New Tax Ruling to Aid Grad Students

A new Internal Revenue Service ruling may lift a considerable tax burden from many Harvard graduate students working towards their doctoral degrees.

The ruling, which was issued Wednesday, frees a doctoral candidate from taxes on a research stipend or fellowship, if he does no work for his stipend other than that required for his degree. Its effects will be felt primarily among science and engineering graduate students.

University reaction to the decision was cautious but optimistic. Professor William N. Lipscomb, chairman of the Department of Chemistry, commented that Harvard's situation is "a bit more complicated" than that of most universities. He said that there are many graduate assistants in the Chemistry Department who receive research support from more than one source and that tax exemption would be complex in their cases.

Individual Decision by IRS

"I think our suggestion would be to have students who are studying for an advanced degree and receiving support from any source to ask for an individual decision from the Internal Revenue Service," Lipscomb said. He emphasized that the Chemistry Department could only encourage its students to apply for tax-exemption and that the department itself could make no decision.

The reaction of Professor William M. Preston, Chairman of the Department of Physics, was similarly conservative. Although Preston said that the department is "naturally pleased" over the decision, he refused to speculate on how many of the department's 45 research assistants might receive tax-exemption.

Some Tax Exemptions Already

Both Preston and Lipscomb indicated that there are already a large number of research assistants who receive tax exemption. The majority of these, they noted, have tax exempt stipends from either the National Science Foundation or the National Institutes of Health. Preston said, however, that some students not holding these grants had already avoided paying. "Until now, the IRS policy has not seemed very consistent," he said.

The Wednesday ruling clarifies two cases resolved several years ago in Federal tax court. In each decision a doctoral candidate in physics was exempted from paying taxes on a research stipend because his research had been equivalent to that required of students not holding stipends.