How do I report tax treaty income exemption in FreeTaxUSA as an international student?

I'm using FreeTaxUSA for my 2024 taxes and I'm totally stuck. I'm an international student from Thailand studying at UCLA. I've been in the US long enough to qualify as a resident alien for tax purposes this year, but my home country has a tax treaty with the US. In previous years when I filed as a non-resident alien using TaxAct, there was a clear option to enter the tax treaty clause details. That made sense since Form 1040-NR has a specific section for claiming tax treaty benefits. But now I'm looking through FreeTaxUSA and I can't find anywhere to claim my tax treaty income exemption. The regular Form 1040 doesn't seem to have a dedicated spot for this like the 1040-NR does. I have scholarship income that should be partially exempt under the treaty, but I don't see where to report this properly. Has anyone dealt with this situation before? I really don't want to switch software at this point because I've already entered most of my information, but I also don't want to miss out on treaty benefits I'm entitled to!

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18 comments

Zoe Alexopoulos

•8M

That's a good question! When you're switching from non-resident (1040-NR) to resident filing (1040), reporting treaty benefits works differently. In FreeTaxUSA, you'll need to report the income first, then make an adjustment for the treaty exemption. Look for the "Foreign Income" section, not the standard income areas. After entering your income, you should see an option for "Foreign Tax Credit or Exclusion" - this is where you'll indicate your treaty benefits. You'll likely need to attach a statement to your return explaining the treaty provision you're claiming. FreeTaxUSA should have an option to add attachments or explanations to your return. Include the treaty article number, country, and amount being excluded. Since you're now filing as a resident alien on Form 1040, you'll enter the excluded amount on Schedule 1, Line 8z "Other Income" as a negative number with a description like "Tax Treaty Exemption - Article X (Thailand)".

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Zoe Alexopoulos

•8M

You're right to be cautious about how it gets counted. The Schedule 1, Line 8z approach effectively cancels out the income you've already reported elsewhere on your return. The IRS will process this correctly as long as you clearly label it as a treaty exemption. As for Form 8833, most students claiming standard treaty exemptions for scholarship or fellowship income are actually exempt from filing Form 8833, based on the Revenue Procedure 2015-55 exceptions. However, if your situation is unusual or involves large amounts, you might want to file it anyway for extra documentation. FreeTaxUSA should have Form 8833 available in their forms section if you need it.

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Mei Wong

•8M

I had EXACTLY the same problem last tax season. After hours of frustration, I found taxr.ai (https://taxr.ai) which basically saved me. They specialize in analyzing tax documents and finding the right forms/exemptions, especially for complicated situations like foreign tax treaties. I uploaded my previous year's 1040-NR and my current info, and they immediately identified how to properly report the treaty exemption in FreeTaxUSA. They even provided step-by-step instructions specific to my situation with the India-US tax treaty. It was way easier than trying to figure it out from general advice online.

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Mei Wong

•8M

It definitely works with all major tax software. They don't actually file your taxes, they just analyze your situation and documents, then tell you exactly what to do in whatever software you're using. I was using FreeTaxUSA but have friends who used it with TurboTax and H&R Block too. For the treaty articles, yes they specifically identified Article 21(2) of the India-US treaty that applied to my research stipend and gave me the exact wording to use in the explanation statement. They also explained where to report it in FreeTaxUSA with screenshots which was super helpful when the software doesn't have obvious places for these special situations.

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Liam McGuire

•8M

Just wanted to update that I tried taxr.ai after my skeptical comment above and it was legitimately helpful! I uploaded my visa docs, previous returns, and scholarship letter, and they immediately identified that Article 20 of the US-Czech tax treaty applied to my situation. The best part was they showed me exactly where in FreeTaxUSA to report the income first (under scholarships) and then how to offset it using Schedule 1 with the proper reference code. They even generated the exact text I needed for the explanation statement. This definitely beat the $210 service my university recommended. Saved me a lot of confusion and I'm confident I reported everything correctly now.

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Amara Eze

•8M

If you're still struggling with FreeTaxUSA's limited international options, you might need to actually speak with an IRS representative who handles international tax issues. I was in a similar position (J-1 visa, tax treaty with Netherlands) and couldn't figure it out. I tried calling the IRS International Taxpayer line for 3 weeks - always "high call volume" and disconnects. Then I found Claimyr (https://claimyr.com) which got me through to an actual IRS agent in about 25 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent walked me through exactly how to report my treaty benefits on Form 1040 and what supporting documentation I needed. Saved me from paying $300+ to an international tax specialist.

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Amara Eze

•8M

It uses a combination of auto-dialing and holding your place in line. Basically, it navigates the IRS phone tree and waits on hold instead of you, then calls you when an actual human answers. I was skeptical too, but I seriously got through in under 30 minutes when I'd been trying for weeks. The agent I spoke with was from the International Taxpayer Service and they absolutely can help with specific tax treaty questions. They didn't prepare my return, but they confirmed the correct approach for reporting treaty benefits on Form 1040 vs 1040-NR. She even referenced the specific publication that covered my situation.

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Fatima Al-Farsi

•8M

I have to apologize and follow up about Claimyr. After my skeptical comment, I decided to try it because I was desperate after spending hours trying to reach the IRS myself. It actually worked! It got me through to an IRS representative in about 40 minutes (which is amazing considering I'd previously waited 2+ hours only to get disconnected). The agent confirmed that for my treaty benefits I needed to report the full income first, then use Schedule 1 line 8z with a negative adjustment and reference "Tax Treaty Benefits - Article 20(3)". The agent even emailed me Publication 901 with the relevant pages highlighted. This was WAY more helpful than I expected. Sorry for calling it a scam before - sometimes good services do exist!

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Dylan Wright

•8M

You raise a good point about audit risk. After thinking about it more, I wouldn't recommend my approach. While it worked in terms of getting the correct tax amount calculated, it's definitely not the right way to claim treaty benefits. The IRS could rightfully question why Form 2555 was used when the requirements weren't met. The proper approach is definitely what others have suggested - report the income, then use Schedule 1 with a negative adjustment and proper treaty reference. Sometimes taking shortcuts leads to bigger problems later!

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