Hi there!

I have a question regarding taxation of fellowships. I am German citizen who came to the US in 2005 on a J-1 visa as a research scholar. Between 2005 and 2007 I was paid by a german fellowship and partly by my boss at the university for the time that was not covered by the fellowship. I applied now for a second postdoctoral fellowship from an US source that is a non-profit organization. Starting from Jan 2008 I am paid now by this fellowship.
The question is now do I have to pay income taxes? A friend told me that according to the German-US tax treaty article 20(3) Germans that were residents of Germany before entering the US for the purpose of working there as a research scholar are exempt from income taxes. Is this true and what should I do? Paying estimated taxes and hoping to get them back next year when I claim this benefit? Is this article still valid when I am a resident alien (which I am in 2008)?

Thank you very much for your help!!

The TOTAL exemption from taxes is normally only good for TWO years max.

Did you pay taxes from 2005 and 2006 on your first J-1 visa?