How to report a foreign Postdoc fellowship?

Forum|Forum|5 years ago
July 10, 2020
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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.

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pk_

Level 15

@_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.

_Maria_Author

Level 2

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.

DaveF1006

Level 15

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

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.

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