The following information and resources are for employees working outside the US. If you are a U.S. citizens or resident aliens (includes Lawful Permanent Residents) working in the US, visit the foreign nationals working in the US page on the payroll website to review the applicable information and resources.
U.S. Citizens and Resident Aliens
U.S. citizens and resident aliens (includes Lawful Permanent Residents) are taxed on their worldwide income. Individuals living and working outside the US may be able to exclude all or part of their foreign income and housing or deduct a foreign housing amount.
- Fellowship Information
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Fellowship payments are not reported on a Form W-2. However, unless you are a candidate for a degree and use the fellowship to pay for qualified educational expenses, the fellowship is considered taxable income to you. IRS publication 970 provides details on the taxability of fellowships.
If you receive multiple different payment types and/or transfer to a different position throughout the calendar year, please review this additional taxation information.
Individuals living and working outside the US may be able to exclude all or part of their foreign income and housing or deduct a foreign housing amount.
To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:
- A US citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
- A US resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
- A US citizen or a US resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.
US Citizens may exclude their foreign income from US taxation up to an annual dollar limit ($126,500 for 2024). This exclusion is applied by presenting their employer with a completed Form 673 Statement for Claiming Exemption From Withholding on Foreign Earned Income Eligible for the Exclusion(s) Provided by Section 911.
US citizens may update their Form W-4 if they expect to take a credit or deduction on their annual US tax return for foreign taxes paid.
Individuals who receive compensation for working abroad, while maintaining tax residency status in their home state, are subject to the income tax laws of that state. Check with your individual state for specific residency requirements. For information on determining your Pennsylvania residency status, see the PA Department of Revenue website.
Helpful Resources
Foreign Earned Income Exclusion
Foreign Housing Exclusion or Deduction
Foreign Tax Credit – Choosing To Take Credit or Deduction
Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
Determining Residency for PA Personal Income Tax Purposes
Foreign Persons
Foreign persons working outside the United States are not subject to US taxation of their wages or fellowship. Tax withholding and reporting must be adjusted to meet the specific circumstance.