Cash Award

[Guest]

I see the cash award for SMART is $25-40k a year. What factors affect how much you receive? Is it based entirely on cost of living?

Thanks,
B

[Chris Moulder]

It's based on your degree. All BS are 25k. Graduate degrees are higher with some possible increases.

[Guest]

do you have to pay taxes on the cash award?

[Guest]

You have to pay income tax on any kind of award that doesn't go towards tuition.

[Matthew]

I remember seeing somewhere that taxes are NOT deducted from your cash award. YOU have to take the proper steps to make sure you pay the appropriate taxes. If you do not, you will have to pay come tax season.

[Chris Moulder]

I remember seeing somewhere that taxes are NOT deducted from your cash award. YOU have to take the proper steps to make sure you pay the appropriate taxes. If you do not, you will have to pay come tax season.

Obviously, you will have to pay your taxes. However, for anyone younger and with no significant past tax liabilities--eg a 21 year old who has only made a few grand in summer jobs before--advance preparations are not necessary.

Generally speaking, it takes several years of owing several thousand dollars before you will be required to pay quarterly estimates. You only be subject to fines for underpayment before April 15th once quarterly payments are required.

[Matthew]

Here is an old Tax Memo from 2008 that was on the smart website.
http://smart.asee.org/assets/File/SMART_Tax_Memo.pdf

[Tristan]

For my taxes, I hired a CPA (Certified Public Accountant) to help me plan out what taxes I would owe and to help me find deductions. IMHO, she is worth the fee ($120 or so a year) to answer tax questions and to ensure I don't owe anything come tax time.

[Dave]

Hey,

I read the post about paying tax on any income that is not going towards tuition.

I am planning on spending a decent amount of my cash award on my on campus housing and meal plan which will be billed directly from my college. Does anyone know if I would be required to pay taxes on this 11 or 12 thousand dollars?

[Matthew]

Yes you will have to pay taxes on all of your cash award regardless of what you spend it on. The cash award gets sent directly to you via direct deposit, hence you will be required to pay taxes on it. You may be able to file the housing as a deductible, not sure because I am not an accountant. You should talk to an accountant and get their advice.