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jgordosea
jgordosea, Enrolled Agent
Category: Tax
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Experience:  I've prepared all types of taxes since 1987.
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Do I have to pay FICA taxes on a stipend

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I am being supported by a T32 postdoc training grant subject to NRSA rules and regulations. I want to know if I have to pay FICA taxes on this and if so am I considered an independent contractor and pay %15.3 of %7.65? Here is information I received regarding this: "Taxability of Stipends: Internal Revenue Code Section 117 applies to the tax treatment of all scholarships and fellowships. The Tax Reform Act of 1986, Public Law 99-154, impacts on the tax liability of all individuals supported under the NRSA program. Under that section,non-degree candidates are now required to report as gross income all stipends and any monies paid on their behalf for course tuition and fees required for attendance....". "An NRSA stipend is provided by the NIH as a subsistence allowance to help defray living expenses during the research training experience. NRSA recipients are not considered employees of the Federal government or the grantee institution for purposes of the award."
Submitted: 9 years ago.
Category: Tax
Expert:  jgordosea replied 9 years ago.
Greetings,

The Internal Revenue Service has indicated that research training programs under the National Institutes of Health (NIH) National Research Service Awards (NRSA) program, as well as those similar to or patterned after the NRSA program, do not result in wages to training stipend recipients, and therefore, do not require income or FICA tax withholding

However, these stipends may still constitute taxable income to the fellow/trainee to the extent there are no offsetting educational expenses. (Tuition, books, fees and supplies are qualified educational expenses; room, board, living expenses and travel are not for this purpose.)

See http://www.phds.org/nrsa-taxes/ for an article on NRSA fellowship taxation.

The payments you receive fall under the general rule for scholarships, fellowships and grants that the amount that is not used for tuition, books, fees and supplies is included as income, but is not subject to self employment tax.

I hope this is the information you need for taxation of NRSA fellowship stipends.
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