Taxes - Don't Worry Everyone Worries

US (Federal) and Massachusetts (State) taxes are levied on income and all students at some point will need to file Federal and State taxes.  Even for Domestic students taxes can be tricky and confusing.  For International students it is even more confusing since the US has bilateral tax treaties with many countries.  So depending upon your country of origin, your taxes could differ remarkably from your fellow students.  You would think that tax questions would be handled by MIT or some easily accessible local entity, but that is not the case.  Even though the International Student Office (ISO) provides tax seminars for International Students, they limit the amount of assistance they can provide (probably due to lack of tax expertise and potential liability).  So it seems, we are individually on our own.

The advice given on this page is to initiate conversation and can become quickly dated as tax laws can change. However, you are not alone and the best information on where to start might begin with other students.

 

The good news is that the 'tax police', known here as the Internal Revenue Service (IRS) are really not interested in putting you into prison or tax hell.  As such, even if you make a mistake, and it somehow gets identified within some reasonably short time window (perhaps 3 years), it is matter of refiling and paying interest and penalties.

Some General Points of Interest:

  • The IRS (Federal) and Massachusetts Department of Revenue websites are the definitive places to go. The publications have the rules (which might be confusing), but it is better to know the sources and understand your situation than to assume or just believe heresay.
  • Tax Preparation Software and Filing. Tax software programs are typically quite good and have the rules 'built-in'. Some provide links to the specific IRS rules.
    • For Domestic Students, your tax income will normally allow you to file simple 1040 or 1040EZ forms in which case, you can find software for filing free.  If your taxes rise to a different level of sophistication, then you might have to purchase both federal and state tax software programs.  In any case, you should be able to file electronically and have a quick return on your refund.
    • For International Students, the ISO does provide a free web-based tax preparation software which conveniently leads you through the federal tax process and fills out the forms.  Unfortunately for you, however, US Federal taxes must be filed by paper and it can take a very long time (perhaps as long a year) for you to receive your tax return.
  • Generally, the portion of your fellowship, or paid work (Research Assistant, Teaching Assistant) which goes toward paying MIT tuition is tax free.  However, the portion which goes toward living expenses (room, board, incidentals), is taxable. This is where you might see the term "Qualified Expenses". It is important when going through your taxes to look up what is and is not a qualified expense (essentially a qualified expense is NOT room and board, but rather tuition and fees required by MIT to remain enrolled at MIT).
  • For RA and TA funding, MIT will withhold Federal and State taxes.  For Fellowships, this might not be the case.  You may have to pay quarterly taxes if this is the case.


Federal (IRS): https://www.irs.gov/individuals/students

State (Massachusetts Department of Revenue): https://www.mass.gov/dor/

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1 Comment

  1. Peter H Brenton

    If you start the term as a Fellow (no taxes withheld) and switch retroactively to an RA or TA (taxes withheld) you might see a big tax withholding for the term.  We do sometimes put people on a fellowship to keep them paid until a grant comes in, so be aware of your type of appointment!