When it comes to taxes you may want to think about the forms as a basic tax form (the 1040) and addendum forms (all the others). Everyone submits a 1040 and depending on your qualifications you may submit any other form. If you have a child, you qualify for childcare deduction. If you contribute to retirement funds you may qualify for an IRA form. There are a couple of ways to file: via paper/electronic copy directly to the government or via a tax software company. Each have their benefits. We’ll describe them more below.
Click to download the slides from the 2018 Tax Seminar.
Due Date: Federal (and state) taxes are due April 15 of each year; if April 15th falls on a holiday or weekend, the due date is extended to the first business day after April 15th. Google to see when this year’s taxes are due.
Tax Year: The tax year begins January 1 and ends on December 31 on that same year.
Tax Documents: You should receive all your tax forms by the end of February. WUSTL provides stipend letters by the end of January. You can access them via Workday. To access the stipend letter: start from the Home page, follow Menu -> Personal Information -> View -> More -> Worker Documents. For W2s: start from the Home page, follow Menu -> Pay -> View -> My Tax Documents. Contact the division office if there isn’t one available after January 31.
Tax Forms: The standard income tax form is a 1040 and there are 3 major variants:
- 1040: Longest form of 1040; allows for itemizing your taxes (unlikely for a graduate student)
- 1040-A: For people with a taxable income of <$100,000, taking the standard deduction, and who have dependents (aka children or people who you take care of who don’t file their own taxes)
- 1040-EZ: For people with a taxable income of <$100,000, taking the standard deduction, and have no dependents (most of us fall in this category)
DEDUCTIONS AND CREDITS FOR GRADUATE STUDENTS
Deductions are subtracted from your pre-tax income, thereby reducing your taxable income. Credits are subtracted directly from the amount of taxes you owe, so credits can have a big impact on the amount of tax you pay. For all deductions and credits you plan to claim, it is a good idea to keep receipts. Common ones are included below:
- Interest paid on a student loan is deductible. If you are paying your undergraduate loans, you may use an 1080-E to deduct some of the payments.
- If you contribute to a traditional (not Roth) individual retirement arrangement (IRA), you can take a deduction for your contribution amount. You can only contribute to an IRA if you or your spouse receive a W2. (TIP: you may contribute to both Roth and regular IRAs for the previous tax year until April 15th of the following year. If you made income AKA W2 before attending WashU, and you have some money saved up, you may contribute up to either $5,500 or the max you made in your W2. After the first year, your salary moves from income to stipend and it may no longer be used for retirement savings.)
- Moving expenses are also deductible for people who moved for a salaried job (aka not a graduate student), so if you moved with a significant other or spouse they can apply for moving credit. However, you need to meet two tests: the “time” test (you worked at least 39 weeks during the first 12 months immediately after you arrived or are planning on working for that long into the next year) and the “distance” test (you moved 50 miles from your previous residence). This mostly affects first-year students, so remember to keep all of your receipts when you move here. If you qualify, use the Form 3903.
- Tax credits for children are applied in the 1040 or 1040-A and childcare credit is available via the Form 2441.
Filing Your Taxes
You file taxes on the previous tax year. For example, if it is 2018 you file your taxes for all income related to 2017.
Paper: Some people prefer to do their taxes via a paper copy or through the IRS Freefile website. Both allow for direct filling in of the 1040s and associated forms.
- Pro: simple. Each form comes with its own, well-explained instruction sheet
- Con: might miss deductions. Without the questions supplied by the tax forms, you may miss out on deductions.
Tax software: Tax filing softwares are readily accessible and easy to use. They (most likely) will cost you money, often around $30-40 per filing.
- Pro: all forms are in one place and easy to find.
- Con: paying the bad guys who lobby against tax reform (unless you use TaxAct).
Tax help: Both private companies and the IRS offer tax help. You may file your federal taxes for free through the IRS’s FreeFile website. If you make under $54,000 you may also receive one-on-one help through the IRS’s Tax Prep.
Paying Your Taxes
Our stipend is not considered income and therefore the government does not take out our yearly taxes. This means we must pay our taxes on our own.
Taxes must be paid no less than quarterly or else you will be fined. You may pay all at once. You pay taxes for the current tax year. Due dates are generally:
- April 15 (for 1st quarter)
- June 15 (for 2nd quarter)
- September 15 (for 3rd quarter)
- January 15 (for 4th quarter)
For each year’s specific dates, please check with the IRS or Google.
Estimate and pay your yearly taxes using the 1040-ES for federal and the Missouri 1040-ES for state. These include a form which you send in with your quarterly payment. Both federal and state estimated taxes can be paid online.
Note: U.S. residents in their first and second years in the division, and students whose stipends are paid through scholarships or training grants, likely do not have taxes withheld (most of us). Students whose stipends are paid by their PI and international students who are nonresidents might have their taxes withheld. You can determine if taxes are being withheld from your paycheck by looking at your pay stub on WUSTL HRMS. If you have direct deposit, go to the HRMS website to see your pay stubs online. You’ll see the heading “Deductions” and right below it, “Federal, MO state tax, and STL local tax.” If you see money listed in these columns, then taxes are being withheld. If not, it’s time to pull out your calculator. You should also be able to view either a Stipend Tax Letter (if taxes are not withheld) or your W-2 (if taxes are withheld).
Stipend Cannot Be Used For Retirement
Since stipend is not considered income, it is not allowed to be put into specific retirement savings.
For more info, see the SAC Retirement page.