Question

Do I need to report my 1042-S, which has a tax exempted income?

Forum|Forum|6 years ago
January 24, 2020
2 replies
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In 2019, I claimed the U.S.-China income tax treaty, which exempted my first $5000 income from federal tax. I have received a 1042-S form showing in Box 2 (gross income) $5000, Box 3b and 4b (Tax rate) 0.00, and withhold to be 0. Basically I think this 1042-S means that I have an income of $5000, which I don't need to pay tax and my employer didn't withhold any tax. Do I still need to report this 1042-S form and how?

TurboTax Deluxe Online

LeonardS

Yes, you will have to report your Form 1042-S income.

TurboTax does not include Form 1042-S. However, Form 1042-S does not need to filed with your income tax return. Fill out Form 1042-S and then mail it to the address specified in the form instructions.

The main difference between forms 1042 and 1042-S is that form 1042-S is concerned with payments made to foreign persons, while form 1042 is concerned with determining how much income will be withheld for tax withholding purposes.

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L

littledonkeyAuthor

Thanks for your reply. But I am still confused. I have received a 1042-S form that is already filled by my employer. What should I do? There is no specific instruction on the form either.

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ThomasM125

You should enter the form in TurboTax in the "Income and Expenses" section, and then "Less Common Income" and then "Miscellaneous Income" and finally "Other Reportable Income."

First, enter the form 1042-S as income, then make an additional entry as a negative amount for the amount of income excluded by the treaty. Thus, both amounts will cancel themselves out, so the net tax will be zero, but it will still show on your tax return that you reported both amounts.

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REMC11

maybe a dumb question but my wife is a citizen of Japan and legally lives in the US. We own an LLC together and a question comes up in Turbo Tax asking if payments were made to a foreign person. As 50% owner in the company she receives draws but not a paycheck. Do we need to fill out a form 1042-2?