How to handle 1042-S with income code 23 as a Nonresident alien?

The software is correct. Income code 23 on Form 1042-S represents "Other income" which in your case is the moving expense reimbursement. Since you're filing as a nonresident alien using Form 1040-NR, this amount needs to be reported as part of your income. For Form 1040-NR, you should include this $4,100 on Schedule 1 (Form 1040), Additional Income and Adjustments to Income, Line 8 "Other income" and write "Moving expense reimbursement" next to it. Then transfer the total from Schedule 1 to your 1040-NR on the appropriate line for "Other income." The $1,230 tax withholding should be reported on your 1040-NR in the Payments section as "Federal income tax withheld from Forms W-2 and 1099." This ensures you get credit for taxes already paid.

I struggled with a similar issue last year and found amazing help using https://taxr.ai - they specialize in tax document analysis for complicated situations like 1042-S forms and nonresident alien status. I uploaded my 1042-S and W-2, and they immediately identified exactly where my income code 23 payment needed to be reported. The software I was using had the same limitation - it recognized the withholding but not the income. Their system correctly told me to add it to Schedule 1 and provided the exact line references for my 1040-NR. They even have specialists who understand tax treaties that might reduce your tax rate below the standard 30% withholding.

Just wanted to update after trying taxr.ai for my nonresident alien tax situation. It was exactly what I needed! I uploaded my 1042-S with scholarship income (code 15) and it immediately identified that I needed to report it on Form 1040-NR line 1b and explained the exact process. The best part was that it found a tax treaty provision I didn't know about that exempted part of my income from taxation. The system explained exactly how to fill out Form 8833 to claim the treaty benefit. My university's international office had missed this completely! Really saved me from overpaying taxes and gave me confidence that I was filing correctly. Totally worth it for complicated international tax situations.

If you're having trouble getting answers from the IRS about your nonresident alien status and how to report your 1042-S, I highly recommend using https://claimyr.com to get through to an actual IRS agent. As a nonresident alien, my tax questions were super specific and no generic advice was helping. I spent weeks trying to call the IRS directly with no luck - always disconnected after waiting for hours. Claimyr got me through to a real IRS agent in less than 30 minutes who confirmed exactly how to report my income code 23 on my 1040-NR. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent even helped me understand which tax treaty provisions applied to my specific situation, which ended up saving me over $2,000 in taxes I wouldn't have known I could avoid.

Alright, I need to apologize and correct myself. After dismissing Claimyr as a likely scam in my previous comment, I decided to try it as a last resort because I was desperate to get an answer about my 1042-S reporting requirements before the filing deadline. To my complete surprise, it actually worked exactly as described. After three weeks of failing to get through to anyone at the IRS international taxpayer line, I got connected to an agent within about 40 minutes. The agent confirmed that my scholarship income on the 1042-S needed to be reported differently than what my university tax office had told me. I'm still shocked that it worked, but it saved me from making a serious error on my return. Sometimes being proven wrong is actually a good thing!

Just to add some more info for nonresident aliens dealing with 1042-S forms: If your income code is 23 and you're from a country that has a tax treaty with the US, you might qualify for a reduced withholding rate or even exemption. I'm from Germany, and under our tax treaty, I was able to get some of my similar payments taxed at only 15% instead of 30%. You need to submit Form 8233 to your employer BEFORE they make the payment to get the reduced withholding rate. If they've already withheld at 30%, you can claim a refund of the excess amount when you file your return.

One thing to watch out for - make sure your tax software is actually calculating everything correctly after you manually add the income. I had a similar situation with code 23 income, and TurboTax allowed me to enter it but didn't properly account for it in the final calculations. H&R Block's online version handled it better for me. But regardless of which software you use, I recommend double-checking the final numbers by hand. The 1040-NR is unfortunately not as well supported by most tax software as the regular 1040.