Grad school research assitant's w2

Forum|Forum|2 years ago
March 16, 2024
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Someone received a w-2 from a grad school as a research assistant.

The w-2 withheld fed and home state tax(a different state from school's state) but no social security tax withheld. What's the difference between this kind of w-2 and regular w-2?

Thank you.

Opus 17

Level 15

Generally speaking, when a student is working for their school, they are exempt from social security and medicare withholding. The income is considered a student stipend rather than compensation for work performed.

Also generally speaking, you are required to file a state tax return in the state where your permanent residence is located, that reports and pays tax on all your world-wide income, even if you earn income while temporarily working in another state. Depending on the rules of the specific state, you may also be required to file a state tax return in the state where you are living temporarily, and pay income tax only on income earned in that state. Since your home state also taxes you on the same income, it will give you a credit to offset taxes paid to the state where your school is located.

Of course, if your income is less than the filing threshold, you may not be required to file at all. What state is your permanent residence located, where is your school, and what is your total income for the year?

magicstar41000-yAuthor

Level 4

Opus 17,

Thank you very much for your explanation.

The school is in PA. Income withheld on the w2 is reported to MA. Total income level requires to file tax return, but don't need to file tax return for PA?

Thank you!

SusanY1

Level 15

Hi Opus 17,

Thank you for your examples. I have 2 follow ups as below:

Part 1. I am not clear about the deal with the school. You said "stipend plus a scholarship.“ Do you mean the w2 earned is the "stipend," the" tuition” part is the scholarship"?

I don't know if the earnings on w2 had already subtracted from the tuition. For example, if earned $50,000 from working as a RA(hourly rate * hours worked), w2 showed $30,000, the other $20,000 had deducted before tax towards the tuition. So this situation is different from the Church example, no free money here.

The above are not exact numbers

Part 2. I just got an update that a 1098-T was sent by the school. Box 1 (payments received for tuition and expenses) say $50,000, box 5(scholarship or grants or grants), say $30,000.

After entering into theTurbo-tax software, it puts $30,000 on schedule 1 ( scholarship not reported on w-2) and 1040 as additional income. I thought scholarship is not taxable!!! Turbotax live helper could not understand this either.

When w2 earning is added to the scholarship amount in box5, the sum is more than the amount in Box 1 of the1098-T - about $30,000.

Very confusing! What's the relationship between the w2, box1 and box5 of the 1098T.

Please explain.

Thank you very much!

Scholarships not used for "qualified" expenses (tuition and required fees) is taxable. A stipend or scholarship designated or used for living expenses is taxable income.

It is not usual for the same income to be reported on a W-2 as on a 1098 in the schoalrship section, but when it is the income should only be reported once.

If part of the income reported on the W-2 was withheld for tuition (pre-tax) and the same income and tuition is also reported on the 1098-T then you would just not enter the 1098-T.

If the W-2 income didn't deduct the tuition pre-tax, then the tuition is reported as an expense but you wouldn't enter the scholarship from box 5 (assuming it's the same amount on the W-2).

Each item - the income and the tuition expense should only be accounted for once. If the tuition is deducted from the Box 1 income on the W-2 then the 1098-T should just be ignored.

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