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Taxability of Salary & Benefits

Because of their status as non-degree candidates, income received by a Postdoctoral Scholar is considered fully taxable by the federal and state tax boards.

Tax Overview

Postdoctoral Scholar - Employee

  • Employee
  • Receives salary for services
  • Taxable and taxes withheld (unless there is tax treaty)
  • Receives W-2

Postdoctoral Scholar - Fellow

  • Non-employee
  • Receives a stipend for living expenses
  • Taxable but no taxes withheld (file quarterly estimated taxes – unless under tax treaty)
  • Does not receive W-2 (income total on paycheck stub)
  • Insurance premiums paid on your behalf is taxable income
  • For visa holders, insurance premium compensation will be reported on 1042S

*Please note: This is general information only. Please consult with a tax advisor.

Fellowships

Fellowships are defined as payments to aid one's pursuit of advanced training and research and are issued for the primary benefit of the individual receiving the payment. Because of their status as non-degree candidates, fellowship income received by a Postdoctoral Scholar is considered fully taxable by the federal and state tax boards.

Withholding

One's residency status determines whether or not the University makes withholdings for federal taxes from this income. No withholdings are made for California State taxes.

U.S. citizens and permanent residents

Do not have federal or state income tax withheld from their fellowship income. If one does not have significant withholdings being taken from another income source, then the individual is expected to file estimated quarterly taxes with the federal (IRS) and state (CA FTB) tax boards. Please obtain the estimated tax publications below in order to assess whether or not you will need to make estimated quarterly tax payments.

Nonresidents of the United States

Nonresidents of the United States will have federal taxes withheld from their taxable fellowship income. Individuals holding the F or J visa are assigned a federal withholding rate of 14%. All other visa holders are assigned a federal withholding rate of 30%. If one's home country has an applicable fellowship tax treaty and qualifies for the treaty exemption, the University may be able to reduce or eliminate federal tax withholding from the income. Here is more detail information about tax treaty statements.

Taxability of Health Care Benefits

Taxability of health care benefits for fellow and paid-direct categories

Given their status as non-employees, the amount of the university contribution towards the Postdoctoral Scholar Benefits Plans (ie. insurance premiums) is considered taxable, imputed income by the federal and state tax boards.

Postdoctoral-Fellows and -Paid Directs with supplemental Postdoctoral Scholar-Employee appointments at less than 50% time are also subject to applicable fellowship taxes for the value of their health and welfare benefits, irrespective of citizenship status.

Non-resident aliens in these two categories will have federal tax withheld each month at a rate of 14% for F/J visa-holders and 30% for all other visa holders. US citizens, permanent residents, and residents for tax purposes will not have withholdings taken or any official reporting by the University. However, they are expected to report the imputed income on their annual tax returns.

The following table summarizes the tax withholding and reporting required for benefits provided to Postdoctoral Scholars:

Postdoctoral Scholar Taxability of Benefits Benefits Paid by the University Subject to Withholding for: Benefits Paid by the University Reported on:
Federal Tax State Tax Federal Form State Form
Employee – Citizen (1) No No No --- ---
Employee – Nonresident Alien (2) No No No --- ---
Fellow - Citizen Yes No No --- ---
Fellow – Nonresident Alien (3)(4) Yes Yes No 1042-S ---
Paid Direct – Citizen Yes No No --- ---
Paid Direct – Nonresident Alien (3)(4) Yes Yes No 1042-S ---

  1. Imputed income due to the coverage of a domestic partner will be reported on the Form W-2 of the Postdoctoral Employee.
  2. Imputed income due to the coverage of a domestic partner will be reported on the Form 1042-S of a nonresident alien Postdoctoral Employee who is eligible to claim a tax treaty benefit; if not, the income is reported on a Form W-2.
  3. Imputed income due to the coverage of a domestic partner will be reported on the Form 1042-S and Form 592-B of a nonresident alien Postdoctoral Fellow or Paid Direct.  
  4. If the individual is from a country that has entered into a tax treaty with the U.S. and that treaty contains an exclusion for fellowship payments, the individual is not subject to tax on the benefits, including domestic partner benefits, and no income tax withholding is required.  The amount of the benefits is reported, however, on Form 1042-S.

Glacier Tax Compliance System

If you’re a visa holder, we advise you to utilize Glacier

Glacier is an online tax compliance system that collects tax-related information from foreign individuals receiving payments from UCSD.  Glacier helps determine tax residency, withholding rate and income tax treaty eligibility. 

http://blink.ucsd.edu/go/glacier

glacier@ucsd.edu

NRSA Policy Guidelines on 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.

Tax Workshop for Postdocs

The Office of Postdoctoral and Research Scholar Affairs has teamed up with Curo Financial Planning to offer the “Financial Education Series for Postdocs”.  A Tax Strategy workshop is offered as part of this series.

For more details, please see Retirement, Welfare, & Financial Planning

Forms, Instructions And Publications

Federal (IRS) - Federal Tax Withholding Calculator at irs.gov (enter “calculator” in Search IRS Site)

CA State

Some IRS Publications that may assist you in filing your return are:

  1. Publication Your Federal Income Tax
  2. Publication 505 Tax Withholding & Estimated Tax