I’m currently a PhD student and am filing taxes online. I put my stipend as my income amount and before I’ve hit file, the website (ezTaxReturn.com) is saying I will owe around $5000 in federal taxes. This seems really high to me and doesn’t make much sense at all. I don’t qualify for any educational credit because my grants are more than my tuition costs, but even with that I’m surprised I will owe so much. It’s also especially hard to pay all that as a graduate student haha. Has anyone else paid that much in taxes during their PhD?
Comments
This sounds off. Time to hire a professional
Is your stipend paid by your university? Was it an assistantship or a fellowship? You should have received a W2 form which shows how much you earned and additionally how much was deducted in advance for taxes. Then when you file your taxes you first calculate your taxable income, and then deduct any deductions and taxes already paid. The remainder is what you actually owe (or if you overpaid, how much of a refund you will get). Is this what you did, and it still says you owe $5000? If no taxes have been deducted in advance (which might be the case if it was a fellowship but not if it was an assistanship) then owing 5000 total might be possible depending on what your stipend was.
I did often pay a lot of taxes as a student, because when I was on fellowship they didn’t withhold payroll taxes. I wish I’d hired a real professional (not a storefront H&R block bozo) at least once to really see if I needed to pay all that, but I was reluctant to pay hundreds more on top of the tax bill. If you can at all swing it I would hire someone at least this first time to make sure it’s all good.
What’s the ballpark number for your stipend? What state are you in? Are you making additional income? What have you already had withheld?
In Ohio I get paid roughly $31k over 12 months. Total taxes were roughly $2k federal, $500 state, $750 local.
Also you should be able to do a payment plan if you really do owe that much. But something seems wild with the numbers. But this is super vague and low on detail so it’s not impossible.
Never heard of that website. Seems suspect, that figure. I’ve had luck over the years with FreeTaxUSA which is a terrible name but is one of the free filer places recommended on other taxes websites. Federal is free but they charge $15 for State, which is really reasonable but also optional – my state (PA) has a very simple online State return process.
My stipend 15 years ago was 20k and I always ended up having to pay at least 2k per year when I filed.
freetaxusa.com
Not some random website.
Did you fill out a W9 form with HR folk when you onboarded? That would have set up payroll deduction of state and federal taxes…
If you are a PhD student and a nonresident alien (this is most likely the case if you just arrived in the U.S.), then you’ll want to see if your country has any tax treaties with the United States. Most countries have tax treaties where the income of researchers and students are either completely tax exempt, or tax-exempt to a certain threshold.
For example, if you are a German PhD student, then the 1989 German-American tax treaty states on Article 20:
> 3. Payment other than compensation for personal services that a person who is or was immediately
before visiting a Contracting State a resident of the other Contracting State receives as a grant,
allowance, or award from a non-profit religious, charitable, scientific, literary, or educational private
organization or a comparable public institution shall not be taxed in the first-mentioned State.
This means grant income would be completely tax-exempt. In order to claim a treaty benefit, you’ll want to file a Form 1040-NR Schedule OI.
I’m a researcher in the U.S. and also an international student, and I recently had to go through this myself. My entire income is tax-exempt due to the provisions of the tax treaty between my country and the USA.
I wrote a guide on how to file taxes as an international student or researcher on F-1 or J-1 visas. I encourage you to take a look.