Where to enter this 1042-S?

[mnfriedman1]

I'm a US citizen living abroad and teaching at a foreign university. On a short visit to the US I gave two lectures at a conference and was paid a small stipend. I received form 1042-S reporting the gross amount of the stipend as well as the US tax withheld. I owe no tax due to the foreign earned income exclusion and would like to get back the US withholding onthe stipend but cannot find where to report the 1042-S information. 

Help would be appreciated.

Thank you.

[KarenJ2 · Accepted solution]

You can report the 1042-S as other reportable income.

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 

9. Enter description and amount 

To report the US tax paid:

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

[dongghungL]

I follow the instruction.  But under Deduction and Credits, Iｃａｎ　ｎｏｔ　ｆｉｎｄ　Ｅｓｔｉｍａｔｅｓ　ａｎｄ　ｏｔｈｅｒ　ｔａｘ　ｐａｉｄ．　　Ｍａｙ　Ｉknow why.  I　ａｍ　ｔｒｉｎｇ　ｔｏ　ｅｎｔｅｒ　ｔｈｅ　ｗｉｔｈｈｏｌｄ　ｉｎ　ｔｈｅ　１０４２－Ｓ　ｆｏｒｍ．

[DaveF1006]

To clarify, what version of Turbo Tax are you using and is it the Online Version or Software? Also are you filing a 1040 Resident or non-resident return?

[Rowena2]

I am filing 1040 Resident on TurboTax online version.

After clicking Other Deductions and Credits, at the bottom of the page are "Other deductable Expenses" and "Other Credits". Under both links, they asked you questions. None of them give you any choices on "Estimates and Other Taxes Paid" or "Other income taxes".

[JohnW152]

You should be looking above Other Deductions and Credits. 

1. With your return open

2. Click on Deductions & Credits

3. Click Show more to the right of Estimates and Other Taxes Paid

4. Click on Income Taxes Paid

5. Scroll down to Other Income Taxes Paid in 2021

6. Click on Withholding not already entered on a W-2 or 1099

@Rowena2

[vijaybala85]

Hi Dave, Thank you for your guidance. I have a quick question. 

I am a resident of Canada. I received a 1042-S for an annuity payment in 2021. They filed it incorrectly because they withheld around 19% as opposed to 15%  (based on US-Canada Tax treaty). The only income I received from the US in 2021 is the 1042-S. Can I use the Turbotax software to just enter the 1042-S income and file my 1040? 

My substantial presence test shows that I have to file the 1040 and not the 1040NR this year. 

I will be filing a Canadian Tax return, so I have to apply the foreign tax credit correctly. With regards to 1099-DIV and a 1099-B (1st two months of 2021, I had a US brokerage account that I was trading on while the securities were being transferred to Canada). So all my 1099-DIV, 1099-B and 1099-MISC, I will be reporting them on my Canadian return. 

So my question is, could I use Turbotax software and file the 1040 with just my 1042-S? Would appreciate your response. Thanks! 

[mnfriedman1]

Hello,

Please clarify a couple of things. Are you a US citizen or do you have a green card?  

Are you referring to the substantial presence test to determine US residency or for purposes of the foreign earned income exclusion? 

[Vijaybala]

Thank you for your response.  I am not a US citizen or a grencard holder. I used to live in the US on work permit until Oct 2020. The substantial presence test goes back 3 years, hence it considers me a "resident alien" for tax purposes. 

I had already filed a W8-BEN with my annuity payor, but for the 2021 payment, they withheld more than the 15% that they usually do. My 2022 annuity had the right 15% withholding.

It would appear I have to file a 1040 and get a refund and then report 15% as foreign tax credit on my canadian return. Right? 

Thank you!

[mnfriedman1]

Since you relocated outside the US during the year I think you are a dual status taxpayer required to file Form 1040NR. See the paragraph "Nonresident at the End of the Year" at https://www.irs.gov/individuals/international-taxpayers/taxation-of-dual-status-aliens

In general, people who are residents for US tax purposes are required to report to the US all income allocable to the period of residency.  Based on the 1040NR instructions it appears to me that you will need to file a paper return.

Sorry I cannot be more helpful. Hopefully others may be. You have a complicated situation and I have not looked at the residency rules for the many years that I have been retired. But since you already know about the substantial presence rules perhaps you already have professional guidance?

[Vijaybala]

Thank you for your response.  I filed a dual return for the year 2020. (Because I lived 9 months in the US and 3 in Canada)

For 2021, I was in Canada all year, so I wouldn't need to do a dial return. I can't do a 1040NR either until 2022. 

I understand taxation overall, but the specifics of using the forms is a conundrum. 🙂 I know I have to file a 1040, but my question was related to the 1042-S. Where in TurboTax can I enter the info provided to me? 

Thank you!

[mnfriedman1]

This is how I've been reporting royalties for several years without any issues.

I use the Home and Business version of TT and report royalty income under the Personal Income tab, Less Common Income, Miscellaneous Income, Other Reportable Income.

I claim the withholding taxes in the Other Income Taxes section of Estimates and Other Taxes Paid under the Deductions & Credits tab.

(As an aside, if you were not present in the US at all in 2021 I'm wondering how you met the 183 day test.)

[vijaybala85]

Hmmm! When I called TurboTax, they told me there is no provision for 1042-S and that I have to hire a CPA to help me with it. Not sure why TurboTax wouldn't have provision for 1042-S? 

Regarding my Substantial presence test, they ask for 183 days in a 3 year period. Which I qualify for because I used to live and work in the US

Because my annuity payor withheld 3% over the 15% limit (US-Canada Treaty), I am having to run around for this. I am wondering if I can just report the 18% withholding by IRS to CRA and report that as foreign credit. Would make it simpler and I wouldn't have to file a US tax return. 🙂

[mnfriedman1]

I am not  familiar with Canadian tax rules so I cannot help you there. Sorry.

I am not giving you tax advice re the substantial presence test, but here is the computation that seems correct to me:

Assuming you spent the entire 2019 and 2020 in the US, and no 2021 days in the US:

2019 = 365 x 1/6 =   60.83

2020 = 366 x 1/3 =  122.00

2021  =  0    x  1=          0

Total                            182.83  which is less than 183. 

Again, I am not giving advice. If you see any merit in my computation, check it out.

[vijaybala85]

Wow.. This was really helpful. I must have made a mistake in the calculation. 

2019: 105 days * 1/6 = 17.5

2020: 283 days * 1/3 = 94.33

2021: 0

Total is less than 183 days. I guess I did not consider the fractions. So I would have to file a 1040NR in this case. Potentially, I wouldn't have to file anything because the 1042-S has already been filed on my behalf with the IRS. 

I am filing my Canadian return and hopefully the TurboTax agent can claim the 18% credit (as opposed to 15%) on my Canadian return and then I will be done with this. 🙂

Thank you so much! Really appreciate it.