[edited April 13, 2016]
If you are on a J-1 visa, you will be exempt from the Substantial
Presence Test for the first 2 (if
non-student) or 5 (if student) calendar years that you are in the US. This
means that you are considered a non-resident aliens for US tax purposes.
You will need to file a Form 1040NR to report your US
source income. TurboTax does not support Form 1040NR. You may want to try https://www.sprintax.com/ which is specifically designed to help
international student nonresident aliens with their US tax returns.
If you are in the US beyond this exempt period, you will file as a US resident.
Click this link for more information from the IRS on US Tax Guide for Aliens
You can enter your stipend as a scholarship on your US income tax return. You would also be able to claim a treaty exemption to this income if one applies.
You would include your stipend income under the education section and if applicable, you will enter the
amount of the treaty exemption as a negative amount under other miscellaneous
income. You may also need to attach Form 8833 to your tax return. (Attaching
this form will require that you mail in your return. You will need to select -
file by mail under the file tab.)
Since
Form 8833 is not supported by TurboTax, here is the link to the IRS
website regarding claiming a tax treaty benefit:
https://www.irs.gov/Individuals/International-Taxpayers/Claiming-Tax-Treaty-Benefits
To enter your stipend as a scholarship into
TurboTax:
- Click
on the “Federal Taxes” tab ("Personal" tab in TurboTax Home &
Business)
- Next click on “Deductions
and Credit”
- Next click on "jump to
full list" or “I’ll choose what I work on”
- Scroll down the screen until
to come to the section “Education”
- Choose "show more",
then Expenses and Scholarships (Form 1098-T)
- You will need to choose the
student this Scholarship relates to and select "edit"
- Under the Education Summary
page, select "Scholarships and Grants" - edit
- Say "yes" - to
question "Did (name) receive a scholarship or grant in 2015?"
- Enter amount as "Other
Scholarships/Grants/Fellowships (screenshot #1)
If a treaty exemption applies, you
will now need to enter a negative amount for the treaty exemption under other
miscellaneous income
To
enter your treaty exemption under as other miscellaneous income:
- Click
on the “Federal Taxes” tab ("Personal" tab in TurboTax Home &
Business)
- Next click on “Wages and
Income”
- Next click on "jump to
full list" or “I’ll choose what I work on”
- Scroll down the screen until
to come to the section “Less Common Income”
- Choose "show more",
then Miscellaneous Income
- Choose "Other
Reportable Income" and enter
this information here under other taxable income (screenshot #2)
- You should use a description
related to the tax treaty article exempting the income (ie: China-US tax
treaty, exemption under article 20) and the exempt amount as a negative
number.
