Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.1 6/24/83; site u1100a.UUCP Path: utzoo!watmath!clyde!floyd!harpo!ulysses!gamma!pyuxww!u1100a!dbg From: dbg@u1100a.UUCP (D B Grooms) Newsgroups: net.taxes Subject: (Summary) Taxes on salary while on company scholarship (OYOC) Message-ID: <631@u1100a.UUCP> Date: Wed, 28-Mar-84 14:52:44 EST Article-I.D.: u1100a.631 Posted: Wed Mar 28 14:52:44 1984 Date-Received: Fri, 30-Mar-84 02:48:24 EST Organization: Bell Communications Research, Piscataway, NJ Lines: 74 I received a number of requests to post the responses to my article titled "Taxes on salaries received while on company scholarship (OYOC)." Not many responses were received, but they are summarized following my original article. I would welcome any additional responses. Thanks to those who responded. ~~~~~~~~~~~~~~~~~~ Original article ~~~~~~~~~~~~~~~~~~~~~~~~~~~ A few articles appeared in Dec. 83 regarding taxes on "salaries" received under Bell Laboratories OYOC (One Year On Campus) program. According to the articles, IRS auditors classified these amounts as scholarships not subject to tax. I am considering amending my returns for the OYOC years to use the scholarship classification. I would like to hear from other OYOC participants (via mail), or participants in other companies' programs which are similar, about their experiences claiming OYOC salaries as scholarships. How did you deduct the amount? Did you deduct the salary as scholarship and also deduct OYOC expenses as business/educational expenses? Were you audited, and if so, were the deductions allowed? Thanks in advance. ~~~~~~~~~~~~~~~~~ Responses ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I originally claimed my OYOC salary as income. I may file the 1040X to ammend the return, the only problem is how to exclude the scholarship from income since it was already included in the w2 form wages. The IRS tax info. lines are of no help. Several calls each produced "Uhhh...Gee, I don't know" type responses. ------------------------------------------------------------------------ I was on OYOC back in 1978. I filed my first-year's return straight: no deductions at all (for business expense or anything else) but some of my OYOC colleagues treated the salary as a scholarship and heard nothing from the IRS, so my second year I tried the same method: I crossed out the amount on my W2, wrote in a new value and wrote "Scholarship" by it, then put *that* amount on my 1040. It made a difference of $1500 to me and gave me about a $1000 refund. I got the refund and never heard a word from the IRS about it. It's been 5 years, so the statue of limitations has run out. ------------------------------------------------------------------------ I just received a pay back from IRS for 1982 OYOC salary deduction. I used 1040x and claimed that my salary at Bell was a scholarship. It is too early to tell whether or not they will give me an audit. ------------------------------------------------------------------------ I am in the process of sending in the forms. I did the following: 1. Attach a fairly explicit note, explaining your changes. 2. Multiply the monthly payment you received while on OYOC by the number of months you were on OYOC that year. Add to this the moving expenses you incurred that year. Subtract the total from what you reported as your wages that year. 3. Change your "moving expenses" deduction back to 0 since you have now included it in step 2 above. 4. Fill out the 1040X forms for the state or states in which you filed 1040's that year whether the net amount of refund or payment has changed or not -- the states do request this. ------------------------------------------------------------------------ The OYOCs who went to Brown last year (returned to work in Sept) (myself included) are all trying to figure out what we should do. One is getting a written ruling from IRS-NJ, two are talking to accountants and the rest are waiting. For 1982 I deducted temporary busines living expenses for rent and food, etc. This year I don't know what to do yet. I'd like to get your responses as they come in and then I'll relay the info to my friends here and from Brown. I really wish we could all figure this out once and for all. I'll keep you informed on what happens with the IRS and the accountants. ------------------------------------------------------------------------ Be careful! If you take a tax exemption this year, you might not be able to income average for the next four years, which can hurt you much more than paying taxes now. ~~~~~~~~~~~~~~~~~ End summary ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ David Grooms Bell Communications Research {ihnp4,houxm,pyuxww}!u1100a!dbg 201-981-3277