How to add my 1042-S stating federal tax exemption (Income code 19)?

[KarenJ]

Are you an international student?  What is your visa type and when did you arrive in the US?  Many thanks!

[andreia_nunes]

I am a postdoc under a J1 research scholar visa. I am considered a resident alien, because I already completed 2 years in the country. I have the exemption because US has a tax treaty with Portugal, my citizenship country. Thank you very much for your answer!

[KarenJ]

Thank you for your explanation.

To enter your 1042-S for wages under other miscellaneous income:

1. Click on the “Federal" on the left hand side of the screen in the black area.
   
2. Next click on “Wages & Income”
3. Next click on All Income
   
4. Scroll down the screen until to come to the section “Less Common Income”
5. Choose "show more", then Miscellaneous Income
6. Choose "Other Income not already reported on a Form W-2 or Form 1099 " 
7. Select - "Yes" for "Other Wages Received"
8. After 2 screens, select "Yes" for "Any other earned income".
9. On screen titled " Enter source of other earned income" - select " Other"
10. Input the "1042-S wages" and the amount on the next screen
    

To enter your treaty exemption under as other miscellaneous income:

1. Click on the “Federal Taxes” tab
   
2. Next click on “Wages & Income”
3. Next click on "jump to full list" or “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Less Common Income”
5. Choose "show more", then Miscellaneous Income
6. Choose "Other Reportable Income" and enter this information here under other taxable income 
7. You should use a description related to the tax treaty article exempting the incomeand the exempt amount as a negative number.

[kubandiran]

I am a postdoc under a J1 research scholar visa. I arrived in the U.S. in September 2022 and was considered a non-resident alien for tax purposes in 2022 and 2023. Starting in 2024, I am considered a resident alien because I have completed two tax years in the country.

I have been benefiting from a tax exemption for two years under the U.S.-India tax treaty. My questions are as follows:

Tax Exemption Period:

Does the two-year tax exemption period refer to two tax years (2022 and 2023) or a continuous 24-month period from my arrival in the U.S.?

Form 1042-S for 2024:

I received Form 1042-S with Income Code 19 for the tax year 2024, indicating scholarship or fellowship grants. This form was issued because I applied for a tax treaty benefit. Consequently, I received two tax forms from my employer: one W-2 and one 1042-S.
The details on Form 1042-S are as follows:
Box 3a: Exemption Code 04 (indicating treaty exemption)
Box 4a: Exemption Code 16 (indicating FATCA exemption)
Box 3b and 4b: Tax rate of 0.00%

Could you please confirm whether the income reported on Form 1042-S for 2024 is indeed tax-exempt?

Thank you very much for your assistance.

Best regards,
Kubandiran Kolanji

[DaveF1006]

 Yes, let's address these questions individually. 

1. The exemption periods are on a calendar year basis. You are a resident alien in 2024.
2. A tax treaty isn't applicable here, so you would need to report the income from your W2. Ignore the 1042 S if it was for
3. The income reported on 1042 S is not tax-exempt because you weren't exempt in 2024.
4. If you received an additional 1042S for the scholarship in addition to the 1042 S issued by your employer, this would need to be reported. If it's the same form, then no. I am asking because I was  not sure in the way that you described if you received two 1042S, one for the scholarship and once from the employer.

Reach back to us and clarify if you received two 1042S or if you received one W2 and 1042S for the same income.  if that is the case, then only the W2 should be reported on your return.