topic How to report a foreign Postdoc fellowship? in Get your taxes done using TurboTax

How to report a foreign Postdoc fellowship?

_Maria_ — Fri, 10 Jul 2020 04:09:57 GMT

I am receiving a postdoc fellowship from a German Institution. I reside in the US, working as a postdoc remotely. The fellowship is tax-free in Germany. How do I report it on my tax form so that is stays tax-free?

If I report it as a foreign income, I have to pay taxes on it. Thank you.

Re: How to report a foreign Postdoc fellowship?

pk — Mon, 13 Jul 2020 04:05:15 GMT

@_Maria_ , are you a German citizen? What visa are you on ? when did you enter the USA ? How did you file your return in 2018?

Generally IRS would consider your work place to be your tax home and as such the income from Germany is not foreign income because you are performing the work while physically here in the USA. I need the answers because I sort of remember that under certain conditions these fellowships are taxable only by the issuing state if the recipient was a resident of that state immediately prior to coming to the USA . Once I get your answers then I will go back and verify the tax treaty conditions.

Re: How to report a foreign Postdoc fellowship?

_Maria_ — Mon, 13 Jul 2020 12:21:57 GMT

Thanks a lot for your input!

I have no German citizenship, here in the USA I am a permanent resident since 2016. The fellowship started in 2019, in Germany it is non taxable, neither for me nor for the Institute providing it.

Re: How to report a foreign Postdoc fellowship?

_Maria_ — Mon, 13 Jul 2020 15:35:39 GMT

I checked with the Institute issuing the Fellowship grant. The information provided by them might help to understand the situation. They claim that according to the German income tax law:

The precondition for tax exemption is that 
a) the stipend does not exceed an amount necessary to fulfil the research task or to cover living expenses and training needs and are awarded in accordance with the guidelines issued by the funding source,
b) the recipient is not obliged to provide a specific scientific or artistic achievement or service or to perform a specific employee activity in connection with the grant.

Re: How to report a foreign Postdoc fellowship?

pk — Mon, 13 Jul 2020 17:46:56 GMT

@_Maria_ , thank you for your replies with all the info. Even if you are a permanent resident of the USA, you are still a citizen of another country. If you are German then the treaty conditions would apply. Whichever country your citizenship ( your passport , even if expired) is will dictate the treatment of the "foreign income" Please tell me .

Re: How to report a foreign Postdoc fellowship?

_Maria_ — Mon, 13 Jul 2020 21:07:49 GMT

I have a valid Russian passport. Never had a German one. Thank you for trying to understand my situation.

Re: How to report a foreign Postdoc fellowship?

pk — Tue, 14 Jul 2020 03:16:26 GMT

@_Maria_ , for Russian students/researchers the tax treatment of grants, allowances or other similar payments is covered under article 18 of the US-Russia Tax treaty. These are exempt from US taxation as long as the Russian citizen is in the USA "temporarily present" in the USA for "..research...". It further states that " such exemption ... shall apply for such period .....as ordinarily necessary...... except that ... no exemption for training or research shall extend a period exceeding five years". Thus if you have been here for more than five years then the exemption is not valid. Another issue is that this treaty and on this subject is only applicable for a citizen/ resident whom is in the USA temporarily --- thus your change of status to Green Card would negate this exemption.

Therefore my conclusion is that , absent any other facts & circumstances, your fellowship grant is to be treated as if you are US citizen/resident without benefit of US-Russia Tax treaty. Thus this grant will be treated as income to the extent that the funds are not used for training or education. Your living expenses are definitely to be treated as income and therefore taxed by the Feds and the State -- both will consider this income as US sourced / in-state sourced.

This is not what you wanted to hear but ....

Is there more I can do for you

Re: How to report a foreign Postdoc fellowship?

_Maria_ — Tue, 14 Jul 2020 04:26:41 GMT

Yes, it is definitely not what I expected but thank you for nailing this down.

Could you please direct me where in the TurboTax to enter this income?

Re: How to report a foreign Postdoc fellowship?

pk — Tue, 14 Jul 2020 04:36:24 GMT

@_Maria_ , thank you for taking the bad news so graciously. There are other places to enter this fellowship but for ease , I would enter this as "other" income and annotate the line as "Research Fellowship"

Good Luck

Re: How to report a foreign Postdoc fellowship?

_Maria_ — Tue, 11 May 2021 15:42:57 GMT

Dear pk,

another tax year, and I am back with the same situation, now when I re-read what you entered, I see that actually I do have the right to exempt the fellowship from the tax report, as it is paid exactly to be "used for training or education", unless I need to provide documental proof of these facts, but do I? p.s. last year i reported it

Re: How to report a foreign Postdoc fellowship?

DaveF1006 — Wed, 12 May 2021 21:38:01 GMT

According to this link from postdocfellowhip.org, "Virtually all postdoc fellowships funded from U.S. sources are subject to income tax because they pay for living expenses. However, often fellowships and traineeships are not subject to automatic tax withholding." The same rules would apply for a foreign Postdoc fellowship." In your case, you have completed all of your education and you are now gaining additional skills to be an effective researcher in your field of study.

Re: How to report a foreign Postdoc fellowship?

_Maria_ — Wed, 12 May 2021 23:06:06 GMT

DaveF1006, thanks a lot for reply! Do I understand correctly the link you provided, that I still need to report the fellowship and pay the tax? what I find weird is that the German source of my fellowship considers it tax free (see above) but in the US I need to pay 30% of it on taxes anyway

Re: How to report a foreign Postdoc fellowship?

DaveF1006 — Thu, 13 May 2021 00:24:32 GMT

I know it seems harsh. Just keep in mind the tax code can vary from one country to another. Meanwhile, congratulations in receiving your doctorate and good luck in your future endeavors.

Re: How to report a foreign Postdoc fellowship?

pk — Thu, 13 May 2021 23:21:53 GMT

@_Maria_ , I went through the above interactions including those of the year before and I am not sure where we are this year ----- what I get is that you a Russian citizen( yes? ), with Residency in the USA ( Green Card ? ) have had Post Doc scholarship from Germany and wanting to know whether this stipend/grant amount is taxable in the USA and how to report this. I saw @DaveF1006 's answer on this topic. Could you please reiterate your situation ( immigration status, citizenship, marital status, source of stipend, other earnings, employment/training/research -- school or private, etc. etc. ) and any changes from 2019, -please ?

Re: How to report a foreign Postdoc fellowship?

_Maria_ — Fri, 14 May 2021 00:51:18 GMT

everything is the same as was last year: Russian citizenship, Green card and residence in the US, German postdoc fellowship from a non-university research organization, no other income, filing taxes jointly with my husband, who has a W-2.

The fellowship is tax free in Germany because a) it does not exceed an amount necessary to fulfil the research task or/and to cover living expenses and training needs b) the recipient is not obliged to perform a specific employee activity in connection with the grant.

Re: How to report a foreign Postdoc fellowship?

pk — Fri, 14 May 2021 04:04:59 GMT

@_Maria_ , then the treatment should be the same --- the Publication 970 referred to by @DaveF1006 is a good source for separating out taxable / reportable income from that not required to be reported. I am assuming here that the fellowship grant comes to you directly and not through the institution that you are affiliated with -- so keep all documents regarding this , just in case IRS wants to see.

Is there more I can do for you ?

stay safe

Re: How to report a foreign Postdoc fellowship?

_Maria_ — Fri, 14 May 2021 13:37:15 GMT

thank you for the reply,

I don't quite understand the comment that the grant is paid directly to me. I receive it through a German research institute, which I am affiliated with. They do not provide any tax forms as the grant is tax free, I have only pay checks.