Is UK scholarship taxable if resident in US?

[SW1 0]

Hi, I’m now resident in the US but finishing a doctorate degree in the UK, with scholarship until this autumn. Just wondering if I will need to pay tax in the US on my UK scholarship income. It’s tax free in the UK. But now I am spending it on rent and food in America for these final few months.

If anyone knows about this, please let me know. Thanks.

[broe 4]

Hi, I'm pretty sure you will have to pay US taxes as it was not earnt in the US. You pay taxes on money you earn not what you spend. Im sure someone will come along with a greater knowledge than me on the subject, but personally I'd say you don't.

[aussie_jason 195]

If you are a resident then the answer is no - http://www.irs.gov/Individuals/International-Taxpayers/Withholding-Federal-Income-Tax-on-Scholarships,-Fellowships,-and-Grants-Paid-to-Aliens

[SW1 0]

Thanks Broe.

Thanks Jason, I bookmarked that webpage and will read tonight when I get home. Looks a bit daunting (I'm losing my concentration for all this right now, having just survived the whole marriage visa / green card process), but hopefully I can just be reassured by your one-word answer to my question, "no".

Cheers!

[SW1 0]

If you are a resident then the answer is no - http://www.irs.gov/Individuals/International-Taxpayers/Withholding-Federal-Income-Tax-on-Scholarships,-Fellowships,-and-Grants-Paid-to-Aliens

Hi,

I took a closer look at the URL that Jason posted on here. And now I’m so confused!

The first bullet point says:

• “All amounts paid to U.S. CITIZENS and RESIDENT ALIENS in the form of scholarships, fellowships, grants, and financial aid are not required to be reported to the IRS by the payors.”

But further down, the bullet point that begins with “Students” totally confuses things:

• “…those portions of a scholarship, fellowship, or grant used to pay tuition, fees, books, supplies, or equipment are classified as a "Qualified Scholarship" and are not includible in the gross income (…) Any portion of the scholarship, fellowship, or grant that does not correlate to the five items mentioned above is includible in the gross income of the recipient, which means that it is subject to withholding.”

Withholding means eligible for taxation, right? Please can anyone clarify this total contradiction? The part of my scholarship that gets paid into my bank in the UK is used for my living expenses plus books, various costs, etc. The part that is not paid into my account is paid directly to the university for fees.

This has implications for what I pay in tax next year – but more urgently it has implications for working out my “household income”, which I need to know almost immediately to sign up for Obamacare.

Thank you.