Sabbatical Alternatives

1. University of Missouri Faculty Development Leave Policies (sabbaticals): Due October
   
   *Faculty Development Project Awards (up to $3,500): Due October
   
   
2. Fulbright Scholar Program:  Due August 1, 2003
   • Brazil
     • All Disciplines (award #4493)   (3-5 months)
     • Joint Award in International Trade & Investment:  Argentina, Brazil, Uruguay (#4483)   (4-5 months)
   • Colombia
     • All Disciplines (award #4502)   (3-5 months)
   • Ecuador
     • All Disciplines (award #4506)  (3-5 months)
   • Canada
     • All Disciplines (award #4497)  (4-9 months)
   • Mexico
     • All Disciplines (award #4520)  (3-9 months)

1. Federal Income Tax Rules for Work Abroad (full year)
   
   

   Amazingly, the U.S. tax code understands the virtues of working abroad quite well, and offers a number of incentives to help you do just as we suggest. First of all, if you leave town, everything is deductible (within certain limits) as a business expense. The price you pay for enjoying this incentive is having to keep excellent records to substantiate every such expense and being able to demonstrate to the Internal Revenue Service, if audited, that the sabbatical was a legitimate professional activity, not education or a vacation. If you don't already, you'll almost certainly want to take advantage of professional tax advice. Not only does the tax code recognize the value of leaving the country, it strongly encourages that you do so for at least a year. How do we know that? Because up to $78,000 of foreign income (increasing to $80,000 in 2002) can be excluded from federal income tax if you stay away that long. This is called the "Foreign Income Exclusion." To qualify, a U.S. citizen or resident alien must be out of the United States for at least 330 full days over a period of 12 consecutive months. This helps make up for the fact that the cost of living in many foreign capitals may be higher than it is at home. A two-income couple could conceivably qualify for up to $156,000 of exclusion. "Unearned" income doesn't count, such as dividends, interest, alimony, pension payments, and most rental income. If you are away less than a year, ordinary and necessary business expenses are deductible. If you go away for more than a year and elect to use the Foreign Income Exclusion, your expenses are only deductible proportionate to the amount of income you earn above the $78,000 maximum exclusion. In addition to your sabbatical salary potentially being tax sheltered, the rules allow for a "Foreign Housing Deduction and Exclusion," which may be of additional benefit. Tax treaties between the United States and most foreign countries generally exempt from foreign tax the wages of American professors teaching and conducting research abroad. But even if you do work that is taxable in the foreign country, this can be a credit or a deduction on your U.S. tax form. http://chronicle.merit.edu/jobs/2001/03/2001032302c.htm

   It would be impossible to cover all the issues related to taxation of foreign travel, so get the rules at the I.R.S. Web site. The bible on this is I.R.S. Publication 54, "Tax Guide for U.S. Citizens and Resident Aliens Abroad." Being in residence in a foreign country is the key consideration for qualifying for the Foreign Income Exclusion. Unfortunately the U.S. possessions, such as Guam and the Virgin Islands, don't count. Use Form 2555 to determine whether your trip abroad qualifies as foreign residence. For more on rental issues, get U.S. Tax Publication 527, "Residential Rental Property."

   Other references that may be useful: 1998 Tax Guide for College Teachers, by Allen Bernstein (out of print). For a comprehensive review of sabbatical issues, Purdue University has an excellent Web site.