Tax Basics Workshop, for Professional Degree

Students at UCSF

Tuesday 2/12/19 in S-214Wednesday 2/20/19 in CL 221-222

and Monday 2/25/19 in N-225Zoom: https://ucsf.zoom.us/j/8531229278

Daniel RoddickResource Advisor

daniel.roddick@ucsf.edu

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.

1. Who has to file?

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

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 $1,050Your 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.______________________________________________________

______________________________________________________

Other reasons such as…self-employment income. See Pub 17 pages 9-12 for details!

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: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts-next-year

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.

1. Building Block Approach

1. The 1040 Form, pg1

1. The 1040 Form, pg2

2. Student Loan Interest Deduction

Student Loan Interest Deduction• You can deduct up to $2,500 of interest paid during 2018.

• 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. *

Eligible deduction goes on Schedule 1 Line 33. https://www.irs.gov/pub/irs-pdf/f1040s1.pdf

* Signifies an income “phase-out”

UCSF provides the 1098-T to all students enrolled in the previous calendar year, accessible under the Finances tab in the Student Portal or www.tsc1098t.com

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. *

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 8863.

Remember, these amounts are based on the actual date that you paid your tuition and fees through December 31, 2018.

Use Form 8863 to determine eligible credit to enter on Schedule 3 Line 50.https://www.irs.gov/pub/irs-pdf/f1040s3.pdf

4. Is my grant/stipend taxable?

• Using the IRS worksheet 1.1 designed for Taxable Scholarship and Fellowship Income. www.irs.gov/pub/irs-pdf/p970.pdf

• 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 1. www.irs.gov/pub/irs-pdf/i1040gi.pdf ...

5. Some Other Deductions

Deduct Moving Expenses • No longer applicable!

Tuition and Fees Deduction • No longer available!

Standard Deductions• Almost doubled!

Child Tax Credit• Refundable up to $1,400 • Maximum credit income threshold lifted to $200k, or $400k MFJ.

• More info for families: https://www.irs.gov/pub/irs-pdf/p5307.pdf

Deductions and Credits with regard to Family SizeOld (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

only $1,300 ea. if over 65 or disabled.

$500 per dependent For those not eligible for child tax credit

(ex. not under 17 during the yr). Child Tax Credit

$1,000 per child $2,000 per child

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.www.irs.gov/help/ita/are-my-work-related-education-expenses-deductible

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!

5. Taxes and Health Insurance

Health Insurance RequirementAll taxpayers must indicate that they either• already have health care, Form 1095-Bwww.ucop.edu/ucship/benefits/1095b-proof-of-insurance.html• claim an exemption from the requirement, • or make a “shared responsibility payment”

Requirement to ReconcileIf 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• www.irs.gov/Affordable-Care-Act

Use Form 8962 and enter this information on Schedule 5 line 70.

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 Account, After Tax• Roth IRA

• Can withdraw contributions tax-free, see note below.

• Income under $122k single, or 193K MFJ, to be allowed max contribution eff. 2019. *

• Limited contribution of $6,000/yr. starting 2019.

• Like an emergency fund, but with a better return.

Retirement Accounts, Pre-Tax Payroll Deduction Employer match, sometimes Taxed when withdrawn Maximum contribution for 2019

is $19,000.• 401k usually for profit• 403b usually non- profit• 457 usually State agencies• TSP (Thrift Saving Plan) VA

Please note: some resources say Roth IRAs have restrictions on withdrawal time periods and some say there could be penalties while others claim no penalties. As always communicated verbally, please consult your retirement provider or your employer for details.

7. Tips & Resources

IRS Federal returns, E-file for free• www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free• Your local tax advocate’s number is at www.TaxpayerAdvocate.IRS.gov

You can also call them at 1-877-777-4778.• https://www.irs.gov/individuals/free-tax-return-preparation-for-you-by-

volunteersProtect 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 emails asking for your password or SSN.• https://www.youtube.com/watch?v=0y5z0kWgBcM

Questions?

UCSF Grad Division Information: http://graduate.ucsf.edu/tax-info

UCSF Financial Aid Office: https://finaid.ucsf.edu/financial-literacy

CA Tax Brackets:www.tax-brackets.org/californiataxtable

UCSF 1098-T Information:https://registrar.ucsf.edu/registration/form-1098-t

UCSF Retirement Resource: netbenefits.fidelity.com

Financial Aid cannot serve as a tax advisor.