[gnosls]

Actually, I am asking for my wife.

She is a German Citizen and a Green Card Holder living here in the US with me (a US citizen) and working on her research. She gets paid from a German Postdoctoral Research Fund. But makes no US-based income whatsoever.

Some have told us that she'd have to be visiting on a J-1 visa to avoid paying taxes and that that would only work for 2 years (then shed have to backpay)... but that if she has a green card she must pay full income tax on this postdoctoral research fund (which is tax free in germany, by the way).

Sorry I can't be more discriptive but this is not my specialty by far.

Does she have to report/pay taxes on these German funds here in the US?

[MukatA]

If postdoctoral research fund is income, it is taxable.
If it is scholarship, grant or gift, it may not be taxable.

If you are a degree candidate and if the financial aid (includes scholarship and fellowship) is for tuition fee, other fees, books, supplies and equipment, then it is not taxable. For a degree candidate aid for boarding and travel are taxable. Scholarship and fellowship grants, Your U.S. Tax Return: The U.S. Income Tax Topics 1

[gnosls]

Turns out it seems the consensus states: She does have to pay taxes but filing under "Alternate sources of income" as a non-taxfree scholarship. But that because the work produces no tangible marketable product she does not have to pay the Self-employed aspect of this tax. And the tax is reducible by tracking research expenses.

[AtlantaTaxExpert]

Your assessment is correct. She would report the income (minus the research expenses) on Line #21 of your joint Form 1040.