[KiwiLiz]

If I am given an allowance of $300 per day for 42 days ( $12,600) primarily to meet accommodation and other relevant expenses in the US whilst acting as a "Scholar in residence" for 6 weeks how much tax am I likely to be liable for ? When and how do I register? Can I claim for accommodation, meals, local travel etc. This allowance is extra to receiving a salary in my home country.

[rsain2004]

Try searching "IRS.gov". It's free, yet most citizens don't trust them. The fact remains: In Tax Court one is "Guilty" until proven "Innocent".

[MukatA]

Need more information to answer your question. When did you enter the U.S. and for how many days you are in the U.S. Are you a research scholar? What is your citizenship? How is the employer going to report the payment to you? (on W2, 1099-misc... ).

Normally, for most of the countries (depneds upon tax treaty) research scholar on J1 is exempt from income tax for two years.

[KiwiLiz]

Mukata - thank you for your reply
I am NZ resident, letter of invitation said I would be given a stipend of 42 days at $300 per day - so overall $12,600US and woul dbe going to a research institution on a J1 short term scholar visa - woul dbe coming in September and October 2008
If I am still being paid salary at home - my question is am I liable to US tax on this money - which was primarily for expenses for accommodation, food and minor internal travel in the US.
Am I liable for US taxes - or am I on the tax treaty - does this mean I am not liable for US taxes?

Or would I be better to go with the Visa Waiver program and only claim for expenses.

[MukatA]

There is nothing about Researchers in the U.S. NZ tax treaty. That is you are not exempt from income tax for two years.
However, if your stay is less than 183 days, and you are not an employee, then you income is not taxable.

Read Page 44 of Publication 901: Tax Treaties at Internal Revenue Service

[AtlantaTaxExpert]

Agreed.

The general rule is that income earned while in the U.S. for LESS than 183 days is NOT ubject to taxation unless the income is salary from a U.S. source.

However, even if the stipend was taxable, you could claim your personal exemption of $3,500 plus your actual daily living expenses (food, lodging, transportation, incidentals) as an itemized deduction, which would effectively negate any taxes due.

[KiwiLiz]

Thank you both - makes much more sense now and I have chcked the relevant documents as suggested.

[AtlantaTaxExpert]

Glad to help!