Announcement

Collapse
No announcement yet.

When is stipend taxed?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • When is stipend taxed?

    Hello,

    Ive been receiving a stipend since mid-last year for a job I start this summer (for a large hospital system). They have not been taking out taxes, and I did not receive any tax statement this tax season. I signed a promissory note saying it would be forgiven over several years. Is it taxed last year or the year it is forgiven? I just want to make sure I’m not messing up my taxes!

    Thanks for your help!

  • #2
    A stipend or a loan which some one paid off for you (forgiven) is income. You should get some statement during the tax year you received it. I am sure the government , state and local municipality will want some part of it.

    Comment


    • #3
      Originally posted by Random1 View Post
      A stipend or a loan which some one paid off for you (forgiven) is income. You should get some statement during the tax year you received it. I am sure the government , state and local municipality will want some part of it.
      I don't know if things have changed but in my first year as a graduate student I got a stipend and no taxes were taken out. I also never got a statement in Jan/Feb the following year. I was so confused as to whether I needed to file or not and asked questions but never got a clear answer.

      As I now understand, this should be taxed as income in the year you received it. Even if you get no statements, you'll need to file taxes. That said, if it's anything like my stipend after the standard deduction you may well owe $0

      Comment


      • #4
        Our experience is the opposite of the above two replies. The confusion may be your terminology (stipend) - it sounds like you were given a sign on bonus in the form of a forgivable loan. For us that has been taxable income as it is forgiven, not when it was received. Why would a loan become taxable income the moment you receive it when at that same exact moment, you are technically supposed to pay it back with interest if your end of the bargain wasn't upheld (time spent working)?

        Comment


        • #5
          If it's a loan, taxed in the years in which it's forgiven. You'll also have interest charged and included in the forgiveness amount.

          Comment


          • #6
            Yes, a loan is not taxable. Your stipend is not yet a stipend. Right now it is a loan, no tax.

            There is something similar in real estate. If you buy a property that goes up in value, you can do a cash out refinance. That big check you get at the cash out refinance is a loan, no tax is due. When the loan is paid off at the closing table when there is a sale, your loan is “forgiven” so to speak, when the appreciation in the value of the property pays off the loan for you at the closing. You then owe the capital gains tax and the depreciation recapture tax. Unless you do a 1031 exchange and defer the taxes to the time of sale of the next property. Some RE investors defer the taxes all the way to their death, and then the cost basis gets adjusted and the capital gains tax disappears, but they still owe estate taxes.

            Loans can, in some circumstances, be a great tax savings play. Loans for cash flow can defer taxes to the future. If you have lots of capital assets, you can generate cash flow with loans against your assets, so no tax. Keep the earned income low and use assets to generate cash to save on tax dollars. The extremely wealthy use this technique quite a bit.

            Comment

            Working...
            X