DaveF1006
Expert Alumni

Get your taxes done using TurboTax

The 1042-S should be reported but exempted since it is under the $5000 income exemption as a result of the US-China tax treaty.  Here is how to report to comply with IRS requirements.

  1. Open your return in TurboTax 
  2. Click on Wages & Income 
  3. Scroll down to All Income 
  4. Scroll down to Less Common Income 
  5. Scroll down to Miscellaneous Income, 1099-A, 1099-C 
  6. Click start 
  7. Scroll down to Other reportable income 
  8. Answer yes 
  9. Enter description and amount 
  10. For the first description type in 1042 S income from China and the amount.
  11. Now select the button that says add miscellaneous income item
  12. Here type in exempt income, then  the name of the treaty country, and the treaty article that provides the exemption. Then enter the amount listed in step 10 as a negative number.
  13. As a result, line 8Z in Schedule 1 will show the income but in the second line underneath that, it will the amount excluded plus "Exempt income,” the name of the treaty country, and the treaty article that provides the exemption". You will need to supply the information such as the treaty article and the name of the country..
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"