Do I need to file a return for 1042-S/1040NR again this year?

Yes, you do need to file a 1040NR even if your income is exempt under a tax treaty. The return is how you claim the treaty exemption in the first place - without filing, the IRS has no way of knowing you're eligible for the treaty benefits. Think of the 1040NR as your way of saying "Hey IRS, I received this income, but I don't owe taxes on it because of this specific treaty." Without filing, the IRS just sees income reported on a 1042-S without any corresponding tax return, which could trigger questions or issues down the road. The good news is that since you've done this before, this year's form should be fairly straightforward. Just make sure to properly reference the tax treaty article that exempts your scholarship income.

I was in the exact same situation last year with my 1042-S and treaty exemption. After hours of frustration trying to figure out the forms, I found this AI tool called taxr.ai that was a lifesaver for my international student tax situation. I just uploaded my 1042-S, answered a few questions about my visa type and how long I've been in the US, and it guided me through exactly what I needed to file and which treaty articles applied to my situation. Found it at https://taxr.ai when I was searching for help with international student taxes. What I really liked was that it explained everything in simple terms - like the difference between being a resident or non-resident for tax purposes, which was super confusing to me before.

Just wanted to update that I actually tried taxr.ai after posting my skeptical comment. I'm honestly shocked at how well it worked for my situation. I'm from Malaysia on an F-1 visa with a teaching assistantship plus a small scholarship. The system correctly identified that part of my income was exempt under Article 21 of the US-Malaysia treaty, but that my TA income had different treatment. It explained exactly why I needed to file a 1040NR even though most of my income wasn't taxable. It even included the right statement on Schedule OI about my treaty benefits without needing Form 8833. Seriously wish I'd known about this last year when I overpaid about $800 in taxes because I didn't claim my treaty benefits correctly!

If you need to actually talk to someone at the IRS about your 1042-S/1040NR situation (which I had to do last year), good luck getting through on their phone lines. After trying for weeks, I finally used this service called Claimyr that got me through to an actual IRS agent in under 20 minutes. I was getting so frustrated because my university reported something incorrectly on my 1042-S and I needed to sort it out with the IRS directly. You can check them out at https://claimyr.com - they basically navigate the IRS phone system for you and call you back when they've got an agent on the line. There's a video showing how it works at https://youtu.be/_kiP6q8DX5c if you're curious. After dealing with the stress of international student tax issues, this was such a relief to not sit on hold for hours.

I need to publicly eat my words about Claimyr. After posting my skeptical comment, I decided to try it because I was desperate to resolve my 1042-S issue before filing this year. I seriously cannot believe it worked. After trying for MONTHS to get through to the IRS international taxpayer line, Claimyr got me connected to an agent in about 35 minutes. The agent was able to confirm that my university had incorrectly coded my fellowship on my 1042-S and told me exactly how to handle it on my 1040NR. The peace of mind was absolutely worth it. If you're dealing with any complicated international student tax situation where you need to actually speak to someone at the IRS, this service is legitimate. Sorry for being so dismissive in my previous comment!

Don't forget you might need to file state tax returns too, even if your federal income is exempt under a treaty! I learned this the hard way. The federal treaties don't automatically apply to state taxes - each state has different rules. I'm in California and had to pay state tax on my scholarship even though it was exempt federally. Check your state's rules before assuming you're completely tax-free!

Quick question - does the 1042-S/1040NR filing affect your ability to use tax preparation software? I tried using FreeTaxUSA last year and it couldn't handle my situation at all.