Graduate student FICA exemption not working

Forum|Forum|5 years ago
February 5, 2021
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I am attempting to put together my tax return for 2021. I am married, filling jointly. My wife is currently a graduate student who receives a W2 reflecting ~30k in a graduate student stipend received from working as a research student in a university lab.

It is my understanding that this income is not subject to FICA taxes, and her W2 also leads me to believe this is correct as line 3,4,5, and 6 are all blank. It does not appear that turbotax is taking this into account though, as our federal taxes sky rocket when I input her W2. I have even tried putting in 0.00 for all the above mentioned lines, which does not affect anything, nor does anything change when I input her ~30k "income" into lines 3 and 5.

Is turbotax currently not reflecting the FICA exemption, or am I missing something?

Hal_Al

Employee

Yes, you're missing something.

FICA (Federal Insurance Contributions Act) is the term used to describe social security and medicare tax together. The fact that boxes 4 and 6 are blank means that no social security (box 4) or Medicare (box 6) tax was withheld from your pay. That no withholding means you are not and were not subjected to FICA. There is nothing more for TurboTax to "take into account".

You still are subject to income tax on that $30,000. If the withholding in box 2 of your W-2 was not enough to cover the income tax , you will see a tax liability at filing time. TT is not calculating or adding FICA tax (there's no where on the forms for that). It is only adding income tax.