You will have to file an amendment for those two years, file tax returns as a resident, and pay back the taxes on income that was exempt under the treaty.
Yes, if the two-year period beginning from the date of his arrival is exceeded, the exemption will be lost retroactively.
Since you are no longer eligible for exemption from the tax you should not put in a negative number after adding 1042-s numbers.
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How to file an amendment
