Tax Information for Graduate Students

NOTE: This information is NOT meant to represent tax advice, and it should not be assumed to be error free. When in doubt, contact the IRS, a tax accountant, or an income tax service.

The Federal government considers all payments received by graduate students, either assistantships or fellowships, as taxable income. Whether or not you receive a W-2 form at the end of the year, portions of your funding may be taxable.

An assistantship is generally an amount paid to a graduate student for services performed for the school, usually teaching or research. Assistantships are paid as earnings and taxed at the time of payment. A scholarship generally is an amount paid for the benefit of a student at an educational institution to aid in the pursuit of studies. The student may be a graduate or undergraduate student.

If you are a degree-seeking student, you generally can exclude from income that part of the scholarship used for

  Tuition and fees required for enrollment or attendance; and
  Fees, books, supplies, and equipment required for courses.

You cannot exclude any part of a scholarship used for room and board expenses. A fellowship generally is an amount paid for the benefit of an individual to aid in the pursuit of study or research. Fellowships at Virginia Tech do NOT have taxes withheld. Fellowships are reported as unearned income, and, as such, Virginia Tech issues no W-2 form or 1099 form. The student is responsible for reporting the fellowship amount on a 1040 long form, so it is critical to keep all pay stubs for tax purposes. The person or entity that grants a scholarship or fellowship (grantor) does not withhold tax unless the grant represents payment for services. You may have to pay estimated tax if the grantor does not withhold tax or withholds insufficient tax on the taxable part of your scholarship or fellowship.

If all or part of your scholarship or fellowship is taxable, and you are required to file a tax return, report the taxable amount. You must report the taxable amount whether or not you received a Form W-2. If you receive an incorrect W-2, ask the grantor for a correct one.

Fulbright Students and Researchers
A Fulbright grant is generally treated as any other scholarship or fellowship in figuring how much of the grant can be excluded. If you receive a Fulbright grant for lecturing or teaching, it is payment for services and subject to tax.

Table and Worksheet courtesy of www.irs.gov

The Internal Revenue Service also offers tax guides that may be of interest to graduate students, including:
Publication 519 Tax Guide for Aliens
Publication 970 Tax Benefits for Education