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Which taxes do not have to be paid by graduate students?

Date: December 2018

Question

Hi Deans,

I was reading the Cornell Daily Sun and saw an article about Associate Dean Kahabka’s recent chat at the GPSA meeting. He was quoted as saying, “What [the living wage] doesn’t take into account is that students also have health insurance covered and don’t have to pay certain taxes,” Kahabka said. “In general the nine-month rate comes out pretty favorably to the living wage. Students with summer wages jump up higher than that.”

I was wondering – could you please elaborate on which taxes do not have to be paid by graduate students?

Sincerely,

Overtaxed


Response

Hi, Overtaxed,

Students do generally have to pay income tax on their assistantship stipends, but do not have FICA withheld.  Here’s a link to the IRS website that explains this.

At Cornell, FICA is not withheld from student assistantship stipends during any period of time when a student has an enrolled status.  If a graduate student doesn’t enroll in courses (or enroll in a research course) over the summer term FICA will be deducted from the stipend paycheck.  Here’s Cornell’s policy.

I hope the article in the Sun captured the main point I was trying to make, which was that the 9-month stipend base stipend rate is almost identical to the Tompkins county living wage, but that students would have a bit more buying power than non-students at the same rate because:

  1. The living wage calculation assumes FICA withholding for employees but students don’t pay this.
  2. Students with assistantship appointments also receive ~$3000 contributed to fully cover their health insurance.
  3. And many students don’t just receive the base 9-month stipend but do receive some other forms of employment or funding during the summer, according to our data.

We’ll be sharing more tax information between now and April 15th (tax day), so keep an eye on Grad Announcements!

Sincerely,

Jason

Jason Kahabka
Associate Dean for Administration