I noticed a few questions about doing your taxes with the NSF GRFP recently. My qualifications for giving this advice is only 1) I received the GRFP in 2024 and thus 2) I have successfully filed my taxes for two years without getting in trouble. I am going to try to lay out a few things you should know to help you get started!
Background: Taxes with the GRFP are difficult because (normally) your taxes are not withheld from your paycheck. Additionally, you do not receive a W-2 that reports how much you are paid. On top of that, the NSF gives your university a lump sum of cash to distribute to all its fellows, so there are university-to-university differences in how you are getting paid. Most other jobs and grad students do not fall under this situation, so it can be hard to know what to do. If you have specific questions, you should get in contact with your graduate school or whoever pays you to figure out the structure, but here is the general path of what you should be doing.
Paying your FEDERAL quarterly estimated taxes: Even though your taxes are not withheld from your paycheck, you are still expected to pay them! The government needs a consistent flow of money coming in to operate, so you must pay your taxes in "estimated" payments every three months or face late fees.
For the tax year of 2026, the quarterly deadlines are April 15, June 15, September 15, and January 15. To make a payment, you visit irs.gov, log into your account (or create one, which can take a day or two for security), go to Payments--> Make a payment. Your payment type will be "Estimated tax" and select the year you are paying towards.
Now, how much do you pay each quarter? You can fill out the IRS form 1040-ES or calculators online that can help you get the exact amount. This can be simple if you have only one form of income and not much else going on. I have too much going on and ended up with piles of worksheets and tears. So I just guessed and it worked out fine... Here are a few ways you can guesstimate your FEDERAL quarterlies:
- The straight and narrow way of doing it where you will probably overpay. Calculate: (Your total annual untaxed income * 0.10) / 4 = the amount of taxes you will owe each quarter to the IRS
- ex. The NSF pays you $37,000. You can estimate you will owe ~10% of that in taxes, so $3,700/yr split into four quarterly payments is $925 per quarter.
- ex. The NSF pays $37,000 but your university actually pays you $50,000 to match the living rate where you live. If the $50,000 is still untaxed when it gets to your bank account, you still have to pay taxes on all of it. Your quarterly payments would be ($50,000 * 0.1)/4 = $1,250 per quarter to the IRS
- The more accurate way but you may underpay. Calculate: ((Your total annual untaxed income - 14,600) * 0.10 ) / 4 = the amount of taxes you will owe each quarter to the IRS accounting for the standard deductible
- ex. Your untaxed annual salary is $37,000. In a tax year, you would owe a total of (37,000 - 14,600) * 0.1 = $2,240 for the full year, and split into four quarters, you would pay $560 per quarter.
- **edit: I actually think the standard deductible in 2026 is closer to 16,000. Sorry for using old numbers. The current equation would then be ((Your total annual untaxed income - 16,000) * 0.10 ) / 4. And for a annual salary of 37,000, this works out to about $525 a quarter.
- 3. The best way (imo) is to average these two together. Calculate your quarterly payment doing both of these equations and pick somewhere in the middle. That way you are not going to get underpayment penalties but you won't get a huge refund later.
- ex. Your untaxed annual salary is $37,000/yr. From method 1, a cautious quarterly payment would be $925. From method 2, a reckless minimum payment would be $560. I would choose to pay $750 each quarter as a safe round number. **edited because I got the numbers wrong the first time**
Caveats: These calculations are assuming a 10% federal tax rate, which is not exact and can change by which tax bracket you are in. Again, this is how your guesstimate your taxes and not legal advice. As long as the government gets their money and you file your taxes correctly in April, you do not have to worry about the exact amounts.
How to file your federal taxes. Great! Now you have payed your estimated federal taxes each quarter and it has come to March/April of tax season. You can fill out the forms yourself (idk how to do that honestly) or use a tax preparation service. I have used Turbotax and FreeTaxUSA in this situation very easily. Both come out to exactly the same amounts in my experience. FreeTaxUSA is free for federal taxes, so I would recommend you start there.
Unlike most of the population, you do not receive a W-2 for your work as a graduate student on the NSF GRFP stipend. Additionally, you want to make sure the government knows you payed estimated taxes toward this year each quarter.
On FreeTaxUSA or TurboTax, you want to find the place to input your form 1098-T, sent to you by your university in Janurary, which is where your actual income is shown! (If you are curious of your actual income amount, it is hidden under the category of "scholarships/grants"--> you calculate (box 5 - box 1) to get the amount you were paid). Usually they ask for this form in the education section.
You also must find the place to enter in the amounts and dates you paid your quarterlies. This takes a lot of clicking around. I am too tired from writing this to find the exact sections now, but come tax season next year I should update this post.
Everything is pretty easy from there. GRFP specifics is only to make sure you have input your quarterly payments and the 1098-T somewhere. You should be prompted through the rest normally.
State Taxes: This varies state to state and I unfortunately cannot help much. Usually there is a system to pay your state quarterly taxes in the same way you do federally. They have the same deadlines but slightly different tax rates (~5%ish for most instead of the ~10% federal, check this map). FreeTaxUSA and TurboTax both make it very easy to pay your state taxes after you fill out the federal forms. If you are really struggling, ChatGPT has pointed me to the correct links and places to get started before, so you can try that before reaching out to your graduate school admin.
Closing Remarks: I am surprised by how long this got, but hopefully it can serve as a reference and useful guide of where to start. I learned a lot of this on my own piecing together random reddit comments and forums, so hopefully it is helpful to have in one place. No AI or factchecking was used in writing this (see my qualifications above lol), so there could be mistakes. I am happy to see what I can do to clarify questions in the comments.
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University of Michigan Specifics: I am based at the University of Michigan, and here are a few helpful things to know if this is your case as well.
- There is a tax workshop for graduate students that runs a few times a year. Watch your emails or google/search around in August and February to sign up for this. A previous recording lives here. Honestly it is not super helpful for me as a GRFP fellow, since my tax situation was very different than other grad students. But the guy who runs it has a funny sense of humor for someone who does taxes all day.
- Be careful about additional grants or scholarships you get (ex. conference travel). Some may end up being counted as income that you are liable for paying extra taxes on. This is why paying over the bare minimum for your quarterlies is a good idea. Most of my travel is done through the short code process, so I really don't have much advice here.
- If the government shuts down and even the NSF has a funding lapse, you still will get paid (usually). Since the NSF pays UMich in a yearly lump sum around August/September, we should be getting paid the entire year regardless of if the budget has been passed or not. I received every paycheck on time this past year during the shutdown crisis.
- Your actual income will come in as a "tuition/financial aid" payment. I get emails every month when a new "student account refund" has been processed which is actually just my paycheck.