3

Are there any special tax provisions or incentives that PhD students should be aware of in order to grow their wealth or limit taxes during the duration of their PhD? Assume the student is a US citizen with no debt, sufficient savings, and earning a modest PhD stipend (i.e. ~$25k).

For the benefit of future readers, I would prefer to concentrate mainly on rules that specifically pertain to being a student or having relatively low income (possibly high wealth, if worked before grad school) for the ~5 years in the program, over general financial wisdom which may apply more broadly (e.g. opening an IRA).

3
  • Other grad students would know... :D And professors.
    – RonJohn
    Feb 18 at 3:53
  • Yes agree! Just hard to have casual conversations since we are remote for now...
    – kpz
    Feb 18 at 4:10
  • 1
    don't get into massive debt (this is general financial wisdom though)
    – user253751
    Feb 18 at 15:18
3

earning a modest PhD stipend (i.e. ~$25k).

Open a Roth IRA, since considering the $12,000 standard deduction you'll be in the 12% marginal tax bracket.

Because your future wages will probably be higher, now is the time to invest "taxed" money which will grow tax free for decades.

It's perfect for young, low-income people.

over general financial wisdom which may apply more broadly (e.g. opening an IRA

Ah, well... ignore what I just wrote.

5
  • 1
    Don't forget tuition tax credits available to full time students. I really miss those.
    – Upper_Case
    Feb 18 at 4:36
  • This is still good advice, since I am in the category described in the above post, and I didn’t even know about this. The idea is, if you’re young, then you’re probably unaware of things “for older people”, such as the IRA.
    – Alex
    Feb 18 at 8:27
  • If you think your answer should be ignored, so much that you can write "ignore what I just wrote" at the end of the answer, then delete it.
    – user253751
    Feb 18 at 15:19
  • @user253751 you miss the point.
    – RonJohn
    Feb 18 at 15:19
  • 1
    If contributing to a Roth with a low income, check out the Saver's Credit: rpgplanner.com/… Feb 19 at 5:48
2

Make sure you understand how grad school tuition, fees, scholarships and stipends work with the available tax credits, and deductions. You don't want to wait until April to discover that you should have done something different last year. Search your school website for an office that can help.

See if your state has any programs regarding tuition.

If you are about to start the program, or have already started, a key feature of a 529 plan the ability to save over time is limited. Still some people have found that if the state gives a tax break it can be enough of a benefit to funnel the money through the program. Of course that depends on your income tax situation, and if your rate is zero then there is no state income tax to save.

If you were working full time, and now you aren't, make sure you know what you will do for health insurance. Options include COBRA, a policy through the school, ACffordable Care Act...

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.