I received fellowship to study outside of the US. Which deductions apply? Which home address to use to file if living abroad? How do I to report health insurance?

[cbrowne2012]

I was strictly a student receiving fellowship income for study. Which deductions apply, if any? I was following guidelines for Fulbright student grants and saw guidelines changed in 2017.

Are there penalties for not setting up estimated tax payments? I did not do this prior to departure as I was unaware of it.

I had international health insurance through the program. I am unsure if it qualifies for tax purposes. How do I report this?

I was not abroad long enough to quality as an abroad residence. Which home address do I use when reporting, the one abroad or in the US?

Thank you!!

[PhyllisG · Accepted solution]

Fulbright grants have two types of taxation if you are a United States citizen. Either they are considered wages, or they are considered scholarship/fellowships.  

If your Fulbright grant is deemed wages, then you will report the entire gross amount on your tax return. However, you may be entitled to certain deductions, exclusions, and credits that will reduce your taxable income. 

If the amount paid is considered a scholarship/fellowship, then you will report the net amount after subtracting out the qualified educational expenses such as tuition, books, fees, supplies, equipment etc. You will need to provide an itemized statement that details the expenses that were deducted. 

Either way, both incomes are a taxable event; therefore, estimated taxes may have been required because income tax withholding is generally not applicable to Fulbright recipients who are overseas. You may or may not get an estimated tax penalty. It depends on your tax liability for the current year, and the amount of taxes owed and/or withheld in the prior year.

Your international medical insurance may qualify under the Affordable Care Act.  There are certain requirements that have to be met.  You can call HealthCare.gov at 1-800-318-2596 and ask for a ruling on your plan.

For further information regarding the taxation of Fulbright grants, please refer to the irs.gov website Fulbright Grants.

[PhyllisG]

I forgot to mentioned that you will use the address where you receive your mail, and/or where the Internal Revenue Service can contact you if necessary.