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Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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State University invites Dr. Boyko, a Russian citizen, to ...

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State University invites Dr. Boyko, a Russian citizen, to become a member of the faculty for a three year period to work on a large grant the university obtained from the NASA. Dr. Boyko accepts the invitation and enters the US on a J-1 visa. Based on the Russian treaty, Dr. Boyko thinks his income is exempt because it is from a grant. Determine whether Dr. Boyko is correct.

Please see for reference the IRS publication 901 -

According to US-Russia tax treaty - Income that residents of Russia receive for employment in the United States (dependent personal services) is exempt from U.S. income tax if the following three requirements are met.

  • The resident is in the United States for no more than 183 days during the calendar year.
  • The income is paid by, or on behalf of, an employer who is not a resident of the United States.
  • The income is not borne by a permanent establishment or a fixed base that the employer has in the United States.

As Dr. Boyko is on the J-1 visa - he is considered a non-resident of the US, but because the employer is a resident of US that exemption doesn't apply.

Pay of professors and teachers who are residents of Russia is not exempt from U.S. income tax.

However Scholarship or fellowship grant paid by any U.S. or foreign resident to the resident of Russia is not taxable income within 5 years. -- Treaty Article Citation -18 -- please see the table entry on the page 45.

Thus - Dr. Boyko is correct.

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