Implications of tax bill for students abroad

[mintless]

So, as you all know the right wants to destroy higher ed for all but the rich. This business about taxing tuition waiver is terrifying, but I have a question about the viability of a workaround.

What would happen if I were to enroll in a Canadian university, as an American citizen, where I received a tuition waiver? In my understanding, there is a tax treaty that means, according to Turbotax: "Canada and the U.S. have an agreement that exempts a U.S. citizen from being taxed by the U.S. on income earned and taxed in Canada."

A tuition waiver, in my understanding, is not taxed in Canada. The phrasing here says that the U.S. will not tax on "income earned and taxed in Canada." It seems that a tuition waiver would be earned in Canada, but not taxed in Canada. If then U.S. began treating tuition waivers as taxable income, would they then tax me on a Canadian tuition waiver because the Canadian government did not do so?

It's all so confusing, but I hope my language has been clear enough to communicate the question. Any insight at all would be greatly appreciated.

[TakeruK]

I've only experienced the tax treaty the other way around: as a Canadian living in the USA for school. My understanding with these tax treaties is that either 1) only income up to a certain amount is actually tax-free and 2) the Canada Revenue Agency and the IRS have measures in place to prevent double taxation of their taxpayers.

I would not rely on the "plain language" description of the tax treaty as presented by Turbotax because these are actually much more complex legal documents. When filing as a Canadian in the USA to the IRS, I just input all of my info into Turbotax and let their algorithm figure out what I qualify for.

If you have a copy of turbotax, the best free thing to do is to put in some example numbers and see what it says. The actual best thing to do would be to consult a tax expert but that might cost money.

Note: Canadian schools do not usually issue tuition waivers. Instead we almost always have to pay tuition out of whatever financial package we get. Sometimes they award us a scholarship that is the same value as tuition (but it doesn't count as a tuition waiver in the US tax sense because it's no different than a scholarship for any other reason) or they just compensate us with TA and RA assignments so that there is enough money to pay for tuition. In addition, you might be relieved to know that most Canadian school tuition is very low, even for foreign students.

As a Canadian in the USA, what I had to do was to file my US taxes first and then include a copy of my US taxes with my Canadian tax return to show Canada I've already paid income tax. Canada will then calculate how much tax I owe to the CRA and then give me credit for taxes already paid to the USA. If there was more tax owed to Canada than what I paid to the IRS, then I would still owe taxes to Canada. I imagine the reverse situation is something very similar. So as long as you have paid more taxes to Canada than you would owe to the USA, then you should be okay? But again, check with an expert if the precise numbers will make or change your decision on where to go!