How does a postdoc file taxes?

April 9, 2008 8:44 AM

How does a Harvard postdoc file taxes?

I'm asking this on behalf of my sister's boyfriend, so I'll try to give you all the information I know. He is a postdoctoral fellow at Harvard Medical with an F-32 grant from NIH. He's running up against several layers of bureaucracy and has no idea how to correctly file his taxes, because:

- Harvard has said that, since it's a government grant, he doesn't technically work for Harvard so it would be illegal for them to give him tax advice

-He isn't "officially" a government employee, so THEY won't give him tax advice

-He's researched the issue, but half his sources say to use a 1099 and the other half apparently say to absolutely not use a 1099

-He's spoken to a few friends at other universities, but everywhere is different, and all the grants have different rules that might not apply to him.


So what he needs to know is, what form should he use to file, and what counts as his taxable income?

I know this one's a long shot, but can any of you guys help him out? Thanks!

posted by Dormant Gorilla to law & government (14 comments total)

I'm not sure what you mean by "use a 1099". A 1099 is a document that a taxpayer receives from an entity that paid money to the taxpayer during the tax year. Did he receive one of those? Did he receive a W-2? He would have gotten either one between January 1 and February 1. The IRS gets copies of those, so his tax return will probably need to be consistent with them.
posted by Dec One at 9:01 AM on April 9, 2008

He didn't get a W-2....I think he got a 1099 from the grant-issuing authority. So what he means is that he'd use the 1099 to calculate the "income" he's paying taxes on. Which seems to make sense, but he's been told that he shouldn't do that. Which is why he's confused.
posted by Dormant Gorilla at 9:08 AM on April 9, 2008

Can you contact the grant-issuing authority to ask them, or is that what you meant by "the government won't give tax advice?"

Can I ask who/where told him not to use the 1099? That would seem to make the most sense to me. (I'm not qualified to answer about the particular grant you mention; I'm on a NSF grad student grant, and they dont' even send me a 1099. I have to calculate my own income, make sure it matches with the 1098-T the school sends me, and add it in myself; i think it does go where stuff from a 1099-G would go.)

Mostly I just wanted to sympathize that getting paid by a grant is a pain in the neck tax wise. Also at least in my case there was no withholding, so it might be worth paying estimated taxes to avoid penalties.

The way I figured out what to do myself was mostly by asking other people on the same grant; could you get Harvard to tell you names of other folk who are/have been on that same grant?

Good luck!
posted by nat at 9:35 AM on April 9, 2008

Does he know anyone else in the same situation? New grad students in my program always figured out tax stuff by asking people a couple years ahead who had done it before.
posted by liketitanic at 9:46 AM on April 9, 2008

If someone told him not to use the 1099 he received, I would be interested in hearing that person's reasoning. When you receive a tax document like that, you generally use it in filing your return, unless you have a specific reason not to.
posted by Dec One at 9:58 AM on April 9, 2008

Which 1099 did he get? There's a 1099-G for taxable grants which according to the 1040 instructions is reported on line 21 (and no SE tax). If he got a 1099-misc then they're treating him as a contractor, so that usually means schedules C and SE.

Have you seen this link? Man, the self employment issue is really up in the air... no wonder why no one wants to take responsibility for giving him tax advice.

nat: You mean the other income line (line 21) for unreported scholarships? I thought that's where they went also (and that's where turbotax always insisted on putting them because that's where 1099-g income went). But now I'm reading the 1040 instructions again and the instructions for line 7 seems to indicate that they should be going on line 7 just added back to the w-2 income. The instructions seem contradictory (even though the resulting tax is the same).

The only thing any of us are sure of is that the whole situation sucks.
posted by NormieP at 10:02 AM on April 9, 2008

TurboTax offers (most of) their Federal Edition online for free. Because he's in something of an unusual filing category, he may have to pay in order to get the features he needs. But even if he doesn't want to pay for the extra features, he should at least, if he ever does get to the "Oh, damn, you're in Special Category Q and you'll need to pay to get access to the TPS-847G form," well, then at least he knows he's a Category Q and therefore needs the TPS-847G form.

Personally, I've been a student, a contractor, a state employee (as a grad student at a public university), a full-time employee, and on and on and it all gets so weird as those categories mix and mingle that I get TurboTax every year and consider it money VERY well spent. Its dead simple to use, and requires zero expertise.
posted by ChasFile at 10:46 AM on April 9, 2008

Thanks, everyone- unfortunately I don't have these details yet, but I'll ask him if he can answer these questions and clarify things. I think he was hoping someone here would say there's a much more clear-cut answer than what he's encountered so far, but of course there isn't.

I do know that:
- the grant issuing authority refused to give him tax advice. Go figure.
- None of the people he knows at Harvard seem to know how to do it. Some of them got W-2s and some didn't: he didn't. Friends at other universities, with different grants, gave him straight answers but their information might not be relevant.

I'll let you know if I can get more specifics. Maybe line 21 on the 1040 is the best way to go.
posted by Dormant Gorilla at 12:44 PM on April 9, 2008

Ok, apparently they DIDN'T even give him a 1099. So he has no 1099 and no W-2. And nobody else at Harvard has the same grant he does.
posted by Dormant Gorilla at 12:48 PM on April 9, 2008

From the NIH site in regards to F32 (Ruth L. Kirschstein National Research Service Awards (NRSA) for Individual Postdoctoral Fellows (F32) Section 2, Part 2), which led me to the NIH Grants Policy Statement ("Taxability of Stipends" and "1099")

______________________________________________________________
Taxability of Stipends

Section 117 of the Internal Revenue Code applies to the tax treatment of scholarships and fellowships. Degree candidates may exclude from gross income (for tax purposes) any amount used for course tuition and related expenses such as fees, books, supplies, and equipment required for courses of instruction at a qualified educational organization. Nondegree candidates are required to report as gross income any monies paid on their behalf for stipends or any course tuition and fees required for attendance.

The taxability of stipends in no way alters the relationship between Kirschstein-NRSA fellows and sponsoring institutions. Kirschstein-NRSA stipends are not considered salaries. In addition, recipients of Kirschstein-NRSA individual fellowships are not considered to be in an employee-employer relationship with NIH or the sponsoring institution solely as a result of the Kirschstein-NRSA award. The interpretation and implementation of the tax laws are the domain of the IRS and the courts. NIH takes no position on what the status may be for a particular taxpayer, and it does not have the authority to dispense tax advice. Individuals should consult their local IRS office about the applicability of the law to their situation and for information on their tax obligations.


Form 1099

Although stipends are not considered salaries, this income is still subject to Federal and, sometimes, State income tax. Such income may be reported by the sponsoring institution on IRS Form 1099, Statement of Miscellaneous Income. Normally, the business office of the sponsoring institution will be responsible for annually preparing and issuing IRS Form 1099 for fellows paid through the institution (fellows at domestic non-Federal institutions). Sponsoring institutions are not required to issue a Form 1099, but it is a useful form of documentation of income received and a reminder to the fellow that some tax liability may exist. Fellows are reminded that, even if the sponsoring institution does not issue a Form 1099, they still are required to report Kirschstein-NRSA stipends as income. NIH will issue a Form 1099 for each fellow training at a Federal or foreign laboratory and receiving a stipend check from the U.S. Treasury.

_______________________________________________________

So the NIH answer is to consult the local IRS office and that he will probably want to still get a 1099 from Harvard if he can.
posted by ml98tu at 2:08 PM on April 9, 2008

Thank you! I will let him know. And thanks so much to everyone who responded. I don't know how you postdoc guys deal with this crap.

This whole thing made my eyes cross, and next time when I post on someone else's behalf it's going to be about puppies.
posted by Dormant Gorilla at 2:55 PM on April 9, 2008

Who actually gave him the money? He had to get a check or direct deposit from somewhere.
posted by oaf at 3:02 PM on April 9, 2008

Ah. Looks like Harvard must have. That's what I get for not previewing.
posted by oaf at 3:03 PM on April 9, 2008

mm, Puppies. that does sound like a better topic than esoteric taxation rules. Puppies are cute and everyone agrees what line of your 1040 they go on.

Yes, I'm pretty sure I put my grant income on line 21-- since for me it was definitely "scholarship" in nature (I'm still a student). Not sure where something would go for a postdoc. Could you call the IRS hotline? Might have to bounce around a bit to find someone who actually understands this wierd issue, but it might work..
posted by nat at 4:17 PM on April 9, 2008