So I think something that the world needs is a page with important bits of knowledge and tricks concerning having an NSF graduate or postdoctoral fellowship and paying taxes. The somewhat tricky thing is that you’d need an actual lawyer involved at some point in the process. Is this something one could try to convince the NSF’s accounting department to do? Presumably it’d be easy for the right person to do, and would save a lot of time for NSF Fellows who could then do math instead of trying to figure out taxes.
Here’s some examples of the sort of questions this page could answer:
- In what ways is NSF income taxable? (My understanding, which is not legal tax advice, is that you must pay income tax on this money by writing “SCH $$$” on the dotted line next to box 7, but you do not need to file a Schedule C nor a Schedule SE nor pay FICA/self-employment tax.)
- Is it possible to efile when you have taxable scholarship and fellowship income? Or do you have to print out the form in order to write “SCH $$$” on the dotted line next to box 7? (The rumor in the dept. today was that someone knew how to get TurboTax to enter the SCH thing, but none of us actually there knew.)
- How is the “research allowance” treated? My understanding, which again is not tax advice, is that since this is only for reimbursement it is not income.
- How are health care costs treated? At Columbia they apparently treat your health care as taxable income issuing you a 1099-MISC for non-employee compensation. This seems contrary to my readings of both the 1099-MISC instructions (where one of the criteria for issuing a 1099-MISC is that there were services rendered) and to section III.B.3. of the NSF Postdoctoral Fellowship Solicitation. But presumably Columbia’s accountants know what they’re doing. Nonetheless it’s extremely difficult to figure out what this money means. Is it FICA taxable? Do I have to file a Schedule C? What are my business expenses if it’s a business that didn’t actually do anything but yet was given money for no reason and then spent all its money on my healthcare? Why didn’t Berkeley issue me a 1099-MISC for the portion of my fees that went to medical care in graduate school? Is it possible to know in advance which schools treat health insurance money this way? If it’s self-employment money then I could wind up paying 15% FICA + 9% State and City + 25% Federal of $6K because of Columbia’s accounting.
Anyone have other good questions? Know anywhere to find answers to these questions?