1042-S

[idraumr]

I am a resident alien for tax purposes from India. I have a 1042-S with an income code 20; chapter 3; and the boxes 3a and 4a are 04 and 15 respectively. I thought this means that the income is "exempt under tax treaty", but I don't see why it would be under the India-US tax treaty. Should I report it as additional income in TurboTax and pay tax on it?

Secondly, this income is already included in the W2 form for state wages. If I add it as additional income for the federal return on TurboTax, it double-counts it for the state return. How do I fix this?

[DaveF1006]

To clarify, what state?

[idraumr]

New Jersey.

[DaveF1006]

To clarify, was the 1042S issued for wages earned from a US employer?

[idraumr]

Yes.

[DaveF1006]

To clarify, does the income reported on the 1042S reflect the same income that as on the W2? If so, just report all your income on the W2 because it sounds like you may have reported the 1042 S and W2 separately causing New jersey to count this income twice.

[idraumr]

No, it doesn't. The federal wages on the W2 are lower than the state wages by exactly the amount on the 1042S.

[DaveF1006]

To clarify further, is New Jersey the only state you reported income in?

[idraumr]

Yes.

[DaveF1006]

To clarify, on the W2, is the box listed in Box 16 double what is listed for Box 1?

[idraumr]

Not double, but it's about 20,000 higher, and the 1042S has that exact figure, yes.

[DaveF1006]

It depends. I believe $20,000 is the amount of a  deferred retirement plan that is treated as pre-taxed dollars for federal returns but not for NJ. This plan should be reported in Box 12 with a letter code.

Specific plans that New Jersey does not allow taxpayers to exclude contributions to include, but are not limited to, plans under I.R.C. § 403(b), I.R.C. § 457, 409A, I.R.C. § 414(h), SEP, Federal Thrift Savings Funds, or Individual Retirement Accounts. Employer contributions to these plans receive tax-deferred treatment. In addition, both employee and employer contributions to SIMPLE IRAs, SEP, and SARSEP plans are included in taxable wages (neither receive tax-deferred treatment).

NJ Division of Taxation

[idraumr]

There is nothing in box 12, and the amount is closer to $17,000.

[MarilynG1]

Sound like you need to report both the W-2 and the 1042-S to reflect your total income.

Here's how to report the 1042-S income:

1. Log into your account.
2. Select Wages and income>
3. Less Common income.
4. Miscellaneous Income, 1099-A, 1099>start.
5. Scroll to the bottom of the page to Other Reportable Income.
6. Other taxable income, answer yes.
7. Then give a brief description of the income and the amount listed.

Here's more info on Reporting 1042-S Income.

@idraumr