Filing as Resident with 1042S and claiming tax treaty US-Italy.

[yacauwi]

Hi Everyone,

TLDR: How does a resident alien report a 1042S (income code 16, Box-3a: 00, Box-4a: 16) in addition to a W2 on TurboTax Desktop and also claim tax treaty benefits? 

My current situation is the following: 

I began my appointment at University X in MA on J1 Research Scholar status. My appointment ran from January 2024 to October 2025. I was invited and paid through my professor’s grant. In November 2025, I moved to University Y in CA, still under J1 Research Scholar status and still paid through my new professor’s grant also for the research I am doing.

For tax year 2025 I received a 1042S from University X and a W2 from University Y.

I have added my W2 income on TurboTax desktop, but I cannot understand how to correctly report the 1042S: whether as a Wages & Income>Less Common Income>Miscellaneous Income>Other reportable income or as Deductions & Credits>Education>Expenses and Scholarships. My second question is: how to claim tax treaty benefits between US and Italy for both the income from the W2 and the 1042S?

Two additional details that might be important: 

- I entered the US at the end of December, 2023 under my visa, and that is why I am considered a resident alien for 2025 under the Substantial Presence Test.

- I believe that, based on my situation, I may be eligible to claim the benefits of the US–Italy tax treaty under Article 20 for tax year 2025, because my initial visit was expected not to exceed two years for the purpose of conducting research at a recognized educational institution, and because I was a resident of Italy immediately before coming to the US. Therefore, my first tax year was 2024 and my second is 2025. 

Thank you for any help, 

[DaveF1006]

Yes, you may exclude the income in accordance with Article 20 of the US/Italy Tax Treaty. Here are the steps.

1. Reporting the 1042-S Income

1. Go to Wages & Income.
2. Scroll to Less Common Income and select Miscellaneous Income, 1099-A, 1099-C.
3. Select Other reportable income.
4. Enter a description like "1042-S Fellowship Grant" and the amount from Box 2.

To claim the treaty benefits for both the 1042-S and the W-2 income (assuming the W-2 income also qualifies under the Research Scholar article), you must effectively "offset" the income you just reported.

Since TurboTax doesn't have a specific "Treaty" box for residents, the standard practice is to enter a negative adjustment:

In the same Other reportable income section where you entered your grant, add another item.

• Enter Description: "U.S.-Italy Tax Treaty, Article 20"Amount: Enter the total exempt amount as a negative number (e.g., -25,000). This is the total of the 1042S and W2 income.
• This should cancel out the 1042-S income and the portion of the W-2 income that is treaty-exempt.

[yacauwi]

Thank you a lot. 

Do I have to report the tax withheld from the 1042S somewhere on the software? 

For the W2 it is straightforward, but I would not know where to report it for the income from the 1042S. 

[DaveF1006]

To report in TurboTax.

1. Open your return in TurboTax and go to the Federal tab. 
2. Select Deductions & Credits.
3. Scroll down to the Estimates and Other Taxes Paid section.
4. Find Other Income Taxes and click Start/Revisit.
5. Look for the sub-section Other Income Taxes Paid in 2025 (or the current tax year).
6. Select Withholding not already entered on a W-2 or 1099.
7. Enter the amount from your 1042-S here.

[yacauwi]

Thank you @DaveF1006. 

Should the income from the 1042S be reported on 1040 line 8r or 8z of the Schedule 1? If I follow the procedure recommended, it appears as an additional line on 8z, but the instruction for filing 1040 recommends reporting Fellowships and Scholarships not reported on W2 on line 8r.

To recap, for federal taxes. I have to report as a positive sum the 1042S income either on line 8r or 8z on Schedule 1. Then I should report the negative sum of the W2 income and 1042S income on line 8z. This will bring my total on line 9 to a negative value since I have: income 1042 - (income 1042 + income W2). This negative income will be reported on line 8 of the 1040. Then taxes withheld on Form 1040 will be reported on line 25a for the income from the W2 and on line 25c for income from the 1042S.  All this will result on a total income of 0 on line 9 of the 1040.

When I file for federal taxes, do I have to add the Form 8833? In Publication 519 of this year, on page 68 under Exceptions point 2, it says that Scholarships and Fellowships are exempt from filing a 8833. If I file it anyway, is that going to be a problem? I am asking because people in my situation have filed it anyway.

Finally, I would like to ask for confirmation on State Taxes. For CA state taxes, I have to file forms: 540NR, California Schedule W2, and form CA (540NR). While for MA state taxes, I have to file forms: 1-NR/PY, Schedule Y, Schedule HC, and Schedule NTS-L-NRPY. 

I really appreciate the patience. I have been trying to figure this out on my own for the past two weeks, but it is a bit complicated. 

[CatinaT1]

Yes, you should file form 8833. While Publication 519 mentions an exception for scholarships, you are also claiming a treaty benefit for personal services (your W-2 wages from Univ Y). As a Resident Alien, you are technically overriding the "Saving Clause" of the treaty.

Filing Form 8833 is the "safe" way to disclose this. It prevents the IRS from wondering why a Resident Alien (who is usually taxed on worldwide income) has $0 taxable income.
There is no penalty for filing it "just in case," but there is a $1,000 penalty for failing to file a required treaty disclosure.

California does not recognize federal tax treaties. Even if your Univ Y income is 100% exempt from Federal tax, it is 100% taxable by California because you earned it while a California resident/from a California source. On Schedule CA (540NR), you will have to "add back" the treaty-exempt income in Column C (Additions) so that it is included in your California taxable income.

Massachusetts generally recognizes tax treaties. Since you were a MA resident for 10 months and Univ X is a MA source, the income is exempt from MA tax if it is excluded from your Federal Adjusted Gross Income. You will use Schedule Y on your Form 1-NR/PY to subtract the treaty-exempt income that you received while in Massachusetts.