ScrabbleChamp wrote:I can see how that does pose a predicament. But, worst-case-scenario is that, at the end of the year, I have to report it is income. But, even if that is the case, it will essentially still be tax-free given my deductions and offsets will remove any tax liabilities I may have.
1L year sure. But if you get a BigLaw job 2L, you'll have $35K in income for the summer which will cover all of the standard deductions. (And, its unlikely you'll have enough to itemize being in school. I know I don't even though I always did before. Once you lose home mortgage interest, etc...)
If you don't have enough, you're looking at $3,400 in potential tax each year. That's why I paid the $40 for Turbotax and their penalty guarantee. If they're wrong and I get audited, I'm in no worse position as I pay tax and they pay penalties and interest.