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Old 01-13-2012, 12:47 PM
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Are postdoctoral fellowships subject to self-employment (FICA) taxes

Hi everyone,

Thank you for reading my post. I am a postdoctoral fellow at Columbia University and I am receiving an NIH National Research Service Award (NRSA) institutional training grant (T32). I am NOT considered an employee, neither of the University nor of the NIH. Self-employment (FICA) taxes are not withheld from my paychecks. And this is my question: Am I supposed to pay self-employment (FICA) taxes? I can't get any definitive answer from the university's tax office, so I decided to try to get some help from this forum.
I did some online search and apparently this is a complicated question that doesn't have a simple solution. Below is a link to an article that deals with fellowships and their taxability. After reading it, my impression is "you don't have to but you should". But I am a biologist and I am probably wrong with my conclusion. Here's the link:
Overview of Tax Issues for Postdocs - National Postdoctoral Association - Welcome

Here's another article dealing with the same issue, and again, after reading it I am not sure what to do:
Postdocs and the Law, Part II: Principal Investigator Versus Individual Grants - Science Careers - Biotech, Pharmaceutical, Faculty, Postdoc jobs on Science Careers

Here is an NIH guideline, but an old one from 1994, saying explicitly that NRSA stipends are not subject to employment or self-employment tax (FICA). But again, this is an old guideline.
NIH Guide: NATIONAL RESEARCH SERVICE AWARD--INSTITUTIONAL GRANTS POLICY AND GUIDELINES

Yale's tax office says that their postdoctoral fellows don't have to pay FICA taxes:
Yale University Office for Postdoctoral Affairs | Postdocs

So if anyone could shed some light onto this issue I would greatly appreciate it.

One more question about state taxes. I live in New Jersey but work in New York. Am I supposed to pay NJ or NY state taxes?

Thank you very much for your help.



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Old 01-14-2012, 01:36 AM
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“Are postdoctoral fellowships subject to self-employment (FICA) taxes”---> Self employment tax is NOT FICA tax; SECA is self employment tax; SECA tax is a tax consisting of Social Security and Medicare taxes, OASDI, I mean primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.You figure SECA tax yourself using Schedule SE. Social Security and Medicare taxes of most wage earners are figured by their employers. Also you can deduct half of your SE tax in figuring your adjusted gross income. Wage earners cannot deduct Social Security and Medicare taxes.As long as the amount on your Sch SE line 4 is $400 or exceeds $400, you need to pay SECA tax on 1040ES if you are subject to the tax.
“I am a postdoctoral fellow at Columbia University and I am receiving an NIH National Research Service Award (NRSA) institutional training grant (T32). I am NOT considered an employee, neither of the University nor of the NIH. Self-employment (FICA) taxes are not withheld from my paychecks. And this is my question: Am I supposed to pay self-employment (FICA) taxes?”----->No, I do Not think so: NRSA recipients are not employees of the University or of NIH. Because an NRSA recipient is not an employee of the University , the NRSA award may not be charged for employee benefits. NRSA awards are treated as "non-compensatory stipends". This means that the stipend is not compensation for work performed and is not treated as wages paid to an employee. Wages paid to employees are subject to state and federal income taxes and FICA withholdings. A non-compensatory stipend is NOT subject to state and federal income taxes and FICA withholding. However, NRSA recipients are required to report the NRSA stipends as income on their individual tax returns. Please note that even though NRSA recipients will not receive a Form 1099 from the University, they are still required to report the stipend on their individual tax returns.You need to report the income on 1040 line 21 , other income.
“One more question about state taxes. I live in New Jersey but work in New York. Am I supposed to pay NJ or NY state taxes?”---->I assume that you are either a US citizen or US resident, then as there is NO State Tax Reciprocal Agreement between NYS and NJ, you, as a full year resident of NJ, need to pay tax to NYS as a nonresident of NYS on your income that you earned in NYS and file NJ state claim your tax credit on your NYS tax that you paid to NYS. But I guess you do not get full credit by that amount toward your NY tax. Since the NY state tax is higher than the NJ state tax. In the case of NYC tax, only residents of NYC pay NYC income tax. Non-resident workers do not pay NYC income tax.However, NYC Charter section 1127 requires certain applicants for NYC employment to enter into a contract in which prospective employees agree to make payments in lieu of personal income taxes, the so-called "condition of employment payments," should he reside outside of NYC.



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