Thread by @PFforPhDs

OK this may seem weird but it’s actually really important.

#PhD-specific tax info coming your way!

@AcademicChatter #AcademicTwitter

1/15

@AcademicChatter This thread is for any US citizen/resident #PhD trainee on a 1-year+ external #fellowship (e.g., #NSFGRFP, #NDSEG), training grant (e.g., #NIH), internal fellowship, etc.

2/15

@AcademicChatter If your #stipend or salary is not reported on a W-2 at tax time…

(most universities use the term “fellowship” this way, but there are exceptions)

3/15

@AcademicChatter … it’s likely that they are not withholding income tax – federal, state, local – from your paycheck.

Some universities/institutes do give you the option to withhold (e.g., Duke, at least when I was there), but it’s rare.

4/15

@AcademicChatter If you are not having income tax withheld from your paycheck, there are two important takeaways:

5/15

@AcademicChatter 1) This does not mean you do not OWE income tax on your #stipend/salary. If you receive this income for all of 2020, it’s very likely you’ll have some tax liability.

pfforphds.com/do-i-owe-incom…

6/15

@AcademicChatter Since the money you owe in tax is not being withheld, it’s imperative that you set aside money (I suggest using a dedicated savings account) to pay your eventual tax bill(s).

You should do this every month starting now to avoid a financial crunch later in the year.

7/15

@AcademicChatter How do you know how much to set aside?

I have you covered, at least for your federal income tax. I made a spreadsheet for you (updated for 2020): personal-finance-for-phds.ck.page/ec185783a7

8/15

@AcademicChatter 2) You may be required to make quarterly estimated tax payments.

There are exceptions, but generally speaking if your federal tax liability more than $1,000 for the year, you’re supposed to MANUALLY make four equal tax payments throughout the year.

9/15

@AcademicChatter The 2020 tax year deadlines are 4/15/2020, 6/15/2020, 9/15/2020, and 1/15/2021.

(The last deadline for the 2019 is tax year is 1/15/2020!)

If you’re required to make these payments and fail to, the IRS will penalize you.

10/15

@AcademicChatter If you aren’t sure if you’re supposed to do this or how to do so, here are two of my resources:

A free long-form article: pfforphds.com/complete-guide…

A paid workshop that includes Q&A calls: pfforphds.com/qetax/

11/15

@AcademicChatter I correspond with DOZENS of #PhD students every tax season who did not know that their #fellowship income was taxable or that they were supposed to pay quarterly estimated tax.

This is truly an area where an ounce of prevention is worth a pound of cure.

12/15

@AcademicChatter And by a pound I mean tens or hundreds of dollars in fines and hundreds or thousands of dollars in back taxes.

It’s NOT a pretty picture when it goes unaddressed for years (I speak with a few people in that situation each year as well).

13/15

@AcademicChatter Please save yourself (and your peers) financial stress by being proactive about your taxes!

1) RT this thread to spread awareness about this issue.

2) Start saving money for your tax bill.

3) Figure out if you have to pay quarterly estimated tax and do so if required.

14/15

@AcademicChatter Feel free to reply with any questions! I’ll do my best to answer them or point you to a resource.

15/15