How do I handle both 1042-S and W-2 income in the same tax year?

Thanks for clarifying! So if I understand correctly, I should make my Q4 estimated payment by January 15th using Form 1040-ES, but that's separate from my actual tax return which I'll file in April after getting both forms? Also, since I didn't make any estimated payments for Q2 and Q3 (I didn't know I needed to), am I going to face penalties? Is there anything I can do now to minimize them?

Yes, exactly! The January 15th payment using Form 1040-ES is just your final quarterly estimated payment for 2025, completely separate from your actual tax return that you'll file in April 2026 after receiving all your forms. Regarding the missed payments for Q2 and Q3, you might face some underpayment penalties. However, the penalties are usually fairly small - they're calculated based on the amount you underpaid and how long you were late. The good news is that making your Q4 payment by January 15th will at least stop additional penalties from accruing. When you file your return in April, you'll need to complete Form 2210 to calculate any underpayment penalties. There's also a "safe harbor" rule - if your withholding from your W-2 job covers at least 90% of your 2025 tax liability or 100% of your 2024 tax liability (110% if your income is over $150,000), you might avoid penalties altogether.

Does this actually work with foreign national status situations? Most tax software I've tried gets super confused when you mention 1042-S forms. Does it actually understand the differences between tax treaties and how to properly report fellowship income?

I'm skeptical about these AI tax tools. How does it handle state tax considerations when you've worked in multiple states like OP? My university's international office always warns us that most tax software messes up treaty benefits.

Yes, it actually specializes in complicated scenarios including foreign national status and multiple income types. It correctly identified which tax treaty provisions applied to my situation and showed me exactly where to report 1042-S income on my return. It even explained which boxes on the 1042-S were relevant for my specific visa type. For multi-state situations, it handled that perfectly too. It helped me determine my state residency status for each period and calculated the correct allocation of income between states based on my specific dates. The guidance includes state-specific forms you'll need to file in addition to your federal return. Much more comprehensive than the generic advice I got from TurboTax.

Wait, how does this actually work? I thought it was impossible to get through to the IRS? Is this just some paid service that puts you on hold for you or something?

Sounds like a scam. Why would anyone need to pay to call the IRS? I've gotten through to them before after waiting. And how would they "put notes in your account" - doesn't sound legit to me.

It's actually pretty simple - they use a technology that monitors the IRS phone lines and calls repeatedly until they get through, then connect you when an agent answers. It's not just putting you on hold - it's actively working to get through their overloaded system. Regarding the account notes - this is absolutely a real thing! When you speak with an IRS agent, they can document the conversation in your taxpayer account. This is super helpful if there's ever a question about whether you made a good faith effort to comply with tax laws. In my case, the agent documented that I called to inquire about proper handling of 1042-S income and estimated payments, which provides some protection if there were ever questions about why I filed a certain way.

Thanks for bringing up the treaty benefit possibility! I'm from Sweden, and I believe there is a tax treaty, but I'm not sure how it applies to fellowship income. My visa is J-1 research scholar. Would that potentially make some of my fellowship exempt? Also, my fellowship covers tuition remission separately from my stipend. The stipend is what will be on the 1042-S. Does that change anything?

Yes, Sweden definitely has a tax treaty with the US, and J-1 research scholars often qualify for benefits! Under Article 20 of the US-Sweden treaty, you may be eligible for an exemption on your fellowship income for up to two years. Regarding your stipend versus tuition remission - that's actually ideal! If the tuition remission is paid directly to the university, it's not considered taxable income to you at all and shouldn't appear on your 1042-S. The stipend portion on your 1042-S may be partially or fully exempt under the treaty. When you get your 1042-S, check if Box 3 (type of income) shows a code like "16" (scholarship/fellowship) and if Box 10 shows "20" (for Article 20) - that would indicate treaty benefits were applied.

I tried using TurboTax for this exact situation last year and it was a nightmare. It kept trying to treat my fellowship as self-employment income and wanted me to pay self-employment tax on it. Ended up having to go to a CPA who specializes in international tax issues and he found that TurboTax had miscalculated my tax by over $3000!