[kellytaxquest]

Hi, I'm a US Citizen living and studying abroad in the UK for graduate school. I receive a stipend for the PhD program here in the UK but am except from UK taxes due to my student classification. Am I given the same exception from US taxes if my 'income' is a stipend given by the UK government? If not, how do I file without a W2 or any government documentation?

[wnhough]

QUOTE," Am I given the same exception from US taxes if my 'income' is a stipend given by the UK government?"--- In general, a scholarship or fellowship award made on the basis of need or academic achievement is not TAXABLE if awarded to encourage or allow the recipient, you, to further your educational development. The award is taxable as compensation if given for past or present services or in expectation of
Future employment.; for instance, stipend money used for school expenses is tax-exempt, but the stipend money used for your living expenses, particulalry both roo and board or support for living, I guess, or etc. is taxable. Up to a limit, that portion of the stipend spent on required books, fees, tuition, and supplies is non-taxable (not including room, board, and transportation); the remainder is taxable.

[kellytaxquest]

How would I report this portion of the stipend to the US IRS? Through a 1040-ES (estimated income)? Is there some other form or paperwork that is more appropriate?

I, too, have read the same in the IRS but was unsure if there is a more detailed or specific answer. Thanks!

[wnhough]

QUOTE,"How would I report this portion of the stipend to the US IRS?"---You, as an academic degree candidate, need to report the amount of your foreign stipend used for your living expenses, particulalry both room and board or support for living, on LINE #7, Wages, Salaries, Tips, etc. of IRS Form 1040, 1040A or on line #1 of 1040EZ( if applicable, I mean if you do not claim your itemized deductions.).

"Through a 1040-ES (estimated income)? "---If you need to file your 1040-ES for quarterly estimated tax payments, then you need to report the taxable portion of your stipend on line #1( as the amount is already reported in your gross income, it is lso included in your AGI).


PleasekKeep track of related expenses. Your school will send you a completed Form 1098T( in the case of US, but I do not know what form it is in UK), which reports the amount of tuition you paid. However, it won't include any other expenses. Keep records of expenses such as books, supplies, activity fees and equipment, which are included as educational tax-deductible expenses for you.

[kellytaxquest]

QUOTE: "You, as an academic degree candidate, need to report the amount of your foreign stipend used for your living expenses, particulalry both room and board or support for living, on LINE #7, Wages, Salaries, Tips, etc., of IRS Form 1040, 1040A or on line #1 of 1040EZ." "Your school will send you a completed Form 1098T( in the case of US, but I do not know what form it is in UK)".

I thought a W4 was needed to file a 1040, is this not the case? The UK does not provide an equivalent to the Form 1098T for foreign students. I have only my school-issued monthly checks to verify stipend amounts (of which tuition was deduced by the school before drafting the check to me). When I spoke to the foreign student office they stated that I was exempt from income taxes both the UK and US due to a student-exemption tax treaty though I find this difficult to believe. Perhaps my take home is below the taxable level for US income? And the funds are in UK pounds, not US dollars.

[kellytaxquest]

Sorry, meant W2... I thought a W2 was needed for filing a 1040

[wnhough]

QUOTE," I thought a W4 was needed to file a 1040, is this not the case?"---No. The chief purpose of your W-4 Form is to provide your employer with your personal info. As an employee;in the US, an employer is always responsible for withholding social security, medicare and income tax, FICA Taxes I mean, from his employee checks. The goal is to accurately estimate the employee's total liability and divide it evenly over each paycheck. This is done based on information provided by the employee on Internal Revenue Service Form W-4. At the end of the year, the employee either owes money( if the amount of withheld estimated tax payments(quarterly basis) is smaller than the tax liability on your 1040 return)) or receive a refund(if the amount of withheld estimated tax payments is larger than the tax liability on your 1040) depending on the accuracy of the withholding estimates. The numer of withholding allowances claimed on your W-4 by you may DIFFER from the number of exemptions claimed on your Federal tax return.


"When I spoke to the foreign student office they stated that I was exempt from income taxes both the UK and US due to a student-exemption tax treaty though I find this difficult to believe. "---No. You are NOT EXEMPT in both US and UK. Under the tax treaty between US and UK, if you pay taxes to the taxing authority in UK, then you calim tax credit on the tax that you paid to the UK taxing authority on your tax in US. The purpose of the tax treaty between US and UK IS to avoid double taxation for both US and UK taxpayers.You are NEVER exempt from taxation in US and UK.
Please visit the website for further info. On your full time student payment taxation: http://www.unclefed.com/ForTaxProfs/Treaties/uk.pdf


" Perhaps my take home is below the taxable level for US income?'--- I do not know if your gross income level is below taxable income level for US taxation.

" And the funds are in UK pounds, not US dollars'---You need to convert your UK pound value into $ US value by applying the weighted average currecy exchange value to figure out your income converted into $ US.