I have fellowship income that is exempt from taxes based on a treaty. I have NOT received tax forms for this income (W2/1042s). Should I report this on my return or not?

[jrnv89]

I have income that is exempt from federal taxes based on a tax treaty (fellowship income paid by a foreign source, but distributed to me by my university). However, I have not received any tax forms  (neither W2 or 1042-s

[ThomasM125]

Technically, you are required to enter the income. Also, you need to complete form 8833 to have the income exempt from tax by citing the treaty.

You would enter the income in the Less Common Income section of TurboTax, then Foreign Earned Income and Exclusion.

After you enter the income, you would enter a negative amount as Other Income to cancel it out as follows:

1. Income and expenses
2. Less common income
3. Miscellaneous income, 1099-A, 1099-C
4. Other reportable income
5. Enter a description of the treaty and the amount as a negative number

So, you will enter the income and then cancel it out with a negative entry.

You should complete and attach form 8833 to your return, which you must mail it, to disclose the treaty. This form is not available in TurboTax, but you can complete it online by using this link:

Form 8833 (Rev. November 2020) (irs.gov)

[jrnv89]

Thank you! 

Are you sure “Foreign earned income” is the right category? Because my 1042-s in the past used to say that it was payed by my American university (who transferred me the money every month), and did not mention the foreign source. Perhaps the ‘Other reportable income’ is a better category for the fellowship money?

[DaveF1006]

It depends.  Are you a US resident studying abroad, a foreign citizen, or a dual citizen? If was 1042-S income, this is income paid to a foreign person and not reportable on a US tax return. Also, was this your only income that originated from the US? 

Please review this link, regarding the Substantial Presence Test to see if you qualify as  a US resident to file a US resident tax return.

[jrnv89]

I am a foreign resident. Last year I was a non-resident and received a 1042-s. This year I became a resident and therefore did not receive any forms for this income. And yes, this was my only income (US sourced and otherwise). 

[LinaJ2020 · Accepted solution]

Yes, you will still need to report the income.  Without receiving any tax forms, I will suggest you to report under "Other Income".  Here are the steps:

In TurboTax online,

• Sign into your account, select Pick up where you left off
• To the right upper corner, in the search box, type in "other reportable income" and Enter
• Select Jump to other reportable income
• Next screen, Other Wages Received, select No to continue
• Next screen, scroll down all the way to the bottom, under Other reportable income, select Start
• Next screen, Any Other Taxable Income? select Yes to continue
• You will then enter the same amount as a negative number for the offset.

The amounts should show on line 8 of Schedule 1 and Form 1040.