(Note: This section is completely unofficial and is no way endorsed by the Graduate Program or University of California.)
What should I do during my first year regarding taxes?
During your first year, you will be paid through some sort of fellowship or training grant. This usually means that taxes won’t be taken out of your monthly paycheck. Unfortunately, this also places the burden of saving for the taxes that should have been deducted from your monthly paycheck. Depending on any other income sources or financial accounts you may have, your individual tax burden may be slightly different. However, an informal poll of BioE graduate students showed that they paid around$2000-$5000 in total taxes (both California and Federal income taxes) for the 2015 tax year.
Unlike those folks paid through an HR (Human Resources) department, you will not receive a “W2″ form; you will receive two 1098T (Tuition) forms (one from Berkeley and one from UCSF). On your federal tax return, you will report the income you received in the “other income” section. Your “other income” is calculated as the difference between your “scholarships” and “cost” of attending the institution. See the example below for a UCB-based student from the 2014 tax year, where his total taxable income for the 2014 year (reported as “other income”) was $500.
|Institution||Cost (1098T)||Scholarships (1098T)||Taxable Income (Scholarships – Cost)|
Overall, his tax burden was about $4000 (to both the federal government and CA state). Because this may come as “sticker shock” to everyone, he recommend saving each month (around $320) so that you don’t have to worry about this at the end of the tax year. Additionally, after your first filing as a PhD student, you will need to pay estimated quarterly taxes. (The forms for federal estimated taxes are here: 1040-es. The forms for California estimated taxes are here’: 540-es).
What should I do if I have a fellowship or training grant?
If you get a fellowship like NSF or NDSEG, then congratulations! Unfortunately, this means that you have to be a bit more careful about your tax situation. See the example above (under the first year question) to see how much my total People generally budget out a certain amount each month (around $200) so that they don’t have to worry about where the money is going to come from when they pay my taxes. See the first year section for additional information, especially regarding filing estimated taxes.
What should I do if I am paid through an HR department or appointment?
If you are one of the lucky folks who is paid through an HR department or an appointment, you will probably be able to have taxes taken out of your monthly income. Check with your HR department to see if this is possible. If this is the case, then FANTASTIC (you don’t typically have to worry about owing money come tax season). If you are paid through an HR department or appointment, you will receive a W2 income earnings statement; you will report your income in the appropriate box on the tax form (instead of “other income” for first year students or fellowship holders).
I am still ridiculously confused. Who can I talk to?
Unfortunately, the university is not “allowed” to give out *any* tax advice. I strongly suggest you chat with other graduate students about this if you are not sure! While our advice isn’t official, it can definitely help.