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Expat taxes, student scholarship

Forum|Forum|4 years ago
April 11, 2022
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I am a PhD student in South Africa. I am US citizen but have not lived there since I was a baby. In South Africa my scholarship for my PhD studies is non-taxable, but how do I find out if I have to file taxes in the US for this scholarship?

Best answer by DanielV01

In general, US citizens and resident aliens must file tax returns to the United States on their worldwide income, unless their income does not reach the filing threshold. In your case, even if your income does not reach the filing threshold, as long as you have a Social Security Number, you will want to file to receive the stimulus payment that was issued.

In general, scholarship "income" is not taxable nor reportable when used for qualified education expenses (typically tuition, applicable fees and required materials) towards an accredited college or university. Guidance as to whether or not the university you are attending being accredited can be found here. Scholarship above and beyond those necessary education expenses can be considered taxable in the United States.

However, since the United States treats such income as a type of wage income (although technically not earned income), there are two types of provisions that would likely make any "taxable" amounts not taxable. First of all, any reportable scholarship under $12,550 would be reduced to $0 for the standard tax deduction for a single filer. And if you have taxable scholarship income above $12,550, you still could qualify for the Foreign Income Exclusion because you have not spent 30 days in the last 365 days in the United States. But if you have over $12550 of taxable scholarship (the amount of scholarship spent on nonqualified expenses), then you have a filing requirement in the United States even if you can exempt the income. And, as mentioned above, if you have not received a stimulus check from last year, you will want to file your return to receive that payment.

DanielV01Answer

Employee

In general, US citizens and resident aliens must file tax returns to the United States on their worldwide income, unless their income does not reach the filing threshold. In your case, even if your income does not reach the filing threshold, as long as you have a Social Security Number, you will want to file to receive the stimulus payment that was issued.

In general, scholarship "income" is not taxable nor reportable when used for qualified education expenses (typically tuition, applicable fees and required materials) towards an accredited college or university. Guidance as to whether or not the university you are attending being accredited can be found here. Scholarship above and beyond those necessary education expenses can be considered taxable in the United States.

However, since the United States treats such income as a type of wage income (although technically not earned income), there are two types of provisions that would likely make any "taxable" amounts not taxable. First of all, any reportable scholarship under $12,550 would be reduced to $0 for the standard tax deduction for a single filer. And if you have taxable scholarship income above $12,550, you still could qualify for the Foreign Income Exclusion because you have not spent 30 days in the last 365 days in the United States. But if you have over $12550 of taxable scholarship (the amount of scholarship spent on nonqualified expenses), then you have a filing requirement in the United States even if you can exempt the income. And, as mentioned above, if you have not received a stimulus check from last year, you will want to file your return to receive that payment.

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R

Rm96Author

Thank you for your answer @DanielV01! In my case, my scholarship is more than $12550, but if I deduct the fees for tuition, it is less than this amount. Do I then understand correctly that I do not have to report?

DanielV01

Employee

Correct. "Taxable Scholarship" is what you receive above and beyond what is necessary to cover tuition, fees, and certain materials. As long as that amount does not reach the US filing threshold for 2021, it is not necessary to report that amount.

But, to file and receive the stimulus payment you must report some income. For those who are not required to file a US return, you may claim $1 of interest income. The IRS has accepted this. And if you have a US address you can use for the return, you will be able to e-file and then have the amount direct deposited into a US account. Otherwise, you will mail in your return to the appropriate address, and a check will be mailed to the address you provide on the tax return.

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