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I was talking with a friend of mine when at some point we started talking about how she hadn't paid taxes for an internship she had done at a University overseas.

Since she had been paid using a scholarship and she was under the impression that the earnings were tax exempt.

I was just wondering whether or not this is actually the case?

After talking about it, it seems that even if she did owe taxes on what she had earned, the amount she spent on tuition for schooling in Canada (the work experience course during which she was doing the internship) was more than what she potentially owed in taxes.

Consequently is it the case that even if she needed to pay taxes such concerns are irrelevant since she wouldn't owe any taxes after her tuition had been factored in?

Additional Information: She is a Canadian citizen, studying at a university in Canada. She did the internship at a University in Europe for which she obtained a Visa. The total value of the scholarship, paid by the foreign University (including reimbursements for airfare and a monthly salary) was 3500 euros. She spent $900 CAD on tuition at the Canadian University that year.

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    Can you add more details, i.e. what was her residency status, how much was the Scholarship, who had provided this Scholarship. Is She US national doing Studies in Canada or Canadian National doing Studies in US? – Dheer Dec 23 '15 at 6:43
  • If she does owe back taxes, the solution in the US would be to file an amended return for that year. I presume Canada handles this similarly. There may be a penalty for late payment, but on numbers this small it's going to be pretty painless. – keshlam Dec 24 '15 at 9:18

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