay enough in withholding or estimated tax throughout the year. Make sure you pay all taxes by the IRS due date, even if you extend your time to file.
3. Pay your medical insurance and out of pocket costs and child care expenses with pretax dollars if such employer plans are available.
4. Invest in a Roth IRA if you can! You’ll thank me in 30-40 years when you are not paying tax on your retirement income.
5. Keep your Adjusted Gross Income (AGI) as low as possible. Higher AGI has side effects on your tax return and elsewhere (financial aid, Affordable Care Act taxes, etc)
6. Know your marginal tax rate.
- Taxable income reduction times marginal rate equals tax savings. Nondeductible rent divided by the result of one minus your marginal tax rate equals the equivalent tax-deductible mortgage interest and property tax on your own future home.
- Tax planning and actions occur during the tax year. You can smooth out income spikes through timing of income and deductions.
7. Know when to say HELP! Tax law is complicated and there are severe penalties for noncompliance. An error can set your financial plan years back. Consider seeking the advice of a tax professional when:
- You are behind in the payment of your taxes
- Your return goes beyond your wages and bank interest
- You buy a home or invest in rental property
- You accumulate stock options, RSUs and ESPP shares or partnership interests
- You are contemplating marriage or marital separation or become widowed
- You are being audited or discover errors on prior returns
- You are moving from one state to another or work in more than one state
- You start a small business
- You need to care for elderly parents or other relatives
- You are planning future intergenerational transfers (inheritance, college planning)
The items presented here are for general information only and do not constitute tax advice. The University does not endorse nor independently confirm the information presented in any other website referred to in this document. The University encourages users of this page to seek qualified tax counsel when appropriate.