F1 Resident alien with 1042-s with 0 tax rate

[elsielva]

Hi I am a F1 student who stayed in U.S. for more than 5 years this year, so I have to file as a resident alien. I am currently doing a fellowship at my University, I only get a 1042-S from school, and my tax rate is 0.(income code 16, tax rate 00, exemption code 04). University didn't withhold any tax for me.

Lest say I made $8,000 from school with a 0% tax rate.

I enter my 1042-S for wages under other miscellaneous income for $8,000, and I also enter my treaty exemption under as other miscellaneous income as a negative number.(-5000). Now my total income is $3000. I don't know if I can just file this online or do I need to complete the 8833 like this post said.or other forms and mail them in paper. Thanks!

[KurtL1]

You are correct you will need to mail in your return.

You would enter your foreign wages by the following:

1. Enter foreign wages in the Search Magnifying Glass in the upper right hand corner of the screen
2. Select foreign wages 
3. Answer the questions on the screens

Because of the U.S. China Treaty some of your income is not taxable and as you indicated, you would enter the amount as a negative amount on line 21 with the description "Form 8833".

You would then Complete Form 8833 and you would be required to mail in your return with the Form 8833 attached,

[elsielva]

Hi, I dont have foreign wage so I guess I dont need that. When I file for federal and state return, do I need to attach 1042-s as long as 8833 ?

Also I saw some post saying since my 1042-S has 0 tax rate meaning this scholarship is not taxable. Do I need to revise the negative amount to -(5000+1042S amount ie 8000）= -13000 since by article 20(b) of the USA-China tax treaty scholarship is not included in the 5000 treaty.

[KurtL1]

To answer you questions:

1. Unless the Form 1040-S is showing  U.S. Income tax withheld you do not need to mail in the form with your return.
2. If the 1042-S code in Box 1 is 16 the amount on the form is classified as a Scholarship or Grant. If the tax rate entered into box 3b is “00.00”, the exemption code “04” is used to indicate “Exempt under tax treaty”. Exempt Code “00” may be used to indicate that a tax rate greater than zero has been applied.

If the income codes are 17,19, 20 the amount is for wages. If the income code is 23 the amount is Other income.

• 

What income code in in Box 1 will determine how to Treaty adjustment/

[elsielva]

Yes my income code on 1042-S is 16, 3a is 04, 3b is tax rate 00.00 

Right now, I entered 1042-S related to your scholarship for $8,000, and I also enter my treaty exemption under as other miscellaneous income as a negative number.-(5000+8000). 

  For 8833, I am claiming a TOTAL EXCLUSION CLAIMED:  $13000

Am i doing it right? Thanks

[KurtL1]

The articles in the U.S. China Treaty are 19, 20, and 21.

Article 19 states that if you are a Teachers, Professors and Researchers your income is not taxable for a period of three years. Article 20 states that if you received a Scholarship or Grant, the first $5,000 is not taxable. Article 21 states that Other Income may be taxable in both states.

On your Scholarship or Grant income (Code 16) only the first $5,000 is exempt from taxation and would be listed as a negative amount on Line 21.

In your last question, if the $8,000 is other income it is taxable. If it is wages from being a Teacher, Professor, or Researcher. it would be exempt from taxation in the U.S. and would be listed as a negative amount on Line 21.

I cannot say if the $13,000 is the correct amount without knowing under what occupation the $8,000 was earned. The $5,000 exemption is correct to be listed on Form 8333 and shown as a negative amount on Line 21.

[elsielva]

Hi Kurt,

I started this fellowship in my university on Nov 2019, that's the only income($8,000) I had in 2019. I was a full time in graduate school until June 2019. And the University asked me to fill a form which asked me to cite the U.S. china treaty 20(b), so I guess this fellowship money should be count as exempted from tax. 

I am thinking if I should put that money under Deductions and Credit scholarship like this post. And then do the -13000 on both 1040 and 8833. Let me know if you think it is correct. I am currently waiting the 1098-T form from my school to do next step. Thanks.

[KurtL1 · Accepted solution]

Thank you for the additional information.

Article 20(b) - A student, business apprentice or trainee who is, or was immediately before visiting a Contracting State, a resident of the other Contracting State and who is present in the first- mentioned Contracting State solely for the purpose of his education, training or obtaining special technical experience shall be exempt from tax in that Contracting State with respect to:

(a) payments received from abroad for the purpose of his maintenance, education, study, research or training;

(b) grants or awards from a government, scientific, educational or other tax-exempt organization.

The $8,000 is exempt from taxation and should be entered on LIne 21 as a negative number.