As someone with a PhD, you are used to reading some complicated stuff. But hold on, the United States government (in the guise of the Internal Revenue Service – or “IRS”) is here to present you with a nearly insurmountable challenge: understanding your tax situation! We’ll try to make it as clear as we can here, but you may need to consult a bona fide tax specialist to get things straight.
Know Thy Title Code
UCSF’s tax withholding and income reporting obligations differ depending on whether the IRS considers your compensation or salary as “wages” or a “fellowship.” It’s all money, right? But to the IRS, there are different kinds of money. That means that in some cases UCSF is required to hold back part of your pay for taxes, and sometimes not. And in some cases, UCSF must tell the IRS how much money you make, and in other cases not. The citizenship status of the postdoc payee affects UCSF’s reporting and tax withholding obligations too.
As a postdoc at UCSF (or at any UC campus), you have a title code, which reflects who pays you and how you are paid, and, as said above, that determines your tax status. That's why it is absolutely crucial to know your title code! Because postdocs are often paid through more than one funding source, you may have two or even three title codes. If you don’t know your title code(s), consult your HR representative.
How Your Title Code Affects Your Tax Situation
Postdoc Employees (title code 3252), Regardless of Citizenship Status
The payments you receive for working at UCSF under a postdoc employee appointment (title code 3252) are considered wages. The IRS requires UCSF to withhold income taxes from wages. If you are a 3252 postdoc employee, congratulations! Your tax status is the simplest. UCSF will hold back some of your wages and pay them to the IRS. At the end of the year, UCSF will provide you with a W-2 form, showing the amount of tax that has been withheld from your pay. You will submit this form and the information on it to the IRS on your tax return, and that’s all you really need to worry about. It is possible that you will get a tax refund, or you may have to pay additional tax. When you are first hired, UCSF will provide you with a form W-4, a sort of worksheet that will help the University determine how much money to withhold from your paycheck for taxes. If you provide the right information on this form, then usually you will pay about the right amount of tax and avoid having a high additional tax bill.
Postdoc Fellows (title code 3253) who are U.S. Citizens, Permanent Residents (i.e. Green Card Holders), and Resident Aliens
If you are a postdoc fellow (in title code 3253), then the payments you receive for working at UCSF are not considered “wages,” rather they are considered a “fellowship.” UCSF is not required to withhold taxes from fellowships or to report fellowship payments for individuals who are U.S. citizens, permanent residents (green card holders), or resident aliens for tax purposes. Instead, the IRS and California Franchise Tax Board require fellowship recipients to “self–report” fellowship payments when they file their U.S. and California annual income tax returns. This means that the postdoc fellows themselves are solely responsible for keeping track of their own monthly fellowship payment statements. UCSF will not issue a W-2 form for fellowship payments to postdocs in this category, since only payments that are considered wages are reported on the W-2. Postdoc fellows who fall under this category should refer to the IRS and CA Franchise Tax Board for information about paying quarterly estimated taxes.
Postdoc Fellows (title code 3253) who are NON-Resident Aliens
The IRS does require UCSF to withhold taxes from fellowship payments to postdoc fellows (those in title code 3253) who are non-resident aliens for tax purposes. At the year-end, a different tax statement, called a “1042-S” will be provided to such postdocs.
Postdoc “Paid-Directs” (title code 3254)
Some postdocs at UCSF are paid directly by external organizations, such as a foreign government. Payments to these postdocs are not considered wages, and UCSF is not required to report such payments to the IRS; therefore, the postdoc will not receive a W-2 form. However, when a UCSF department pays for the cost of benefits for a postdoc paid-direct, this contribution is considered a form of income called “imputed income,” and the amount of this contribution is considered taxable income.
Postdocs with Multiple Title Codes
If you have more than one appointment line in the payroll system, more than one tax situation may apply to you. For example, say you receive a fellowship (under title code 3253), but you also receive a supplemental salary from your PI (under title code 3252). In this case, part of your income will be reported to the IRS, and part will not. That means that although you would have to pay estimated quarterly taxes to the IRS for the fellowship portion of your pay, UCSF will withhold the taxes from the supplemental portion of your pay.
• During the annual tax season (roughly mid-February until the annual tax deadline on April 15), the UCSF Office for Postdoctoral Scholars (OPS) holds a tax information workshop at Mission Bay and Parnassus campuses. This workshop is primarily aimed at postdoc fellows and paid-directs. View the presentation for the 2017 workshop, ("Tax Issues Associated with Reporting Fellowships").
• If you are an international scholar, either paid-direct or fellow, with "non-resident" status for tax purposes, be sure to attend a workshop on taxes for international postdocs offered by the International Students & Scholars Office (ISSO) website.
• We recommend that non-resident, international postdocs attend both workshops at least once, since what is covered is slightly different.
• How to figure out how much Federal estimated taxes to pay and how to make your payments
• How to figure out how much State of California estimated taxes to pay and how to make your payments
• Information on Fellowship Income Statement
• Off-campus, a non-profit organization in San Francisco called "Tax Aid" offers free tax advice for people whose household income is less than $54,000.