You can obtain information and worksheets from the IRS and New York State to help you evaluate whether you need to pay quarterly estimated taxes to cover your liability.
There are no simple answers to this question. The withholding requirements vary depending on the type of payment. The following table details what payment types are subject to withholding.
Note: It is possible for a payment to be exempt from holding requirements and still be taxable to the recipient.
|Payment Type||Cornell Withholding?|
|Wages||Yes. Cornell withholds federal and state income taxes using graduated rates.|
|Tuition fellowships for degree candidates||No. Tuition fellowships are exempt from taxation under Internal Revenue Code.|
|Other fellowship support (e.g., room, board, stipends, living allowances, awards, travel, prizes, emergency funds)||No. Cornell does not withhold taxes on fellowship support for U.S. citizens or resident aliens, even though this fellowship support constitutes taxable income to the recipient. The recipient is responsible to claim the monies.|
|Student loans||No. According to the IRS, loans are not taxable income. However, there are provisions in Internal Revenue Code related to below-interest loans and debt forgiveness.|
The following table outlines what types of payments (e.g., awards, loans, etc.) are considered taxable income.
|Payment Type||Taxable Income?|
|Travel awards||Generally, yes. The IRS views travel awards to students as support to further education, similar to taxable fellowships. The IRS does not consider students to be in a "trade or business," therefore, student travel expenses do not qualify as reimbursed business expenses.|
|Prizes (usually given for outstanding research, teaching, etc.)||Generally, yes. The IRS does not treat this type of merit award as tax-exempt.|
|Student loans||No. According to the IRS, loans are not taxable income. However, there are provisions in the Internal Revenue Code related to below-interest loans and debt forgiveness.|
Resident aliens are taxed in the same manner as U.S. citizens.
Note: "Resident alien" is a tax term, not an immigration term, and refers to foreign nationals who either have a green card or meet the "substantial presence test" described by Internal Revenue Service (IRS) Publication 519, U.S. Tax Guide for Aliens. All other foreign nationals are classified as nonresident aliens.
SSNs and ITINs are federal identification numbers assigned to U.S. taxpayers. U.S. citizens should have SSNs. Individuals ineligible for SSNs should obtain ITINs. For more information on these numbers, see U.S. Federal ID Numbers.
All wages are reported to the individual taxpayer and to the IRS on the W-2 form. Fellowship support used for tuition, mandatory fees, and required expenses for a course is not taxable.
Yes. There are incentives that apply to students. However, these benefits generally do not apply to foreign students. Refer to IRS Publication 970, Tax Benefits for Education. Note that this link may not contain information about the newest Tax Cuts and Jobs Act passed in December 2017.
It depends on your student status, as well as the type of payment you receive. The following table outlines exemption eligibility by payment type.
|Payment Type||Exempt from Social Security Taxes?|
|Wages||Yes, if the student is enrolled at least half-time and works for the educational institution.|
|Fellowships||Yes. Fellowship payments are not considered wages or self-employment income.
Note: Fellowship payments are generally subject to income tax.
Yes. However, you must be enrolled as a half-time student to be eligible for the student FICA exemption.