# US Tax Help with DAAD Scholarship



## mdlm18 (9 mo ago)

Hi! Not sure if anyone here will be able to help me but I have been looking everywhere for answers and no one seems able to help me. I am in Germany on a DAAD research fellowship since October 2021, and I am now trying to do my US taxes and am incredibly confused. 
First, I have a one year residence permit in Germany per the rules of my fellowship - does this mean that I am technically no longer a resident of the state I lived in before arriving in Germany/receiving my residence permit? Aka, would I only be a part-year resident of that state? And now a resident of a foreign country?
Second, I know my scholarship is not taxable in Germany, but is it taxable in the US? Or is my stipend considered foreign income? How do I report this scholarship, since it technically comes from a foreign organization?
If anyone could help me I would be eternally grateful!


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## Harry Moles (11 mo ago)

Foreign scholarships and fellowships can be problematic. If you are doing "work" (i.e. research in a lab) rather than merely studying, you can potentially call your DAAD funding "earned income" and use the FEIE to reduce your taxable income to zero. If not, then technically any amount beyond tuition would count as taxable income. This is completely perverse, of course. You'd be paying US tax on a grant that is not taxed by the country that provides it - essentially taking money from German taxpayers and giving Uncle Sam a cut.

My advice is as follows. The IRS only knows what you tell it, so make an executive decision: either the fellowship is earned income wiped out by the FEIE, or the fellowship is not considered taxable income and thus not reported. If this means not filing a return at all because your US-source income falls below the minimum filing threshold, even better.

I can't really speak to state residence rules, but making the income disappear might solve that problem.


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## Bevdeforges (Nov 16, 2007)

It depends a bit on which US state you came from - but for some states, the year you move overseas you may have to file a part-year state tax return (i.e. January 1 to the date you moved out of the state/US). Or just file the 2021 state return, but only include the income from the state up until your move date.


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## mdlm18 (9 mo ago)

Thank you both for your help!


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