I received 1042-S with income code 15 and in 3a Exemption code 04 and in 4a Exemption code 15. Do I need to pay taxes on my pension?

[MarkoPende]

I left the U.S. in December 2024 and spent zero days in the U.S. in 2025. In 2025, I received payment from my former employer for my remaining paid time off (PTO). They also sent a W-2 to my address in Austria. In addition, I transferred my pension/retirement funds to Austria and received a 1042-S form.

According to my 1042-S form, my pension income should not be taxed; however, my pre-calculated tax shows that I owe $4,808.

Here are the key fields from my 1042-S form:

• Income Code: 15
• Exemption Code (Box 3a): 04
• Tax Rate: 0.00%
• Federal Tax Withheld: $0.00
• Country: Austria

What this means:

1. I am tax-exempt in the U.S.
   Exemption Code 04 indicates income exempt under a tax treaty. A 0% tax rate and $0 withheld confirm that my pension income was treated as tax-exempt in the U.S.
2. Income Code 15 = Pension / Annuity
   This confirms the income is retirement-related. Under the U.S.–Austria tax treaty, private pensions are generally taxed only in the country of residence (Austria).

Given this, I am wondering why my pension is suddenly being treated as taxable.

[AmyC]

My first concern is the 1040 filing with TurboTax. I would think you are probably a nonresident alien and should be filing 1040NR. See Sprintax to be sure you are filing the correct form.

If you should be filing the 1040, you need to subtract the nontaxable income.

1. Reverse the income by scrolling to the bottom section,  Less Common Income
2. Select Miscellaneous income, 1099-A, 1099-C, start
3. Select Other Reportable Income start/edit
4. Other taxable income - select the Add button
5. enter description - Treaty Exempt US-Austria
6. enter negative amount, put a minus sign in front of your income
7. done

[MarkoPende]

Hi Amy,

thank you very much for your response. I think you are correct and I should file the 1040NR.

Kind regards,

Marko