What should I do if I received a 1042-S instead of a 1099-INT for bank interest?

This is actually a pretty common situation for people who change residency status during the tax year. Since you're now a resident for tax purposes, you're correct that you'll file Form 1040. You don't need to physically submit the 1042-S to the IRS - they already received a copy from the payer. You should report the interest income shown on your 1042-S on Schedule 1 (Form 1040) as "Other Income" with a brief description like "Interest previously reported on Form 1042-S." You'll also want to include it on Schedule B if your total interest income is over $1,500. Keep the 1042-S with your tax records as supporting documentation in case the IRS has questions. The income codes on your form (02 for interest and 15 for tax rate) are consistent with bank interest paid to a non-resident at the time of payment.

I was in this exact situation last year and honestly spent HOURS trying to figure it out. I finally used the tax document review service at https://taxr.ai and it saved me so much stress! You upload your documents and they analyze exactly how to report everything correctly. They immediately identified my 1042-S issue and gave me specific instructions for reporting it on my 1040. They explained that the income codes on my form (mine were also 02 and 15) indicated bank interest that was already reported to the IRS under my tax ID. The system confirmed I needed to include it on Schedule B and Schedule 1, and even provided the exact wording to use for my situation.

Just wanted to follow up on my own experience. After seeing the recommendation, I tried https://taxr.ai for my 1042-S issue and wow - what a relief! The system instantly recognized my 1042-S from the UK and gave me step-by-step instructions for reporting it properly. It confirmed exactly which lines to use on my 1040 and what description to include so the IRS would understand I wasn't double-reporting income. The analysis also explained why I received 1042-S instead of 1099-INT (because of my residency status change mid-year) and how the tax treaty with my home country affected everything. My return was accepted by the IRS without any issues!

If you're still having trouble after trying to sort through the forms yourself, another option is to actually speak with someone at the IRS directly about your situation. As someone who had foreign income reporting issues last year, I spent WEEKS trying to get through to the IRS international tax line. I finally used https://claimyr.com and they got me a callback from the IRS in under 2 hours! You can see a video of how it works here: https://youtu.be/_kiP6q8DX5c. Their system basically navigates the IRS phone tree for you and gets you in the callback queue. The IRS agent I spoke with confirmed exactly how to report my 1042-S income on my 1040 and explained why the codes matter (mine were different from yours but still related to foreign income). Best $20 I ever spent instead of waiting on hold for hours.

I need to apologize for my skepticism about Claimyr. After struggling for another week trying to reach someone at the IRS about my 1042-S vs 1099-INT situation, I broke down and tried the service. Within 90 minutes, I got a call directly from an IRS representative who specialized in international tax issues. The agent walked me through exactly how to report my foreign interest income on my 1040, explained what my specific income codes meant (mine were 02 and 15 also), and even gave me tips for avoiding this issue next year by updating my W-8BEN with my bank now that I'm a resident. Definitely worth it for the peace of mind alone, and I've already filed my return correctly.

Just want to add that you should definitely double-check if the amount on your 1042-S is correct. When I was in your situation, the bank reported the wrong amount on my 1042-S (they included some fees that shouldn't have been there). If you notice any discrepancies between what you think you earned in interest and what's on the form, contact your bank's tax department directly. They can issue a corrected 1042-S if needed. Much easier to fix before you file than having to amend later!

Anyone know if reporting income from a 1042-S affects your eligibility for the Foreign Tax Credit? I have both 1042-S and 1099-INT forms this year and I'm trying to figure out if I can claim FTC for both income types since some tax was withheld on the 1042-S.

I went through this exact same situation two years ago when I transitioned from F-1 student status to permanent resident. The key thing to remember is that you're absolutely on the right track - you do need to report this income on your Form 1040 even though you received a 1042-S. One thing I learned the hard way is to make sure you check if your bank has your updated residency status on file. Since you're now a resident, you should submit a new W-9 to replace any W-8BEN they have on file. This will ensure you get proper 1099-INT forms next year instead of dealing with this 1042-S situation again. Also, don't forget that if you had any tax withheld earlier in the year when you were still a non-resident (from other sources), you can claim credit for those withholdings on your 1040. The timing of your status change matters for determining what credits you're eligible for throughout the tax year.