To the extent that your University stipend(s) and fellowship awards are not used to pay for actual tuition fees or textbooks, they constitute taxable income, and thus do need to be reported on your tax return. The good news is that, while your stipend and / or fellowship income is
taxable as ordinary income, at least you do not have to pay Social Security and
Medicare taxes on it, as you would if the income were alternatively
taxed as ordinary W-2 wages. Please allow us to explain this, and how to include it on your tax return.
Academic institutions, research facilities,
and certain government
agencies will often report fellowship (or stipend) income in various or nonstandard ways, especially at the graduate
and postdoctoral levels. It's certainly not an
uncommon occurrence; but yes, it is
definitely considered taxable compensation. As such, you do (legally) need to
declare it and report the information on your
income tax return.
This can be accomplished in the TurboTax
program, both in the online (web-based) software as well as in the
desktop versions of the program.
The mechanical steps to do so are outlined at the following AnswerXchange post from a few years ago:
https://ttlc.intuit.com/questions/2638576-how-to-report-a-fellowship-stipendThose general processes remain accurate for the current (2016) tax year of the TurboTax program (
i.e., either of those described will work just the same).
Both
as a test of
this, and as demonstrable proof for this answer, I ran a (hypothetical)
academic
fellowship of $3,000 through the federal tax program. In fact, I did it
in both of the ways described on that other post, and the
results came out just as expected, without any errors present. (Please
see the attached screen-capture image below for a visual aid; simply click to
open.) As desired, the notation "SCH" appeared on Line 7 of Form 1040,
and the $3,000 test amount was added to taxable wages.
I have
full confidence that this method will work for your tax return, too.
Just substitute the actual fellowship income total you have (subtracting out any dollar amount that was used directly for tuition or textbooks, if any) for the
$3,000 used in this
demonstration example.
Thank you for asking this important question, and good luck with your graduate studies.
