Question

1042-S and tax treaty

Forum|Forum|5 years ago
March 5, 2021
1 reply
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Hello, I'm a J1 scholar since September 2018.

In 2019 and 2020, I reported as a NR.

I think I should file my tax this year as a resident alien. For tax filing, I received three documents (all from same university)

1042-S : Jan - June 2020 (Federal tax withhold)

1099-MISC : July - Aug 2020 (no tax withhold)

W2 : Sep - Dec 2020 (Federal + State withhold + Social + Medi)

I came from Korea and I heard that there is a tax treaty between Korea and USA (Article 20)

ARTICLE 20
(1) Where a resident of one of the Contracting States is invited by the Government of the other
Contracting State, a political subdivision, or a local authority thereof, or by a university or other
recognized educational institution in that other Contracting State to come to that other Contracting State
for a period not expected to exceed 2 years for the purpose of teaching or engaging in research, or
both, at a university or other recognized educational institution and such resident comes to that other
Contracting State primarily for such purpose, his income from personal services for teaching or research
at such university or educational institution shall be exempt from tax by that other Contracting State for a
period not exceeding 2 years from the date of his arrival in that other Contracting State.
(2) This Article shall not apply to income from research if such research is undertaken not in the
public interest but primarily for the private benefit of a specific person or persons.

My question is

Do you think I can apply this treaty for 1042-s and 1099-MISC (two years should be Sep 2018 - Aug 2020)? and if so, how can I do that in Turbotax?

Not A Product Question

L

linaj20201

An international tax treaty-related question is out of our scope for advice, unfortunately. You would need to seek a professional who is specialized in this matter to verify if this income is taxable or not. Per IRS, both nonresident and resident can apply the tax treaty to their Form 1040-NR and Form 1040 as long as they meet the criteria. Your two years of non residency should be 2018 and 2019. Starting from January 1, 2020, you start counting your days. TurboTax does not cover the nonresident filing and you may contact Sprintax about your previous nonresident filing.

On your 2020 tax return, if the income is not taxable, you can make an entry under "Other Reportable Income" and the same amount as a negative amount.

To report information in the TurboTax program, here are the steps:

Report your income as usual. Then enter the treaty-exempt amount as negative amount (e.g. -5000) through this path-Federal Taxes / Less Common Income / Miscellaneous Income 1099A, 1099C / Other Reportable Income
Download and fill in a Form 8833 to claim an exception. https://www.irs.gov/pub/irs-pdf/f8833.pdf
You cannot e-file. You can still use the TurboTax program to prepare your tax forms, but you need to print out all your tax forms and submit the Form to 8833 together by mail to the IRS.

To enter your paid federal tax withholding, here are the steps:

In TurboTax online,

Sign back into the program and select Pick up where you left off
At the right upper corner, in the search box, type in estimated tax payments and Enter
Select Jump to estimated tax payments
On the screen, Estimates and Other Income Taxes Paid, scroll down to enter info

The exempt amount will show on line 8 of Schedule 1 and Form 1040 as a negative figure to offset your taxable income.