TAXES

SUMMARY OF TAXES

Taxes can be difficult to calculate due to their complexity for different situations. However, for domestic graduate students we've done our best to provide the following information and examples. (The information may also apply to international graduate students; see the International Taxes section for details.)

All of these income taxes are mandatory unless otherwise noted, and should be included when budgeting your living expenses. For graduate student income and expense information, see the Survive page.

We estimate that domestic graduate student employees may pay a total of ~2% to ~12% of their income per year in state and federal income taxes. (The calculations for each tax type are provided in the sections further below.)

Here are some common scenarios:

• • If you earned $24,000 total in 2024 with summer income, such as a Distinguished Doctoral Fellow (the highest possible paid position!), your total income tax may be: $940 (federal) + $980 (state) + $116 (summer federal Medicaid) + $600 (summer state OBRA) = $2,636 in total income taxes (11% of your total income)

  • If you earned $16,000 total in 2024 with no summer income, such as a Teaching Fellow, your total income tax may be: $140 (federal) + $580 (state) = $720 in total income taxes (4.5% of your total income)

  • If you earned $9,600 total in 2024 with no summer income, such as an hourly-paid employee, your total income tax may be: $0 (federal) + $260 (state) = $260 in total income taxes (2.7% of your total income)

All graduate students should estimate their tax obligations in order to budget their finances accurately!

INCOME TAXES ESTIMATOR

Since income taxes can be difficult to calculate, we've created an Income Taxes Estimator specifically for UMassD students to estimate the amount of annual income taxes for different incomes. This Estimator uses the following assumptions:

• tax year 2024

• domestic student status (international students may be taxed differently??)

• 1 adult

• filing single

• no deductions or tax credits

• taking the standard deduction (not itemizing deductions)

• total gross annual income less than $26,200

• not legally blind

Feel free to make a copy of the Income Tax Estimator spreadsheet to edit it for your situation!

FEDERAL INCOME TAX

Federal income tax will likely be 10% of your income after the first $14,600 you earned (based on the IRS's 2024 tax rates). For example:

• If you earned $24,000 total in 2024, your federal income tax may be: $24,000 - $14,600 (the standard deduction) = $9,400 taxable income, taxed at 10% = $940 in federal income tax

• If you earned $16,000 total in 2024, your federal income tax may be: $16,000 - $14,600 (the standard deduction) = $1,400 taxable income, taxed at 10% = $140 in federal income tax

• If you earned $9,600 total in 2024, your federal income tax may be: $9,600 - $14,600 (the standard deduction) = negative taxable income = $0 in federal income tax

• If you earned less than $14,600 in 2024, you will owe $0 in federal income tax.

Federal income tax can be calculated on various financial websites, such as NerdWallet's Federal Income Tax Calculator webpage.

STATE INCOME TAX

Massachusetts state income tax is 5.0% of your income after the first $4,400 you earned.

• If you earned $24,000 total in 2024, your MA state income tax may be: $24,000 - $4,400 (personal exemption) = $19,600 taxable income, taxed at 5% = $980 in MA state income tax

• If you earned $16,000 total in 2024, your MA state income tax may be: $16,000 - $4,400 (personal exemption) = $11,600 taxable income, taxed at 5% = $580 in MA state income tax

• If you earned $9,600 total in 2024, your MA state income tax may be: $9,600 - $4,400 (personal exemption) = $5,200 taxable income, taxed at 5% = $260 in MA state income tax

• If you earned less than $4,400 in 2024, you will owe $0 in state income tax.

A MA state income tax calculator can be found on eFile's Massachusetts Income Taxes Calculator webpage. (Note that for this webpage, the "Annual State Income" is after subtracting out the $4,400 personal exemption. Also, beware that some other websites don't calculate it correctly!)

SUMMER INCOME TAXES

Doctoral Fellows (and some Research Assistants) typically work during the summer  months. If a domestic grad worker (or an international grad worker living in the US for more than 5 years) isn't registered for summer classes, and because the summer is an intersession longer than 5 weeks, additional taxes are taken out of their paycheck. Any income earned during the summer (4 months) is taxed at 7.5% for Massachusetts OBRA mandatory retirement account contributions, plus 1.45% for federal Medicaid. See the OBRA  Mandatory Retirement Program section below for more information.

• Federal Medicaid tax: If you earned $8,000 in summer 2024, and earned more than $22,600 total in 2024 (to factor in the $14,600 standard deduction), your federal Medicaid tax may be: $8,000 summer taxable income, taxed at 1.45% = $116 in federal Medicaid tax

• State OBRA tax: If you earned $8,000 in summer 2024, and earned more than $12,400 total in 2024 (to factor in the $4,400 personal exemption), your state OBRA tax may be: $8,000 summer taxable income, taxed at 7.5% = $600 in state OBRA tax (ouch!)

  • • Some universities refund the OBRA tax at the beginning of each Fall semester. However, UMass Dartmouth doesn't do this.

Question: If you register as full-time in the summer by submitting a Full-Time Enrollment Status Form, will you be exempt from the summer Medicaid and OBRA taxes??? It would cost $250, but save much more in summer taxes?? You must register for the summer if you plan to graduate in August, so maybe this is possible??? You won't get the OBRA refund back later though.

OBRA PROGRAM

The Massachusetts OBRA mandatory retirement account contribution is Massachusetts' alternative to federal Social Security tax.

In the summers, all domestic grad workers (and international grad workers living in the US for more than 5 years) are considered part-time, seasonal (less than 1 year contract), or temporary (non-benefited) employees and therefore MUST contribute to a MA OBRA mandatory retirement account (the MA SMART 457 Plan) from their pre-tax income. For more info on the MA SMART 457 plan, visit Empower's OBRA webpage.

You can create and log into your OBRA account from Empower's MA Deferred Compensation Smart Plan webpage.

On your summer paychecks, the OBRA withholding will be listed in the Before-Tax Deductions section as “Alternative Retrment Mandatory.”

The cost of OBRA contributions is 7.5% of your pre-taxed income. Additionally, there is a $12.00 annual fee for your account to be maintained. This account cannot be rolled over to any other retirement account, and you cannot remove the funds until you have "separated" (graduated, withdrawn, or taken a leave of absence) from the university. Also note that these OBRA contributions do not count toward Social Security benefit credits (which are needed when filing for disability benefits, such as for Long COVID).

All students can get their OBRA contributions back (if they request it!!) after separating from the university. Students must first be assigned an End of Term Date (the date they will be separating from UMassD) on their academic record, then access their OBRA account online to request the refund. However, the refund can't be direct deposited into an overseas account (such as for international students); it must be a domestic bank account OR they will mail a check to the mailing address on file. If the mailing address is out of date or the check cannot be direct deposited to a domestic bank account, the OBRA refund will not reach the student! If the student can't be contacted after 1 year, their money goes to the state of MA.

Good news: After 1 year, students who didn't receive their OBRA refund can claim it on MA Unclaimed Property's Search for Unclaimed Property webpage.

SOCIAL SECURITY TAX

All graduate student employees are always exempt from the 6.2% federal Social Security tax, even for income earned in the summers. Whew!

INTERNATIONAL TAXES

If the US does not have an income tax treaty with an international student's home country, that student will be taxed at the same rate as a US domestic student.

"Non-residents for tax purposes" have 14% of their income automatically withheld from their pay?

International students may benefit from tax treaties that vary greatly from one country to another. For example, a student from Sri Lanka does not have any tax exemption, and a student from the Philippines has a $3,000 exemption. Other countries like Bangladesh and India have larger tax exemptions.

• • For international students with nonresident alien status, see the IRS's Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens webpage

Income code is 17 (compensation for independent personal services) or 19 (compensation for teaching) or 20 (compensation during studying and training)?

Notes:

From https://blog.sprintax.com/f1-visa-tax-return-guide-international-students/:
"In general, international students who are in the US on an F-1 visa are considered nonresident aliens for tax purposes for the first five calendar years of their stay in the US."

Substantial Presence Test:
https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

Calculator:
https://philhogan.com/substantial-presence-test-calculator/

Is there a way to estimate taxes for international students??? Sprintax software is provided for free from the university, can it be used to estimate taxes???
https://www.umassd.edu/international_students/taxes/details/

MIT has good info:

https://vpf.mit.edu/by-topic/general-tax-information/basic-information-about-us-system-and-tax-authorities?active=227

Check out all of the links in all 3 subcategories of the "Students" section on the left sidebar: General Tax Information, Tax Forms, and Tax Filing.

A list of treaty countries can be found in IRS Publication 901.

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If any information presented here is inaccurate or questionable, please let us know ASAP by submitting the Feedback Form below! The resources we provide can be valuable if correct, but harmful if incorrect. We are committed to providing all UMass Dartmouth graduate students with the most accurate information possible.

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