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casiegel
Level 2

Foreign Allowance

Hi, I’m just starting a Trainee program with an European Union agency. The stipend they give me is considered an ‘allowance’ in the European country I live in and therefore isn’t taxable. Do I still have to report it on my US taxes?

3 Replies
tagteam
Level 15

Foreign Allowance

Probably (you are taxed on your worldwide income, generally). I will page @pk, who is very good at this.

pk
Level 13
Level 13

Foreign Allowance

@casiegel , as I understand from Euro Commission site , the stipend  is really to defray the cost of living  in the country.  Thus  for a US citizen/ Green Card holder, this income would be looked upon as a stipend  paid to you and is income that is taxable.   However, because you are having a foreign tax home  ( if you are staying abroad for more than 330 days total in a continuous 12 month test period, then this income would be eligible for  foreign earned income exclusion.   From Euro-Union site it appears the session starts in October and so you will have to be abroad  till atleast  Oct of 2023 to be able to file a 12 month test period to establish foreign tax home.

Does this help ?   If you need more , then please provide your immigration status  ( US citizen/ Green Card  or ? ), how long is your trainee period expected to be , which country  ( Belgium or ? ) etc.

 

pk

casiegel
Level 2

Foreign Allowance

Ok, thank you! I have already been abroad for a few years, so I've been taking the FEI exclusion on all my self-employed income since I've been here. This is my first time having an actual contract and I wasn't sure if it should be included on my taxes or excluded all together given the way my country of residence views it. But I will put it and take the exclusion for it. Thanks!!

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