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Tax Qs - College (scholarship?) income

Posted: Wed Apr 15, 2020 11:24 am
by psteinx
TLDR - Qs about W2 income, for a student, from a college where no withholdings were made - does it fall into any special scholarship/fellowship non-taxable categories, and in general, how should we handle it, tax-wise?

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Getting kids' taxes together

Oldest kid is college student. Had various income sources, but of note here is income from her college.

She's an undergrad at a well-regarded private university. Hopefully THEY know what they're doing and the reporting on their end is correct.

She was paid, I think, for 2 roles with them. One was helping a professor - basically research assistant/curriculum design. The other was as a TA/tutor for a class - basically helping those students who needed it, during office hours.

We have a W-2 from the uni, for $1020. No withholding of any sort (Fed/State/Local/FICA/Medicare) - all of those boxes blank. I'm not sure how much of the income was for the first role, how much for the 2nd (or if it makes a difference). Neither of these roles were what I would think of as a standard scholarship, nor work-study. I think of them as basically mini-jobs, though perhaps the university classifies them differently. FWIW, she is continuing in the 2nd role (TA-ish), and perhaps the first, this year, and there will likely be higher income from it.

So, I'm a little puzzle by the lack of withholding, and the implications for doing taxes. IIUC, some kinds of money paid by a uni are typically untaxable - scholarships and perhaps fellowships. I presume the uni thinks these payments fall into one or more of those categories? Can anyone provide guidance and/or a pointer to relevant IRS publications/forms? We could put the payments as income and I think she'll still be at $0 fed income tax liability. But would she somehow owe FICA/Medicare taxes, and if so, how do we handle/report that?

Re: Tax Qs - College (scholarship?) income

Posted: Wed Apr 15, 2020 11:39 am
by softmax
AFAIK scholarship/fellowship comes with form 1042s (correction: not 1042s but probably some other forms. 1042s is for foreign students) instead of W2 so you are right, these are not standard “scholarship”.

Income from university during regular *school year* is not subjected to FICA tax. By regular school year I mean a summer RA job still requires paying FICA.

Fed/state tax works exactly the same as regular income.

Re: Tax Qs - College (scholarship?) income

Posted: Wed Apr 15, 2020 11:49 am
by psteinx
softmax wrote:
Wed Apr 15, 2020 11:39 am
Income from university during regular *school year* is not subjected to FICA tax. By regular school year I mean a summer RA job still requires paying FICA.
Interesting. Yes, this was money made during the school year, not summer (conceivably there may have been a few hours put in right as/before school was starting.)

So, just report the W-2 income on 1040 like any other income, and let the chips fall where they may, for income tax, and no adjustment needed for FICA?

Any pointer to an IRS pub or the like that confirms this/explains in more detail?

Re: Tax Qs - College (scholarship?) income

Posted: Wed Apr 15, 2020 12:18 pm
by snowman
I wouldn't worry about it if I were you. I would add that W-2 into your tax software together with other W-2s your kid received. Same W-2 went to IRS, you want them to match.

I have/had 2 college students, 2 different schools. W-2s never had any FICA taxes withdrawn, those fields were blank. One school withheld both fed and state taxes; the other school left those blank (no withholding). I don't see anything unusual in your situation. You can always call the school and inquire about it if it bugs you.

Now, if she also got scholarships, she should have received 1098-T, but that one will have to go on your tax return, not hers. If those scholarships exceeded QEE, that excess gets reported on kid's tax return as taxable scholarship.

Re: Tax Qs - College (scholarship?) income

Posted: Wed Apr 15, 2020 1:03 pm
by psteinx
For future reference of perhaps myself and others, here's IRS reference on FICA withholding for students:

https://www.irs.gov/charities-non-profi ... o-fica-tax

Re: Tax Qs - College (scholarship?) income

Posted: Wed Apr 15, 2020 1:29 pm
by softmax
psteinx wrote:
Wed Apr 15, 2020 1:03 pm
For future reference of perhaps myself and others, here's IRS reference on FICA withholding for students:

https://www.irs.gov/charities-non-profi ... o-fica-tax
Yes, that's exactly the link I was going to send you.
Note that they mention "pursuing a course of study", which in most cases excludes summer/winter breaks.

And yes, if the school sent you W-2, then it should be reported just like any other income.

Re: Tax Qs - College (scholarship?) income

Posted: Wed Apr 15, 2020 2:35 pm
by cjclueless
Well you learn something new every day here at Bogleheads!

My college student had a lab assistant job on her campus last year and I too was surprised at the lack of withholding for FICA/Medicare. However she also had a 1099 dog walking gig also with no withholding which I knew would result in employee/employer taxes with half claimed as an income adjustment.

Now I have to take a closer look at her already filed return to see if Turbotax dinged her for self employment taxes on her university earnings. Boo.

CJ