Tax Information
***Disclaimer: Unless you are a CPA you are not supposed to give out tax advice, however, it's important for the trainee to understand their tax obligation. Below is important tax information a trainee should know about when they are paid on a training grant.- Trainees paid on stipends are not considered employees of the university.
- Stipends have no federal and state taxes withheld from the monthly check.
- Trainee receives gross pay with no taxes taken out (social security, federal, state, Medicare, SDI, etc.).
- Both salary and course tuition/fees are reportable as taxable income.
- Childcare reimbursements are paid via payroll and is taxable.
- A W-2 is issued for additional compensation only.
- No IRS 1099 is issued by UCSD, therefore, are not subject to employer/employee FICA withholding.
- Trainees will not receive a W2 for stipend payments (but will receive one for additional compensation)
- The closest thing to a W2 for stipend payments is an appointment letter - see samples below.
- Stipends are no longer currently paid through Financial Support request Tool (FSRT). Starting 7/1/2024 all trainee stipends will be paid through UC Path.
- Additional compensation is also paid through UC Path. (subject to tax deductions, W-2 issued)
- Predoc Appointment - Sample Letter
- Stipends are paid through UC Path but with NO taxes deducted.
- Additional compensation is paid through UC Path and that portion of the paycheck will have taxes deducted.
- Postdoc - Sample Letter
- Stipends are paid through the disbursements system and not payroll.
- Additional compensation is paid through UC Path. (subject to tax deductions, W-2 issued)
Tax Options
- If the trainee receives only stipend payments.
- Option to submit federal and state quarterly estimated tax payments by using the Federal Form 1040-ES and California State Form 540-ES.
- If the trainee receives both stipend and salary payments (additional compensation from UC Path).
- They have the option to increase the amount withheld from the salary paycheck to cover any tax liability for the total combined income.
- To change your tax withholdings:
- See Section IV of the UC W-4, you may authorize additional federal and state tax withholding.
- Visit the UC Path Website to change your W-4 withholdings.
- Remember to cancel the additional tax withholdings when they are no longer receiving stipend payments and receive only salary.
FAQ's
Q. Why didn't I receive a W-2?A. Stipend payments have not yet been reported to the IRS, it is self-reported on your W-4 as "additional income."
Q. How do I know the amount of stipend payments I received for the last tax year?
A. Refer to your initial appointment letter when you were put on the training grant. If you don't have one, ask the program coordinator or fund manager for it.
Q. I received my W-2, but it doesn't reflect my entire income for last year?
A. Only your additional compensation will be on the W-2, the stipend portion is self-reported and not reflected.
Q. Do I owe federal and state taxes on stipend payments?
A. Yes, and it is on the honor system that you report it.
Q. If I don't want to pay a lump sum at the end of the year, what are my other options?
A. See above under "tax options."