How the GOP’s Tax Cuts and Jobs Act will affect graduate students

Princeton graduate students could see their tax bills skyrocket to $11,000 or more if the Republican tax bill currently under consideration in the House of Representatives becomes law.

The GOP bill eliminates §117(d) in the U.S. tax code, a provision which exempts “qualified tuition support” for research and teaching assistants from being counted towards gross income.

This means that a student whose funding comes in full or part from a teaching or research assistantship at Princeton will be paying tax not just on their stipend and any additional teaching/research income, but also on the roughly $49,000 Princeton tuition as “non-cash income.”

Fortunately, students who are on fellowships would not see their tuition support counted towards taxable income. §117(a), which exempts “qualified scholarships” from taxation would remain on the books. But most Princeton students receive at least part of their funding from assistantships during their the course of their PhD program and would therefore be affected by the tax bill.

What does this mean in practice?

(more…)