"Vernon Chatman" <vernonchatmaniii[at]sbcglobal.net> wrote:

- quote -

I'm trying to reconcile the following from Pub 520, your
comments please:

A Fulbright grant is generally treated as any other
scholarship or fellowship in figuring how much of the grant
is tax free. If you receive a Fulbright grant for lecturing
or teaching, it is payment for services and is taxable.

If your grant for lecturing or teaching abroad is wholly
taxable, you can deduct your ordinary and necessary business
expenses. Ordinary and necessary business expenses include
your away-from-home expenses (travel, meals, and lodging) if
you are temporarily away from your tax home in the United
States. Generally, you are considered to be temporarily away
from your U.S. tax home if you expect your stay abroad to
last, and it does last, for one year or less. For details
about these expenses, including whether your stay is
temporary, see Publication 463, Travel, Entertainment, Gift,
and Car Expenses.

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"Vernon Chatman" <vernonchatmaniii[at]sbcglobal.net> wrote:

- quote -

The answer to this is it really does depend.
To which country did he go?
When did he arrive there and when did he return?

If you read the tax treaty, you MAY find that the taxes for
teachers are payable to the teacher's country of origin.
This makes it foreign sourced income. So most knowledge
teachers leave in January and stay there the entire year.
The limit for this windfall is exactly two years.

It's one more reason that tax planning is a highly
profitable endeavor.

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Client taught while abroad which was a necessary condition
for receiving the Fulbright Schlorship funds. Client is US
citizen. Income not reported on W2 or 1099-MISC.

My take:
Grant for services (i.e., teaching) abroad is wholly
taxable, however, can deduct ordinary and necessary business
expenses. Will report the income and expenses on Schedule C
as client was not an employee.

Do you concur or disagree?

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