Tax Basics Workshop, for Professional Degree Students at UCSF

Transcription

1 Tax Basics Workshop, for Professional Degree Students at UCSF Tuesday 2/12/19 in S-214 Wednesday 2/20/19 in CL and Monday 2/25/19 in N-225 Zoom: Daniel Roddick Resource Advisor

2 Our Agenda 1. General Information Who has to file a tax return? What form(s) do I use? 2. Student Loan Interest Deduction (1098-E) 3. Education Tax Credits (1098-T) 4. Is my scholarship/grant/stipend taxable? 5. Other items and changes Deductions and Credits Additional Things to Know 6. A Note on Retirement Accounts 7. Resources Financial Aid cannot serve as a tax advisor.

3 1. Who has to file? If you re single and your parent (or someone) can claim you as dependent on the tax return, you still must file if any situations apply below: Your unearned income was over $1,050 Your earned income was over $12,000 (includes taxable portion of grants/scholarships/fellowships more about that later.) Your gross income was more than the larger of: $1,050 or your earned income plus $350. If you are not a dependent on someone else s return and under 65 years old, you must file if your gross income was at least $12,000 for Single $24,000 for Married Filing Jointly $5 for Married Filing Separately $18,000 for Head of Household Other reasons such as self-employment income. See Pub 17 pages 9-12 for details!

4 1. So should I file? Even if you are not required to file, you SHOULD file if you can claim a refund. For example, You had taxes withheld from earnings but didn t make enough or work long enough to owe taxes at the rate you were taxed. You qualify for a refundable credit such as Earned Income Tax Credit (usu. modest income, with children). See: Even if you are not required to file, you MIGHT decide to file in your last year of school If you are considering the Income-Driven Repayment (IDR) plans for your Federal student loans or Public Service Loan Forgiveness (PSLF) your reported income on the tax return is what may be used to document income and consequently the reduced payments.

5 1. Building Block Approach

6 1. The 1040 Form, pg1

7 1. The 1040 Form, pg2

8 2. Student Loan Interest Deduction Student Loan Interest Deduction You can deduct up to $2,500 of interest paid during You do not have to itemize to claim this deduction. Modified Adjusted Gross Income (MAGI) must be less than: $80K single, $165k married filing jointly (MFJ) to obtain any deduction. * * Signifies an income phase-out Eligible deduction goes on Schedule 1 Line s-pdf/f1040s1.pdf

9 3. Education Tax Credits Lifetime Learning Credit Up to $2,000 non-refundable credit If you are listed as a dependent by someone else, they get to claim the credit. If not, but third party pays the tuition, you may get the credit. MAGI must be less than $67k single or Head of Household, below $134k married filing jointly (MFJ) to obtain any deduction. * UCSF provides the 1098-T to all students enrolled in the previous calendar year, accessible under the Finances tab in the Student Portal or

10 3. The 1098-T Form Box 1 (Payments received for qualified tuition and related expenses) - Box 5 (Scholarships or grants received in 2018) = net amount. This amount can be added to line 31 of Form Remember, these amounts are based on the actual date that you paid your tuition and fees through December 31, Use Form 8863 to determine eligible credit to enter on Schedule 3 Line b/irs-pdf/f1040s3.pdf

11 4. Is my grant/stipend taxable? Using the IRS worksheet 1.1 designed for Taxable Scholarship and Fellowship Income. Amounts received for teaching or research may be considered taxable. Funds such as NHSC Scholarship not taxable b/c service obligation. RA/TA Fee Remission is generally not taxable but the stipend portion usually is taxable. Include with other earned income on 1040 Line pdf/i1040gi.pdf...

12 5. Some Other Deductions Deduct Moving Expenses No longer applicable! Tuition and Fees Deduction No longer available! Standard Deductions Almost doubled! Deductions and Credits with regard to Family Size Old (2017 return) Now (this year s return) Standard Deductions $6,350 Single $12,000 Single $12,700 MFJ $24,000 MFJ $9,350 HOH $18,000 HOH Personal Exemptions $4,050 per dependent, but $500 per dependent For those only $1,300 ea. if over 65 or not eligible for child tax credit disabled. (ex. not under 17 during the yr). Child Tax Credit $1,000 per child $2,000 per child Child Tax Credit Refundable up to $1,400 Maximum credit income threshold lifted to $200k, or $400k MFJ. More info for families:

13 5. Other Tax Items Additional Tax Changes resulting in more taxes Mortgage interest deduction limited to a primary or a secondary home as in 2017 but the size of the mortgage upon which you can deduct interest is $750K not $1M. New limit on state and local income tax (SALT) deduction $5,000 for married filing separately $10,000 for all others Employer-Provided Educational Assistance Can exclude up to $5,250 from income and other compensation Employer can provide more, but it would count as part of your salary As with other aid, non-taxable if for QTRE Deduction for Work-Related Education For those self-employed, contractors, small business owners Only to enhance skills in current work not to change jobs.

14 5. New Tax Brackets Caveat: Capital gains have their own tax brackets! See irs.gov Small business owner? You may be able to deduct up to 20% of your income! See Publication 535 for instructions!

15 5. Taxes and Health Insurance Health Insurance Requirement All taxpayers must indicate that they either already have health care, Form 1095-B claim an exemption from the requirement, or make a shared responsibility payment Requirement to Reconcile If you purchased healthcare from the Health Insurance Marketplace using premium tax credits You may qualify for a refundable tax credit You should receive a Form 1095-A You will fill out form 8962 to claim the credit Use Form 8962 and enter this information on Schedule 5 line 70.

16 6. Retirement Accounts Retirement Accounts are helpful because mostly it s pre-tax. Therefore it reduces your potential tax base. You can contribute up to $18,000. This could reduce how much the rest is taxed! Retirement Accounts, Pre-Tax Payroll Deduction Employer match, sometimes Taxed when withdrawn Maximum contribution for 2019 is $19, k usually for profit 403b usually non- profit 457 usually State agencies TSP (Thrift Saving Plan) VA Retirement Account, After Tax Roth IRA Can withdraw contributions tax-free and without penalty Income under $122k single, or 193K MFJ, to be allowed max contribution eff * Limited contribution of $6,000/yr. starting Like an emergency fund, but with a better return. netbenefits.fidelity.com

17 7. Tips & Resources IRS Federal returns, E-file for free Your local tax advocate s number is at You can also call them at Protect Yourself, Beware of Tax Scams Any message asking for W-2 or other tax information. Use a different way to validate any request for W-2 or other tax information, even if it looks like a legitimate request. Do not reply to s asking for your password or SSN.

18 Questions? UCSF Grad Division Information: UCSF Financial Aid Office: Loan Resource Advisor: Financial Aid cannot serve as a tax advisor. CA Tax Brackets: UCSF 1098-T Information: t