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[glenden]

Hello, I am at a tenure track position in the United States and will be on JSPS fellowship about a year. During this time, I will be on leave from current institution.

The fellowship site says the payment won't be taxed there. But, will this be taxed upon my return to the U.S. since this is fellowship? Or can I claim it as travel expenditures? If you know any, please let me know or contact me personally.

Thank you for your help.

[watermarkup]

In a similar situation, I reported my fellowship as scholarship income on my U.S. tax return. Since scholarship income doesn't count as earned income, I lost out on a lot of tax credits.

But I'm the farthest thing from a tax lawyer, and even the IRS was hard pressed to give consistent advice when I needed it. The tax rules for scholarships are complex, and twice as complex for Americans overseas, and it was all but impossible to find applicable and reliable information. Consult a professional before you try anything too fancy.

[glenden]

Thank you, watermarkup. Sounds like complex process. I will ask professionals.

[ballard]

Fellowship income is absolutely taxable (and it's not "upon return"...you still have to file every year, though I believe folks who are overseas get an extension). I believe, contrary to what watermarkup says, it is generally considered "earned income" (unless awarded specifically for things like tuition, which shouldn't apply to you); but it's not "wage income", which hurts for things like IRA contributions, but saves you from FICA taxes.

If you're going to be out of the country for a continuous year (minus up to 30 days within the 12 month period; doesn't have to overlap with calendar/tax year), though, you may qualify for some of the foreign tax benefits, e.g., the Foreign Earned Income Exclusion and the Foreign Housing Exclusion. Given what academics are usually paid, I suspect that might wipe out your US tax obligation. See IRS publication 54.

But like watermarkup, I'm not a professional. Sadly, from experiences relayed by friends who worked overseas, your run-of-the-mill professional may not know how all this works, either.

[higherandhigher]

I'd recommend reading through these three publications:
http://www.irs.gov/publications/p970/index.html
http://www.irs.gov/publications/p54/index.html
http://www.irs.gov/publications/p514/index.html