@Gourav039 , while I recognize that this "cautionary note " is only in the technical explanation and NOT in the body of the treaty, it is not mentioned in the IRS language regarding J-1 aliens. There is no mention of this claw back anywhere that I can find except for the ref'd technical explanation. Additionally if indeed IRS chooses to exercise " may clause" and wants all the excluded income taxed, whom is going to pay the penalties and interest charges --- so it is going to be a can of worms. Thus I think this is moot point i.e. there is no claw back. As a J1-Alien you file a 1040 from the day you pass the Substantial Presence Test and after passing the two year tax holiday under the treaty, just pay the normal taxes and go forth. So I would NOT worry about the possibility of claw back.
Does that help ? Is there more I can do for you ?
