Prof wrote:

- quote -

<Big snip by Moderator
As Y is Spain and the treaty with Spain does not include an
article for Teachers & Professors (you don't fall under the
Student Article) your income is not exempt. Also see IRS
Pub 901 that lists those countries that provide an exemption
for professors and researchers. Spain is not listed.

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Thanks all for the responses so far. Some more details:
1) I did claim foreign income exclusion in the federal
returns.
2) the treaty between the US and X, and between X and Y
(Y = Spain) is the "model" treaty (my case falls unders
Article 20 "Teachers and Researchers")
3) the treaty between US and Spain is slightly different, and
I paste below the relevant articles 4 and 22. I also
paste the relevant two articles of the treaty between X
and Spain.

Given all this, some of my specific questions/concerns are:

a) It seems to me that according to article 4, paragraph 1
of the US-Spain I should be considered resident of both
states, but that according to paragraph 2, since I'm not
currently living in the US and my salary is from Y, my
"center of vital interests" is Y. However perhaps I can
claim to be in paragraph 2(d), since I do have economic
relations in both states and an address in both.

b) in the US-Spain treaty there is no provision for
"Teachers and Professors". Article 22 is only about
"Students and Trainees" so I don't know if it applies to my
case. Assuming it does, under paragraph 1.a.(iii), then it
seems to me that independently of my current status, I can
claim that before coming here I was a US resident, and so
the provisions of the article do apply to my case.

What do you think?
Thanks again.

--------------
ARTICLE 4
Residence
1. For the purposes of this Convention, the term "resident
of a Contracting State" means any person who, under the laws
of that State, is liable to tax therein by reason of his
domicile, residence, place of management, place of
incorporation, or any other criterion of similar nature,
provided, however, that this term does not include any
person who is liable to tax in that State in respect only of
income from sources in that State.
2. Where by reason of the provisions of paragraph 1, an
individual is a resident of both Contracting States, then
his status shall be determined as follows:
(a) he shall be deemed to be a resident of the State in
which he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be
deemed to be a resident of the State with which his personal
and economic relations are closer (center of vital
interests);
(b) if the State in which he has his center of vital
interests cannot be determined, or if he does not have a
permanent home available to him in either State, he shall be
deemed to be a resident of the State in which he has an
habitual abode;
(c) if he has an habitual abode in both States or in neither
of them, he shall be deemed to be a resident of the State of
which he is a national;
(d) if he is a national of both States or of neither of
them, the competent authorities of the Contracting States
shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1, a
person other than an individual is a resident of both
Contracting States, the competent authorities of the
Contracting States shall endeavor to settle the question by
mutual agreement and determine the mode of application of
the Convention to such person. If the competent authorities
are unable to make such a determination, the person shall
not be treated as a resident of either Contracting State
except for the purposes of payments of such person covered
by paragraphs 1 through 4 or Article 10 (Dividends), Article
11 (Interest), and Article 12 (Royalties).

ARTICLE 22
Students and Trainees
1.
(a) An individual who is a resident of a Contracting State
at the beginning of his visit to the other Contracting State
and who is temporarily present in that other Contracting
State for Page 18 the primary purpose of:
(i) studying at a university or other accredited educational
institution in that other Contracting State, or
(ii) securing training required to qualify him to practice a
profession or professional specialty, or
(iii) studying or doing research as a recipient of a grant,
allowance, or award from a governmental, religious,
charitable, scientific, literary, or educational
organization, shall be exempt from tax by that other
Contracting State with respect to the amounts described in
subparagraph (b) of this paragraph for a period not
exceeding five years from the date of his arrival in that
other Contracting State.
(b) The amounts referred to in subparagraph (a) of this
paragraph are:
(i) payments from abroad, other than compensation for
personal services, for the purpose of his maintenance,
education, study, research, or training;
(ii) the grant, allowance, or award; and
(iii) income from personal services performed in that other
Contracting State in an aggregate amount not in excess of
5,000 United States dollars or its equivalent in Spanish
pesetas for any taxable year.
2. An individual who is a resident of a Contracting State at
the beginning of his visit to the other Contracting State
and who is temporarily present in that other Contracting
State as an employee of, or under contract with, a resident
of the first-mentioned Contracting State, for the primary
purpose of:
(a) acquiring technical, professional, or business
experience from a person other than that resident of the
first-mentioned Contracting State, or
(b) studying at a university or other accredited educational
institution in that other Contracting State, shall be exempt
from tax by that other Contracting State for a period of 12
consecutive months with respect to his income from personal
services in an aggregate amount not in excess of 8,000
United States dollars or its equivalent in Spanish pesetas.
3. This article shall not apply to income from research if
such research is undertaken not in the public interest but
primarily for the private benefit of a specific person or
persons.

---------

Moderator:
There is no greater tax scam than being an Artical 20
academic. I spent a few years trying to pull it off. It's
hard work to make the connections. But you pay no taxes
on your income!

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Prof wrote:

- quote -

As you haven't told us the name of Country Y, what does the
tax treaty between Y & the US say is the definition of a
resident and what does it say in the Article that provides
the exemption?

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Prof wrote:

- quote -

As a U.S. permanent resident you are subject to U.S. tax on
your worldwide income. As a result, you are likely a U.S.
resident under the applicable tax treaties of country X and
country Y. Thus, you likely meet the requirements under the
U.S.-Country Y treaty.

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"Prof" <papocchio9[at]yahoo.com> wrote:

- quote -

Without knowing which countries you are talking about, we
cannot look at the specific treaties. However, this
provision seems to be a common feature of most, if not all,
tax treaties, it is possible to make some generalizations.

It the provisions are like the model, you would not have to
pay tax to wither country X for the time you spent there.
You would have t compy with that country's laws and
regulations to claim the exemption, however. Nor would you
have to pay tax for up to 2 years in country Y. Again,
complying with the appropriate laws and rules.

The standard treaty provisions do NOT exempt you from any US
tax. You might qualfy for the foreign earned income
exclusion, however. It would be necessary for you to
qualify for this exclusion on the physical presence rules,
as the treaty provision prevents you from meeting the bona
fide resident requirements.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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I'm a US permanent resident but I've been living and working
in country X for 1.5 years and then in country Y for 1 year
(neither of which are my countries of nationality).

Both X and Y have tax treaties with the US under which
researchers and professors are exempted from paying income
tax (in X and Y) for the first two years. I'm a researcher:
can I claim the exemption in Y, even if I've lived in X
before coming to Y ? I've been filing US tax returns in the
last 3 years.

Thanks.

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