How to file 1042-S income code 16 (Resident Alien)

[Climate_aug]

As an F-1 student classified as a resident alien, I worked last year as both a research and a teaching assistant. My 1098-T form shows that my school included the cost of my health insurance in Box 5 as part of my scholarship/grant. This inclusion made the amount in Box 5 exceed the amount in Box 1 by the cost of the health insurance paid by the school. Initially, I was confused because it appeared I had to pay additional tax on money I never actually received.

However, I recently realized that this additional tax may have already been covered by my school last year through a direct deposit. I received a 1042-S form showing a few hundred dollars in Box 2 (Box 1 income code: 16; Box 3a exemption code: 04; Box 4a exemption code: 16). Should I regard it as a taxable income?

I am unsure how to report this on my 1042-S form in TurboTax given my situation.

[DaveF1006]

Yes, you need to report both of these in your return. Your health insurance is part of your scholarship income because even though you received no money, you received a benefit in lieu of money, which makes it a taxable event.

[Climate_aug]

Hi Dave, 

Thank you for your response! I was wondering — how should I import the 1042-S form into TurboTax, given that there doesn’t seem to be an explicit option for it?

I came across a post on this forum discussing the steps to file a 1042-S using TurboTax. Do you think this would apply to my situation (F-1 Resident Alien with income code of 16 in 1042S Box 1)?

Many thanks in advance!

[DaveF1006]

Yes, here is how to report.

1. Open your return in TurboTax 
2. Click on Wages & Income 
3. Scroll down to All Income
4. Scroll down to Less Common Income 
5. Scroll down to Miscellaneous Income, 1099-A, 1099-C 
6. Click start 
7. Scroll down to Other reportable income 
8. Answer yes and record this as 1042S income and then the amount.

If you paid income taxes on this, go to;

1. With your return open
2. Click on Deductions & Credits
3. Scroll down to Estimates and Other Taxes Paid\
4. Click on Other Income Taxes
5. Scroll down Other Income Taxes
6. Click on Withholding not already entered on a W-2 or 1099

[Climate_aug]

Hi Dave,

Thank you again! However, I apologize for what might be two seemingly silly follow-up questions. How do I determine if I paid income taxes on this? I checked my 1042-S, and there is no federal tax withheld (Box 7a: 0; Total withholding credit: 0). Does this mean I should choose the first instruction you advised?

"

1. Open your return in TurboTax 
2. Click on Wages & Income 
3. Scroll down to All Income
4. Scroll down to Less Common Income 
5. Scroll down to Miscellaneous Income, 1099-A, 1099-C 
6. Click start 
7. Scroll down to Other reportable income 
8. Answer yes and record this as 1042S income and then the amount.

"

Additionally, the instructions you provided here are slightly different from an earlier suggestion on another post (Where to file 1042-S income code 16), where another expert advised adding it under Other Scholarships/Grants/Fellowships in the 1098-T section. Would both methods be legally acceptable?

"

It's scholarship income.

Enter under 

• Deductions & Credits
• Education
• Expenses and Scholarships (Form 1098-T)

Select "Yes" for the first screen "Do you want to enter your higher education expenses?" 

You can continue through without answering or entering any data until you get to the "Did You Receive a Scholarship or Grant in 2024?" screen

Select "Yes" enter the amount and Continue

The income will be on Schedule 1 line 8r

"

[DaveF1006]

You can enter this as a  scholarship.  When the interview questions  are asked, you will indicate you did not receive a 1098T and then the next screen will ask how do you qualify for the exception. You can indicate you qualify or don't qualify.

Assuming you qualify, then you will need to type in the name of the school, address, and EIN. If you don't have the information, you won't be able to enter this into the program and will need to enter this in the manner I described. 

It really doesn't matter in how you report the scholarship income as long as it is reported in your return.