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kashri · Apr 5, 2009, 07:55 AM

I know this issue has been addressed to a good extent in an older thread: I got a 1042-S form but am a resident alien

In short, two solutions were suggested:
1. (correct way) Ask the employer to cancel 1042-S and send new 1099M
2. (practical way) file the 1042S reporting the income and deduction

I need help with using the 2nd solution. I have a 1042-S that shows some Fed tax withheld. As suggested in the referenced thread, I noted down the reported gross income in 1042-S as other income (item #21) in form 1040. But where exactly on the form should I mention the withheld tax in 1040? Also, do I need to add another form or paper

FYI, I am international student, resident alien for tax purposes for 2008 (non-resident alien until 2007) and have a W2 other than the 1042-S.

MukatA · Apr 5, 2009, 08:18 AM

What is income code in box 1?
You may have to report it as W2 income or 1099-misc income depending upon the income code.

kashri · Apr 5, 2009, 08:34 AM

The income code in box 1 is 15. The description from the back of 1042-S says 'scholarship or fellowship grants'. It was basically a one-time scholarship for attending a conference.

Could you please elaborate on how should I report it as W2-income or 1099-misc income? Is there any supporting document I need to prepare/attach?

Thank you

MukatA · Apr 5, 2009, 08:59 AM

If you are a degree candidate and if the financial aid (includes scholarship and fellowship) is for tuition fee, other fees, books, supplies and equipment, then it is not taxable. For a degree candidate aid for boarding and travel are taxable.

If you are not a degree candidate, then all the financial aid is taxable.
You must use Worksheet 1-1 in Chapter 1 of Publication 970 to figure out the taxable amount.

However, if you were a degree candidate, include on line 7 only the amounts you used for expenses other than tuition and course-related expenses. For example, amounts used for room, board, and travel must be reported on line 7.

Any "SCH" amount that you put on line 7 of Form 1040 is subject to employment taxes at 15.3%. Include amounts you receive under a scholarship as pay for your services as an independent contractor in determining your net earnings from self-employment. If your net earnings are $400 or more, you will have to pay self-employment tax. Use Schedule SE, Self-Employment Tax, to figure this tax.

Publication 970 - Tax Benefits for Education - Tax Benefits for Education; Chapter 1--Scholarships, Fellowships, Grants, and Tuition Reductions.

kashri · Apr 5, 2009, 10:07 AM

Thank you for the pointer. I looked at publication 970, chapter 1. FYI, I am a degree candidate, the income reported on W2 is due to my part time work on campus and the scholarship reported in 1042-S was used for travel and lodging.

Based on my understanding, in form 1040 I am planning to put W2 income in line 7, 1042-S gross income in line 21 (based on comments in earlier thread), and sum of W2 withheld interest & 1042S withheld interest in line 62.

I will appreciate if you (or anyone) could comment on this strategy.

Thank you!

kashri · Apr 6, 2009, 07:39 AM

Could anyone from the previous thread share what they did?

Thanks!

kashri · Apr 6, 2009, 08:27 AM

Hi, I called up IRS this morning. They suggested that I put "SCH xxx.xx" (where xxx.xx is the 1042-S income) in the dotted line on line 7, and the total of W-2 & 1042-S incomes in box 7. Further, I should write "1042-S" in the dotted line on line 62 and put the sum of W-2 + 1042-S taxes withheld in box 62.

I believe this is what MukatA also suggested, but I could not follow. Thanks a lot though!

rek_col · Apr 7, 2009, 12:55 AM

Hello kashri and MukatA,

I have a similar case as kashri and I am clear on inclusion of amount received on 1042-S on federal 1040 form.

My question is the following:

On my 1042-S form there is no state tax deducted.
So when I fill my state taxes ( state of Maryland in this case) do I have to put my total income as toal income in W2 + total income in 1042-S.

Or do I not have to pay state taxes on the amount received on 1042-S ?

Please clarify ? Your help is appreciated.

kashri · Apr 7, 2009, 01:49 AM

Sorry, I don't have any info on state tax laws. I hope MukatA answers your question. Good luck!

Originally Posted by rek_col

Hello kashri and MukatA,

I have a similar case as kashri and i am clear on inclusion of amount received on 1042-S on federal 1040 form.

My question is the following:

On my 1042-S form there is no state tax deducted.
So when i fill my state taxes ( state of maryland in this case) do i have to put my total income as toal income in W2 + total income in 1042-S.

Or do i not have to pay state taxes on the amount received on 1042-S ?

Please clarify ? Your help is appreciated.

rek_col · Apr 7, 2009, 11:14 AM

Thanks kashri, what are you going to do for your state taxes in that case ?

kashri · Apr 7, 2009, 04:31 PM

I'm in Texas. We don't have state tax on income.

Originally Posted by rek_col

thanks kashri, what are you going to do for your state taxes in that case ?

AtlantaTaxExpert · Jun 6, 2009, 11:22 AM

You put the 1042 taxable income on the same line on the MD state form where the wages go.