US citizen doing a full-time PhD program abroad while working part-time in the UK

[sshahid]

Hi, I'm a full-time Ph.D. student who is living abroad and wants to file US taxes disclosing both my annual stipend from the university and my part-time earnings from work. I have been in the UK since September 2018, and I have not filed taxes since. I am filing my 2019 taxes first since this can be done online via Turbotax Inuit.

University: My studentship includes waived tuition fees and an annual stipend. I believe this is considered a scholarship.  However, my UK university does not provide a 1098-T and they don't have an EIN or filer's Federal Number, which is needed to file under Deduction & Credits: Education: Expenses and Scholarships (Form 1098-T)  via TurboTax. 

After reading discussions on "scholarships", I decided to disclose this under Miscellaneous Income, 1099-A, 1099-C: Other reportable income, and labeled it as "Studentship (abroad)". My federal tax due went up to $726. However, then I read another blog saying that it can be disclosed under Foreign income as well, is this accurate?

Work: As I'm working in the UK, I don't have a W-2, so I disclosed my income under Foreign Earned Income and Exclusion, and my entire salary was eligible for an exclusion. 

Ultimately, I added both my annual stipend and annual income and listed it as my Foreign Earned Income which came up to a little over 30k and was eligible for an exclusion. However, I am concerned if this is the right way to report this because I only pay tax on my work income. Also, I can only list ONE employer information, I chose my university as my main. 

I have not taken any housing deductions, simply listed both my salaries because I am living with family in the UK and saving on rent. Therefore, I put 0 for 'Foreign housing expenses'. The forms asks:

Did you have any family members living with you in your main home?

The possible choices are "yes, my family lived with me while I was living and working outside the US" or "no, my family did not live with me."

I am confused about how to answer this as I lived with my UK family - I did not have my US family living with me. Also, it says describe my housing situation: "Purchased house", "rented house or apartment", "rented room", "quarters furnished by employer". I am living at my aunt's house, should I put down that I live with my aunt, and then pick 'purchased house' or say no, to living with family and pick 'rented room' ?

Lastly, I am asked: Does your visa limit the length of time you can work outside the U.S? I chose limited, so it asks: Describe the limitations of your visa here

On my Student visa, I can only work 20 hours a week (hence my part-time job). Is this asking me to disclose limitations such as my 20-hour work limitations in the UK or does it mean the length of time I can be working outside of the UK? (e.g. 'four years' since my student visa expires in 2022).

[sshahid]

Please help, I’ve been working on this form for a week 😭 — @CatinaT1 @JotikaT2 @AnnetteB6 @KristinaK @DawnC @SusanY1 

[SusanY1 · Accepted solution]

For your scholarships - yes, it is accurate that a foreign student can include this type of income as foreign earned income, thus making it eligible for the Foreign Earned Income Exclusion (FEIE).  You are not required to pay taxes on income that is excluded through the FEIE, however you must not be an exempt person who isn't subject to any taxes in the country in which you reside.  

For your wages from your part-time work, you have properly listed this as foreign income, to be excluded under the Foreign Earned Income Exclusion (FEIE).

Since you can only list one employer on the FEIE, listing the University sounds reasonable as your primary employer.

When taxpayers abroad have more than one employer, it is proper to list the primary employer or the most recent employer (in the case of a change in employers.) 

While the questions about your living situation follow the question about the housing exclusion portion, they are actually related to the questions on the form that qualify you as a bona fide resident.   You can exclude your income when you are either physically present in another country (or countries) for at least 330 of 365 days or when you are considered a bona fide resident. 

The answers to the questions about where you live and with whom are part of the determination for whether or not you are a bona fide resident.   The idea behind some of these questions can help you better understand how to answer them in most cases.  What the IRS is looking for here is evidence that you are living indefinitely in the other country rather than for a specified temporary period of time.   Indefinite does not mean forever here or that you don't intend to return to the U.S., just that your not visiting for a specific limited time period.

If you qualify under the physical presence test, these questions are a little less important.  

Now, for the specific questions that you have about this:

• Did you have any family members living with you in your main home? In your case, since your U.S. based family is not with you I would answer no.  (You didn't bring family with you - but it may not have been appropriate to bring them.  This typically refers to the typical U.S. family unit of spouse/children.) 
• Describe your housing situation.  I would select a rented room, even though you are living with part of your U.K. family. This most accurately represents your situation at the present time.
• Does your visa limit the length of time you can work outside of the U.S.?  This refers to the length of time your visa or work permit is valid and whether or not it can be renewed or has any restrictions.   In your case, I would say that your work permit is valid as long as you are also a student and is valid for part-time work only, (if I understand correctly) and give the visa expiration date where asked.  

Thank you for your question.  Hopefully, you can wrap this up today so that your long week of tax work is over and you can return your energy to your Ph.D. studies and other activities!

[Lorri]

FEIE - foreign earned income exclusion does not include scholarships and fellowships.

IRS classification of types of income - scholarships /fellowships considered variable and not earned 

Consider the visa type you have to determine if you have earned income.  If you are on a student visa and earn income for research and you are paid by a state university as scholarship monies, then you would not be eligible for this FEIE.