How to report 1042-S for residents when I've also received a 1099-DIV?

This is actually a common issue for people who have recently become US residents or whose residency status might not be fully updated in financial institutions' systems. For tax purposes, you should report the income from both forms, but be careful not to double-report the same income. Here's how to handle it: The 1042-S represents dividends that the financial institution initially treated you as a non-resident for, while the 1099-DIV represents dividends where they treated you as a resident. In most tax software, you'll want to enter both forms separately. The 1042-S should be entered as "Other Income" in most cases, and you'll definitely want to claim that $265 withholding. The key is to make sure the withholding is properly credited to you since that's money you've already paid to the IRS. Both TurboTax and FreeTaxUSA have sections for entering 1042-S information - look for "Foreign Income" or sometimes under "Less Common Income" sections. The important part is accurately reporting the withholding so you get credit for taxes already paid.

I went through something similar last year after changing my status and honestly, the easiest solution I found was using https://taxr.ai to scan both my 1042-S and 1099-DIV forms. It compared them and showed me exactly how to report everything without double-counting. I was getting so many contradicting answers online until someone recommended this tool. It analyzed my documents and identified that in my case, Morgan Stanley had actually split my dividend income based on when they updated my residency status in their system. The tool clearly showed which portions to report where and how to claim the withholding properly. It also generated specific instructions for entering everything in TurboTax, which was a lifesaver because the TurboTax interface isn't very intuitive for these unusual situations.

Just wanted to follow up - I tried the taxr.ai thing mentioned above and it was seriously helpful for my situation with the 1042-S. Uploaded my forms and it immediately flagged that Morgan Stanley had been treating me as a non-resident for part of the year despite my status. The tool showed me exactly how to enter my 1042-S in FreeTaxUSA (found under "Less Common Income" → "Other Income" → then selecting 1042-S from the dropdown). It also confirmed I needed to claim the full $265 withholding as federal tax already paid. The best part was it compared my forms line-by-line and showed me exactly where there was overlap so I didn't double-report anything. My refund ended up being about $200 more than what I initially calculated before using the tool, mostly because I wasn't properly claiming all my withholding.

If you're still having trouble getting through to the IRS to clarify this situation, I'd recommend trying https://claimyr.com - I used them when I had a similar issue with mismatched forms last year. I spent days trying to call the IRS directly with no luck - either constant busy signals or disconnected after waiting for an hour. Claimyr got me connected to an actual IRS agent in under 20 minutes who confirmed exactly how to report my 1042-S as a resident. They basically call the IRS for you and then call you when they've got an agent on the line. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - they navigate the IRS phone tree for you which saved me so much frustration. The agent I spoke with confirmed that the 1042-S withholding definitely needs to be claimed as federal tax withheld.

I take back what I said about Claimyr. After trying for THREE DAYS to get through to the IRS myself about my 1042-S/1099-DIV issue, I gave it a shot. Was completely shocked when I got connected to an IRS agent in about 15 minutes. The agent confirmed that since I'm a resident, I should report the income from the 1042-S in the same category as my 1099-DIV (dividend income), but make sure to claim the $265 withholding as federal tax already paid. She explained that financial institutions sometimes mess up the reporting when your status changes, but the IRS looks at your actual tax status for the year, not what Morgan Stanley thought your status was. The agent even gave me specific instructions for FreeTaxUSA, mentioning I needed to go to the "Federal Tax Withheld" section and add the withholding separately from the income reporting. Saved me a ton of stress knowing I'm filing correctly now!

As someone who deals with international tax issues, I can tell you that Morgan Stanley likely didn't update your residency status properly in their system. This happens ALL THE TIME with brokerage firms. If you're absolutely certain you were a US resident for tax purposes for the entire year of 2024, then you should: 1) Report all dividend income (combining both forms, but being careful not to double-count) 2) Claim all federal tax withholding (the $265 plus any withholding shown on the 1099-DIV) 3) You don't need to file Form 1116 for foreign tax credits since this is US-source income with US withholding You might want to contact Morgan Stanley to update your status for 2025 so this doesn't happen again.

Has anyone else noticed that Morgan Stanley seems to mess this up a lot? I had the same issue when I became a resident, and it took them forever to update their systems. Their customer service was useless when I tried to get help too. Anyone have any luck getting them to fix this?

I'm dealing with a very similar situation right now! I received both forms from E*Trade for the same reason - they had me classified as a non-resident for the first part of 2024 even though I've been a US resident the whole year. What really helped me was calling the IRS directly to confirm the reporting approach. The agent I spoke with explained that this is actually pretty common when brokerage firms don't update residency status quickly enough in their systems. She confirmed that as a US resident, I should report the dividend income from both forms as regular dividend income, but enter them separately to ensure all withholding is properly credited. The key thing she emphasized was making sure I claim ALL the federal tax withholding from both forms - don't miss any of it because that's money you've already paid to the IRS. In my case, the 1042-S withholding was actually higher than normal dividend withholding rates, so I ended up getting a bigger refund than expected. For FreeTaxUSA specifically, I found the 1042-S entry under "Federal" → "Income" → "Less Common Income" → "Other Income Not Reported on Form 1099" and then there's a specific dropdown option for 1042-S. Make sure to enter the withholding amount in the federal tax withheld section when prompted.