Yes, you have to report the income as mentioned above but you also need to subtract the income using the same interaction. Your 1042-S would be wage income so report the $5,000 under other reportable income and then report it again as a negative income and a description identifying it as China treaty related.
Federal:
Here is an example of an Italian pension income and withdrawal as an example of input. Yours will be a little different since yours is wage income.
Unless you have something else, you should be exempt from filing the 8833 with the federal.
The payee must file a U.S. tax return and Form 8833 if claiming the following treaty benefits:
- A reduction or modification in the taxation of gain or loss from the disposition of a U.S. real property interest based on a treaty.
- A change to the source of an item of income or a deduction based on a treaty.
- A credit for a specific foreign tax for which foreign tax credit would not be allowed by the Internal Revenue Code.
The payee must also file Form 8833 if the payee receives payments or income items totaling more than $100,000 and determines the country of residence under a treaty and not under the rules for determining alien tax status.
State:
The treaty may not apply to your state. You will need to see if your state taxes the income or if they require you to file form 8833 for it to be exempt or if nothing additional is required. See How do I contact my state Department of Revenue?
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
