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[venerable_bede]

To my surprise, this topic doesn't seem to have been addressed anywhere in the fora before. So, here goes: Any former (or current) Fulbrighters out there have any information about the tax liability of a (Core Program) Fulbright grant? The IRS page about it is kind of hard to decode. It says:

Fulbright grants may be either of the following:

1. scholarship/fellowship income, or
2. compensation for personal services, which is usually considered wages.

For tax purposes, a scholarship/fellowship may be defined as an amount given to an individual which has the following characteristics:

• It is paid to aid the individual's pursuit of study, training, or research;
• It does not constitute compensation for personal services - past, present, or future; and
• more for the benefit of the grantee than the grantor.

Then it adds:

Thus, if the proceeds of a Fulbright grant were paid to enable the Fulbright grantee to perform study, training, or research abroad mostly for his/her own benefit, then such grant constitutes scholarship/fellowship income. On the other hand, if the proceeds of the Fulbright grant were paid as compensation for lecturing or teaching abroad, then the grant is compensation for personal services and is usually considered to be wages.

Okay, but what if one is doing research AND teaching AND essentially acting as a consultant at the college or uni? That is, what if teaching a course is only one part of the grant?

Obviously this is a question for my accountant, when all is said and done, but I would welcome the advice, experiences, etc., of others so I have a better idea what to expect when I do talk with my CPA.

[oldfullprof]

I don't trust CPAs or tax professionals.  Many act like IRS agents.  They're not aggressive enough.  One cost me at least $15,000 once, before I became more familiar with IRS.

[venerable_bede]

As a graduate student, I got audited and hounded by the IRS for not paying taxes on a foreign fellowship I received, despite being advised by an IRS agent in the US embassy in that country that I didn't have to pay taxes on it. (Sadly, I didn't get a signed affidavit from him, so I couldn't prove that he said what he did.) So I don't trust the IRS either, which makes all of this, as Jimmy Stewart says in It's a Wonderful Life, a very interesting situation.

[fleabite]

My gut feeling on this one would be to estimate the percentage of time you spend performing service for the institution and report that part of the total compensation as wages. You would then report the remaining portion as scholarship/fellowship income.

[venerable_bede]

Yeah, that makes sense. And provides a very tangible reason to minimize prep and grading time...

[ls410]

It shouldn't matter either way in terms of the actual tax burden.  I listed my Fulbright as a scholarship just as I did other fellowships in grad school.  Scholarships and wages both go in line 7 on your 1040.  For non-wage income you are supposed to indicate what it is on the dotted line (for a scholarship like a Fulbright you write something like SCH).  So it all gets added the same way.  My gut feeling would be to just list is all as a scholarship because that is likely what they will expect you to do.