I reported fellowship payments which Turbotax indicated as taxable but staff from payroll say for resident alien, these payments are non-reportable and non-taxable. Help

Forum|Forum|2 years ago
April 16, 2024
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Further research online (universities websites) indicate that it depends on whether the fellowship payment is qualified or non-qualified. My monthly pay slip indicates "Fellowship Qual non-" which I assume ends with tax. I'm so confused on the issue of postdoc fellowship payments for resident aliens and how to report correctly. I would love clarification on this

TurboTax Deluxe Online

Vanessa A

A resident alien is treated like a US Citizen for tax purposes. If the fellowship payments were for services performed or used for anything other than Qualified Education expenses, they are taxable income.

So, if you reported the fellowship as income and it was not used for qualified education expenses, you did it correctly.

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evegesAuthor

Thank you. Your answer confirms what I thought initially. The information I got from the payroll staff threw me off a little bit and got me into false hope that I didn’t owe IRS. Next time I will ensure to make quarterly tax payments so I’m not shocked at the end of tax year on the amount of tax I owe

Opus 17

Employee

Are you on a student visa? That generally makes you a non-resident for tax purposes. Also, I am not aware that any fellowship is ever completely non-taxable, but there may be something I don’t know about. Fellowships are not subject to social security and Medicare tax, but I haven’t heard about income tax. We need more information about your visa situation.
@Hal_Al

evegesAuthor

No I’m on J-1 visa and this year I qualified as resident for tax purposes. When you’re a non-resident, the tax filing process seems much easier because the university withholds taxes as needed. After further research, I’m convinced I did file correctly. Hopefully next year, it becomes a much smoother process

Opus 17

Employee

@eveges wrote:

No I’m on J-1 visa and this year I qualified as resident for tax purposes. When you’re a non-resident, the tax filing process seems much easier because the university withholds taxes as needed. After further research, I’m convinced I did file correctly. Hopefully next year, it becomes a much smoother process

Normally a J-1 holder is considered a non-resident, unless they have been in the US more than 5 years. If you have been here 5 years, then you are a US resident and subject to tax as a US resident. Your fellowship is taxable, although it is not earned income and you should not have a schedule C or pay self-employment tax (social security and Medicare tax).

If the university is issuing a 1099-MISC or 1099-NEC (it should be a 1099-MISC), then you are responsible for estimating your taxes due and making quarterly estimated tax payments (due April 15, June 15, Sept 15 and Jan 15). If you over-pay the estimates, you get the difference back as a tax refund. You can pay at www.irs.gov/payments.