Tax Treaty Repayments on Non-resident 1042-S and W2

[princetonkatsu]

I am a resident alien on J1 visa and have received both a W2 and 1042-S (Foreign Person's US Source of Income Subject to Withholding) for this year.

Previously I filed taxes through sprintax as I was a non-resident alien, but now I am a resident as I've been here over two years I need to complete the 1042 via TT. Further,  I was under a 2 year UK-USA tax treaty for which I did not pay tax on my any income for the past 2 years. However I have stayed beyond the 2 years and now need to retroactively pay that tax treaty money to the IRS. I'm not sure how to move forward with this on my tax return - how do I let the IRS know that I now need to pay back 2 years of taxes? This is very confusing for me, I'm from a country where this is done for us by the govt.

On TT, I have input the following in 'Other Taxable Income' as suggested from previous posts based on my 1042-S form (which has an income and then 0% tax rate and 0 Federal Tax withheld.

Description: 1042-S Income

Amount: The amount on my 1042-S

If I leave it at this, TT tells me that I owe about 6k in taxes,

Then added again

Description: Tax treaty exemption (cha 3, code 4)

Amount: negative the amount on my 1042-S

Then TT tells me I should get about 3k tax return....

The values I am inputting are correct based on my 1042-S. The wage I have input into 'amount' is my partial salary that was untaxed from my 1042-S. I started being federally taxed right after 2 years and tax treaty ended, and this number on my W2 (which I have also input into my W2 section on TT).

or does the IRS just get back to me asking for the 2 years tax back payment and that this isn't relative to my tax return?

[LoganathanB]

You will have to file an amendment for those two years, file tax returns as a resident, and pay back the taxes on income that was exempt under the treaty.

Yes, if the two-year period beginning from the date of his arrival is exceeded, the exemption will be lost retroactively.  

Since you are no longer eligible for exemption from the tax you should not put in a negative number after adding 1042-s numbers.

Click on the link for more information

How to file an amendment

[Marcin1]

Hi, I will be going through the same process in 2024 if I decide to extend my stay in the US.  I've been wondering, do I need to pay any fees and/or penalties for this kind of amendment? If yes, where can I find any info on how much? As per US/UK tax treaty I would need to pay all the taxes retroactively. I believe those include federal, NY state and NYC city tax. How can I calculate how much I owe IRS with all applicable fees and penalties? @princetonkatsu, would you be able to share your experience after filing the tax amendment in 2022? @LoganathanB, I would appreciate your guidance too. Thank you!