I am just starting out with the SMART Program and will begin receiving stipened payments in August.
What are your tips/recomendations in regards to taxes?
thanks
TAX TIPS
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guestagain
Re: TAX TIPS
This is just advice from my own experience, I am not a professional in any way, so do not hold me accountable if somehow something goes wrong.
Prepare for estimated payments, the first year (2015) you shouldn't have to worry about unless you owed more than $1000 for 2014 (you are allowed one above $1000 before they will penalize you the second year for not learning after your first year). I personally took a full third of my stipend, so say it's 3000, I put 1000 into my stash every month and lived off of the other 2000. So come tax season you get to write a nice pretty check for both federal and state but you should have the $$ to cover, and anything left is a bonus.
Next year you definitely will need to start making estimated payments. You add your stipends, your health allowance, book allowance, and internship support payments up to a number and fill out the estimated taxes form (for both federal and for your state). You will have to pay what the calculated taxes you will owe are but split over quarters (the form tells you this) and you send in the form voucher plus your $$ due April 15, June 15 (this one's a doozy, only 2 months in between), September 15, and December 15. Save a record of all of these payments so you can show your tax preparer that you in fact made these payments. I still save 1/3 of my stipend to cover this. Particularly if I were to calculate something incorrectly or whatever I would still have a small stash to cover it come tax season.
If last year you owed more than $1000, then you need to make your estimated payments now. First one due September 15 and the second is December 15.
Prepare for estimated payments, the first year (2015) you shouldn't have to worry about unless you owed more than $1000 for 2014 (you are allowed one above $1000 before they will penalize you the second year for not learning after your first year). I personally took a full third of my stipend, so say it's 3000, I put 1000 into my stash every month and lived off of the other 2000. So come tax season you get to write a nice pretty check for both federal and state but you should have the $$ to cover, and anything left is a bonus.
Next year you definitely will need to start making estimated payments. You add your stipends, your health allowance, book allowance, and internship support payments up to a number and fill out the estimated taxes form (for both federal and for your state). You will have to pay what the calculated taxes you will owe are but split over quarters (the form tells you this) and you send in the form voucher plus your $$ due April 15, June 15 (this one's a doozy, only 2 months in between), September 15, and December 15. Save a record of all of these payments so you can show your tax preparer that you in fact made these payments. I still save 1/3 of my stipend to cover this. Particularly if I were to calculate something incorrectly or whatever I would still have a small stash to cover it come tax season.
If last year you owed more than $1000, then you need to make your estimated payments now. First one due September 15 and the second is December 15.
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Guest
Re: TAX TIPS
So you get your whole check up front every month and then have to pay one big whopping every tax year? Can I ask what your yearly salary, monthly bring-home, and about what you paid in taxes for a year?