lecturesonnothing Posted May 23, 2016 Posted May 23, 2016 Hi everyone, I have something of a niche question regarding the whole morass of bureaucratic confusion that constitutes the tax rules for international grad students: I'm wondering if anyone who's been in the same situation could let me know how things work. I'm from the UK and will be starting my PhD in the US in September of this year. As far as I can work out, I'll be a nonresident for tax purposes (at least for the first few years), so will pay federal and state income taxes on my stipend but will be exempt from Medicare and social security contributions. So far, so clear. However, this means that I'll still be a tax resident in the UK. In the UK, PhD stipends aren't taxable. However, if I was earning the same income from a job in the UK as I'll be getting for my PhD stipend, I'd pay quite a bit more tax than I will be paying in the US. Therefore, I might potentially be asked to pay the difference to the UK tax authorities. What I'd like to establish, then, is whether the UK tax authorities will tax me based on their own rules about what counts as taxable income, or whether they'll follow the rules of the country in which I'm earning the income. (Also, in case anyone thinks I'm getting my knickers in a twist about what might turn out to be a pretty small sum of money, I've had two different jobs between the start of this tax year and the date I move to the US: I'm currently giving away a pretty hefty chunk of my pay cheque in tax, but seeing as my earnings from April through to August will come below the tax threshold, I should be due a fairly sizeable rebate if HMRC don't treat my US stipend as taxable.)
TakeruK Posted May 23, 2016 Posted May 23, 2016 I hope someone from the UK can answer your question, but if it helps, Canada taxes my US stipend according to Canadian rules on what counts as taxable income (like the UK, Canada does not tax PhD stipends) so every year I file a nil income tax return (and get some rebates too, for being a low income taxpayer). In my opinion, I think that barring any tax treaty between another country and the US, the solution that makes the most sense is for each country to treat income according to their own laws, not following US laws. lecturesonnothing 1
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