Thanks for this info! My 1042-S doesn't seem to distinguish between amounts for tuition vs. living expenses - it just has a total in Box 2. How do I determine which portion is taxable vs. non-taxable? Do I need to get additional documentation from my university?

You'll need to look at your student account statement from your university to see the breakdown. The university doesn't typically distinguish this on the 1042-S itself. Compare your total qualified educational expenses (tuition, required fees, but NOT room and board) against the total fellowship amount. Any amount of your fellowship that went toward qualified expenses can be excluded from taxable income, while the remainder (often your stipend for living expenses) is taxable. Your university's financial aid office or international student office should be able to provide the necessary documentation showing this breakdown if you don't already have it.

I used TurboTax last year for my 1042-S and it was better than FreeTaxUSA but still not ideal. You have to enter it under "Less Common Income" then "Other Reportable Income" and then manually type in the details. They still don't have a dedicated form for it, but at least the interview process walks you through it a bit more clearly than FreeTaxUSA.

Thanks for sharing your experience. This is exactly what I was worried about. I think I'm going to go ahead and file the amended return this week. Better to just deal with it now than have it hanging over my head.

Good call! It's definitely the smart move. The peace of mind alone is worth it. And like others have mentioned, the penalties are usually much less severe (or even waived completely) when you correct the issue yourself instead of waiting for them to find it.

Can confirm this works! First Time Penalty Abatement saved me about $200 in penalties when I messed up some 1099 income reporting two years ago. You just need a clean compliance history for the past 3 years.

That's a good point I hadn't considered! I actually moved out completely in late November, and the flooring work was completed in early December before I signed with the property management company on December 15th. Would that affect how the flooring is treated? And would the HOA fees for December be fully deductible then?

Since you moved out in late November and the flooring was installed in early December before signing with the property management company, that timing actually helps your case. The flooring work was done while the property was being prepared for rental use, not while you were using it as a personal residence. The HOA fees for December would likely be fully deductible since the property was no longer your personal residence during that month. Just make sure you have documentation showing you had moved out in November and that the property was being prepared for rental use in December. The property management agreement from December 15th is excellent supporting documentation of your intent to rent the property.

This is super important! I got hit with this last year when I couldn't deduct my rental losses because my income was too high. The carry-forward helped eventually, but it wasn't what I expected when filing that first year with the rental property. Also, doesn't the fact that OP is actively participating in rental management affect this? Or does using a property management company automatically make it non-active participation?

Thanks for this advice! When you say to keep copies of everything, how long do you typically hold onto those records? And has any US client ever withheld any taxes from your payments despite having the W-8BEN on file?

I keep all my records for at least 7 years, which is what our tax office recommends in Australia. It's better to be safe than sorry when it comes to tax documentation, especially for international work. I've never had a US client withhold taxes after properly filing the W-8BEN form. That's actually the whole purpose of the form - it certifies you're not subject to US tax withholding. In the rare case where a client does withhold something, you should contact them immediately as they've likely made an error in their accounting system.

This is super helpful! Do you know if there's a specific form or section in the NZ tax return where international income needs to be reported differently than domestic income? I'm just starting out with US clients too.

I've only claimed it for 3 previous tax years (2020, 2021, and 2022), so this would be my 4th and final year of eligibility. I did check that part!

Perfect! Then you should be good to go on that front. The 4-year limit trips up a lot of people, especially if they've taken gap years or had a non-traditional education path. Since this is your 4th year claiming it, make sure to keep extra good documentation in case of an audit.

If you claim your son as a dependent, then YOU (the parent) would claim the AOTC on your tax return, not your son on his return. The person who claims the student as a dependent gets to claim the education credits. The only exception is the refundable portion we're discussing here. If your son meets all AOTC qualifications but doesn't meet the disqualifying factors (like not being a full-time student for 5+ months), then he could potentially receive the refundable portion on his return even if you claim the non-refundable portion.