The BMS office is not able to offer you advice on preparing your taxes. However, we hope that the information below will help you understand your tax status as a student. It is always best to seek the help and guidance of a professional tax preparer.
UCSF Graduate Division website (VERY useful information!!)
How students are paid
The way your stipend is paid will impact how your taxes are handled. Therefore, to start, here is an explanation of how students are paid.
Students are guaranteed the payment of an annual stipend plus tuition/fees until they graduate. At UCSF, the term “stipend” carries two meanings. First of all, this is the salary you receive. However, this is also the term applied to a specific mechanism of paying that salary. Some students receive their salary via the payroll system, while others receive theirs via an appointment through the stipend desk in Student Accounts. You will therefore hear the terms “payroll” or “stipend” to describe the method by which you receive your salary.
What’s the difference? It boils down to where the sources of funding for your salary come from, and how those accounts are coded. In your first and second year in the BMS program, you will be paid via stipend because your funding comes from a federal training grant appointment, or internal fellowship sources. These accounts are coded as stipends. (And in case you are wondering, BMS also pays your tuition/fees during this time, from these same sources.)
In the third year, your PI assumes the cost of your salary, and also pays your tuition/fees. This is coordinated through the BMS office. Most of the time, your PI will pay your salary from one of his or her grants. An account like this usually cannot be coded to pay a stipend, so your salary is instead paid through the payroll system just like you were an employee. Your salary title is Graduate Student Researcher (GSR). One exception to this is when you have received an extramural fellowship, such as the NSF predoctoral fellowship. Extramural fellowships usually (but not always) can be paid as a stipend. Another exception is when you have a fellowship that only pays part of your salary, and when your PI pays the balance (or “supplement,” as it’s known). In a case like this, you could be receiving your salary from both a stipend source and a payroll source.
Tax Withholding on Payroll
Students on payroll have state and federal taxes withheld throughout the year like a regular UCSF employee, and additionally have mandatory DCP (Defined Contribution Plan) withholding in lieu of Social Security/Medicare in the summer. This affects July and August paychecks (paid August 1 and September 1 respectively), so you should plan on extra withholding during these months. Why is this done? Graduate students do not register in the summer months, so during the two months that you aren’t registered, you are subject to DCP withholding just like any UCSF employee.
For a full description of the net effect of taxes on student salaries, go to the UCSF Graduate Division website. Students report that DCP withholding amounts to about $150 per month. You can apply for a refund of the money when you leave UCSF, either as a cash payout (with penalty) or tax-free if you roll it over into retirement plan account such as an IRA.
Tax Withholding on Stipend
Students on stipend receive the full amount of their checks; no taxes are withheld. Students are, however, still responsible for reporting their stipends to the IRS (please ask Student Financial Services for a copy of their document, "Taxability of Graduate Fellowship Stipends"). The current tax law provides that scholarships, grants, fellowships, and other forms of gift aid are subject to taxation except for the amount of the student's tuition, fees, and required books, supplies, and equipment.
Annual Earnings Statements
Students who are paid on payroll will receive a W-2 from UCSF. These are usually mailed out in late January. A copy can also be downloaded from At Your Service.
Students who are paid via stipend will receive a 1098-T from UCSF Student Accounts. These are usually mailed out in late January. A copy can be downloaded here.
Resources
The UCSF Graduate Division provides information about taxes on their website.
Tips for Tackling Your Taxes (as a Grad Student) - Resource put together by a TETRAD student
The IRS website provides information for students. Of particular interest will be the section titled Tax Information for Students.
Paying Estimated Tax: Quarterly filing with the IRS is recommended. Save your receipts for all books, modems, computers, printers, and other education-related expenses for the purposes of tax deduction (In general, you are allowed to deduct these items from the stipend income, but you must read the relevant IRS publication for details of what is allowable). There is a deduction for moving expenses if you move more than 50 miles from your previous home so save those receipts as well.
Students estimate that their taxes run about $1,000 to $3,000 per year. To avoid paying this at one time, you can pay estimated taxes each year ahead of time (in September and January).
Detailed information about filing estimated taxes and forms can be found in the Student Financial Services Office in MU201W on the Parnassus campus.