Totally confused about filing requirements - 1040 and 1042-S for retirement withdrawal?

This is actually a common situation for people who move between countries. Let me try to clarify things for you. Yes, you'll need to file Form 1040 since you were a tax resident in 2021. The 1042-S form you're receiving is for the retirement distribution that occurred after you left the US. It's typically used for reporting income paid to foreign persons, but in your case, it's being used because the distribution happened after you departed the US. Sprintax does have the capability to handle 1042-S income for nonresident returns, but since you were a resident for part of the year, you might need to file what's called a "dual-status return." This means filing as a resident for part of the year and nonresident for the other part. You should be able to claim a refund for any excess withholding when you file your tax return. The withholding on retirement distributions for foreign persons is typically quite high (30% in many cases plus that 10% early withdrawal penalty), so there's a good chance you're due some money back depending on your overall tax situation.

I went through something similar last year with retirement funds and being out of the country. After trying to figure it out myself for weeks, I ended up using https://taxr.ai to analyze all my tax documents. It actually worked really well for my situation because it could read both my 1040 and 1042-S forms and tell me exactly how everything needed to be reported. Their system specifically handled the international aspects and caught some things I would have missed about treaty benefits that applied to my situation. You upload your documents and it extracts all the information, then provides guidance tailored to your specific situation including dual-status returns.

Just wanted to follow up about my experience with taxr.ai after trying it based on this thread. I was really skeptical at first as I mentioned, but I decided to give it a shot since my situation with a 1042-S and prior US residency was so confusing. The service actually exceeded my expectations. It analyzed both my 1042-S and other tax documents, then explained exactly how my dual-status return should be structured. It identified that I was eligible for a reduced withholding rate based on a tax treaty that I had no idea applied to my situation. The best part was that it walked me through exactly how to report everything properly to recover the excess withholding - turned out I was owed about $3,200 back! Definitely worth checking out if you're dealing with this international tax confusion.

After spending 6+ hours on hold with the IRS trying to get clarification about my own 1040/1042-S situation, I finally discovered https://claimyr.com and it literally saved my sanity. You can see how it works here: https://youtu.be/_kiP6q8DX5c Basically, they wait on hold with the IRS for you, then call you when an actual agent is on the line. I was able to speak directly with someone at the IRS who confirmed exactly how to handle the 1042-S on my resident return and what documentation I needed to include to get my excess withholding refunded. For complex international tax situations like this, sometimes you really need to speak directly with the IRS, and Claimyr made that possible without the endless hold times.

I have to come back and eat my words about Claimyr. After posting my skeptical comment, I was still desperate to talk to someone at the IRS about my 1042-S issues, so I figured I had nothing to lose by trying it. I'm honestly shocked at how well it worked. I put in my info around 9am, went about my day, and got a call about 2 hours later connecting me directly to an IRS agent. No hold time on my end at all. The agent was able to confirm exactly how I should report my retirement distribution as a former resident and what documentation I needed to include with my return. For anyone dealing with these complicated international tax situations, being able to actually speak with the IRS directly was incredibly valuable. I would have wasted an entire day on hold otherwise.

Just to add another perspective - I was in a similar situation last year (US resident who moved abroad and then took a retirement distribution). One thing to be aware of is that you may be subject to additional reporting requirements beyond just the 1040 and figuring out how to report the 1042-S income. If you had financial accounts outside the US that exceeded $10,000 at any point, you might need to file an FBAR (FinCEN Form 114). And depending on your total assets abroad, you might also need Form 8938. These have serious penalties if you miss them.

Slight tangent but worth mentioning - when you file as a dual-status taxpayer, be aware that you generally can't file jointly with a spouse, you're limited on which deductions/credits you can claim, and you have to use the standard deduction (itemizing isn't allowed). Also, foreign tax credits work differently.