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I received an income (university student fellowship) and I want to use a tax treaty exemption for this type of income. I received form 1042-S for this income from my university.

I think the federal tax retun I filled out correctly, and I will attach the federal copy of the form 1042-S to my tax return.

However, how should I proceed when filing the state tax return? As far as I can tell, there is no way to report the exempt income on the state tax return. Then the options are

1) Leave out the copy of the form 1042-S from my state tax return.

2) Attach it, even though the income on the fom 1042-S is not reflected anywhere on the state tax return.

Both of these options seem somewhat wrong to me. Which one should I choose?

  • Did you have state tax withheld from your income? If so, is the state withholding shown on your 1042-S? Which state is it? – Ben Miller - Reinstate Monica Apr 17 '18 at 12:53
  • It is Indiana. I did not have any state tax witheld (only federal). – nralien Apr 17 '18 at 13:03
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State tax forms differ, but usually ask very specific questions: "Enter the amount shown on Form 1040 line 37...". They don't ask you to report any more income or information than you have already reported on your federal return. Thus, if the income you're talking about wasn't included in those fields which you pulled over from your 1040, then there's no need to send in additional documentation. Looking at Indiana's State Income Tax Form, it seems to follow that pattern.

  • However, some states don't recognize tax treaties that don't specifically exempt state taxes. For those states, you would need to add the exempted income back in after carrying over the fields from the federal tax return. California is such a state. – user102008 Apr 20 '18 at 19:22

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