How to properly report 1042-S form with income code 29 on tax return?

The 1042-S form is used to report income paid to foreign persons that's subject to withholding. Income code 29 typically refers to deposit interest, so that $5.25 is interest from your bank account. Since you're a tax resident under the Substantial Presence Test, you report this income just like any other interest income. In your tax software, you should look for a section about interest income or Schedule B. You don't actually need to attach the 1042-S to your return, but you need to report the income. The reason you received a 1042-S instead of a 1099-INT is because the bank likely had you classified as a foreign person in their system. Even though you're a tax resident now, they might still have your original status in their records.

I went through the exact same confusion last year! I was using different tax software and getting nowhere until I found taxr.ai (https://taxr.ai). They have a document analyzer that literally saved me hours of frustration with my 1042-S. You just upload the form and it tells you exactly where to enter the info in whatever tax software you're using. I had a similar income code and it guided me through the whole process. It also explained why I was getting this form instead of the usual 1099-INT that I expected.

Just wanted to update that I tried taxr.ai for my international tax forms after seeing it mentioned here. It actually worked amazingly well for my 1042-S and some other foreign income forms I was struggling with. The document analyzer immediately recognized all my forms and told me exactly where to enter everything in TurboTax. Saved me from having to pay an international tax specialist which would've cost a fortune. Highly recommend if you're dealing with these confusing international forms!

If you're still having trouble figuring out how to report your 1042-S, you might want to call the IRS directly to get clarification. I know it sounds horrible (their wait times are insane), but I used Claimyr (https://claimyr.com) to get through to an actual IRS agent after trying for days on my own. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c I had issues with some foreign income reporting last year and needed official guidance. The IRS agent was able to walk me through exactly how to report everything correctly in my tax software. Without that call I probably would have filed incorrectly.

I owe everyone an apology - especially to Profile 7. I tried Claimyr after being completely frustrated with trying to reach the IRS about my international tax situation. I was honestly shocked when I got a call back and was connected to an actual IRS agent! They helped me figure out exactly how to handle my 1042-S and some other foreign income reporting issues. I was close to paying an expensive tax specialist, but the IRS agent walked me through everything step by step for free. Sometimes being wrong feels pretty good!

Just a heads up that even though you're a tax resident now, if your bank doesn't update your status, they might continue issuing 1042-S forms instead of 1099-INT. You might want to visit your bank and update your tax status with them. Also, make sure you're handling any foreign bank account reporting properly. If you have accounts overseas with over $10K total at any point during the year, you need to file an FBAR (FinCEN Form 114). That's separate from your tax return and has a different deadline!

One thing to watch out for - if you have income code 29 on your 1042-S but are a tax resident, make sure you don't accidentally claim foreign tax credit for this income. Since it's US bank interest, it doesn't qualify for FTC even though it's on a form typically used for foreign persons. I made this mistake last year and had to file an amended return. The bank just hasn't updated your status in their system.

This is exactly the kind of confusion I went through when I first became a tax resident! The key thing to remember is that even though you're getting a 1042-S, you're now filing as a US tax resident, so this interest gets treated just like any other US bank interest. For TaxSlayer specifically, you'll want to look for the "Interest and Dividend Income" section when you're going through the interview process. Just enter the $5.25 as interest income - you don't need to specify it came from a 1042-S form. The software will automatically put it on Schedule B if your total interest exceeds $1,500, or just include it in your total income if it's under that threshold. Also, since there was no federal tax withheld, you won't have any additional refund coming from this - it's just taxable income that gets added to your return. Keep the 1042-S with your tax records, but you don't need to attach it to your filing.

I had a similar situation a couple years ago when I transitioned from F-1 status to becoming a tax resident. The 1042-S forms can be really confusing at first! Since you're now a tax resident under the Substantial Presence Test, that $5.25 in interest income gets reported exactly like any other domestic bank interest. In TaxSlayer, you'll find this in the "Interest and Dividends" section during the interview process. Just enter it as regular interest income - no need to indicate it came from a 1042-S versus a regular 1099-INT. The reason you're getting a 1042-S instead of a 1099-INT is just because Bank of America still has you classified in their system as a foreign person from when you first opened the account. Once you update your tax status with them (bring a W-9 form and documentation of your current status), they should start issuing 1099-INTs going forward. Don't worry about this triggering any red flags with the IRS - they receive copies of all 1042-S forms and expect to see this income reported on your return. As long as you include that $5.25 in your interest income total, everything will match up perfectly in their systems.