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Last year I stayed in the US for one month with a J-1 exchange visitor visa. This was part of my job (following an educational bootcamp at a higher educational institution), so my own employer still paid my monthly salary. I did not make any money. The only thing that I can think of is that our hotel and flight was reimbursed by the receiving institution. However, since these things were already reimbursed by a scholarship, I gave the money back.

So now, a year later, I am in my own country for almost a year, and now I get this 1042-S form in the mail (sent by the receiving institution) with no accompanying letter at all. After contacting the institution, they told me they do not know how that form got to me. I will try to find someone who can help me out from their end, but in the meanwhile perhaps someone over here can help me out. You see, I am a bit afraid that if I do not take care of this quickly enough, I might not be allowed to enter the US in the future.

Some things I noticed:

  • I received three copies: B ("for recipient"), C ("for recipient, attach to any federal tax return you file"), D ("for recipientm attach to any state tax return you file"). The original (presumably A (?) is evidently missing)
  • Income code 16 is filled in, this is correct (Scholarship or fellowship grants)
  • Gross income is 1453, which I cannot imagine how they got there, although I supposed it could be possible that the flight + hotel was around that number
  • the withholding agent's name is filled in as the receiving institution
  • recipient's name is my name

My guess is that this is a copy that the receiving institution needs, and they sent me a copy. So I don't have to do anything with it. However, I would like to be very sure of this first. Any insight is welcome.

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If you receive a tax form in the mail, it will usually include several copies (Copy B for your personal records, Copy C to attach to your federal return, and Copy D to file with your state tax return). Which copy you actually use to file your taxes usually doesn't matter, unless you are mailing in a hard copy of your return instead of using e-file.

According to the American Immigration Council, most J-1 exchange visitors are considered nonresident aliens, but you have to verify that you are considered nonresident, as this affects which tax return you file, if you end up needing to file one. The way to determine if you are considered a nonresident alien or a resident alien is by passing either the green card test or the substantial presence test. If you meet the green card test at any time during the calendar year, you are considered a U.S. resident for tax purposes. If you meet the substantial presence test for the calendar year in which you received the 1042-S you will be considered a U.S. resident for tax purposes.

If you received payment(s) for "incidental expenses", which includes room and board, these expenses require the person who paid for them to issue a 1042-S and the payment(s) may be subject to federal, state, and local taxes. It appears that if foreign-source income is shown on a 1042-S, it is normally not taxable. If your gross income is shown as foreign-source on your 1042-S, it is probably not taxable. However, if it is not shown as foreign-source, it may very well be taxable. In your case, I would speak to a CPA or tax professional about whether or not you need to file a tax return, since a tax pro, especially one that specializes in foreign taxation, will be able to give you a definitive and complete answer as to whether your income is taxable. Based on this article from the American Immigration Council, it sounds like you might need to file a 1040-NR, but I cannot say for sure whether you need to file one or whether you need to report the income on the 1042-S. Unfortunately, the tax laws for J-1 visas are somewhat complex, and whether or not you are considered a nonresident alien or a resident alien (determined by the green card test or the substantial presence test) determines which tax form you might need to file, if filing a return is in fact required.

Disclaimer: The research and information presented in this article is for informational purposes only and does not constitute legal advice. It is always a good idea to get a second or even third opinion when it comes to issues in tax law, as tax law is complex and its interpretations and applications vary.

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  • Thanks for the elaborate answer! expenses require the person who paid for them to issue a 1042-S and the payment(s): I asked the institution about this, and they said they already paid tax on the reported gross income. So I would then assume that I do not have to pay tax on them. However, why did I still get the documents in the mail then. I find it a bit odd. I think I do not have to fill them out, then. Aug 6 '20 at 8:13
  • If the institution paid tax, they may have simply paid withholding, and you might be able to claim a refund if you didn't owe tax. I would ask the institution if they paid withholding or actual tax. I believe it is the taxpayer's obligation to pay tax, not the institution's. Aug 6 '20 at 8:24
  • Here I quote them directly: "Although we are not tax advisors, I can tell you what the IRS has on their website, in IRS Publication 519 and in 1040NR Instructions. “You must file a return if you have U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.” The instructions to Form 1040NR show that the tax rate on a 1040NR return is 10% until you have income of $9,700. Since the amount reported is less than $9,700 and we withheld at 14%, it appears that you should not have to file. " Aug 6 '20 at 8:52
  • I would double check with a tax advisor, but it sounds like your gross income is below the filing threshold, which would mean you probably wouldn’t need to file a return. But definitely double check with a tax advisor if you can. Also, if they withheld extra taxes beyond what they should have, you might be able to claim a refund. Aug 6 '20 at 9:17
  • I'm not keen on hiring a tax advisor because I never even received any money. So I would be paying for something that should not be an issue in the first place. Aug 6 '20 at 11:06

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