Form 1042-S is used to report amounts paid to foreign persons (including persons presumed to be foreign) that are subject to tax withholding, even if no amount is deducted and withheld from the payment because of a treaty or exception to taxation, or if any amount withheld was repaid to the payee. It is also used to report amounts withheld under Chapter 3 of the Internal Revenue Code.
To enter your withholding on scholarship or fellowship income in the program:
- From within your TaxAct® return (Online or Desktop), click Federal. On smaller devices, click the icon in the upper left-hand corner, then select Federal.
- Click Form 1042-S (Note. You will only see this topic if you are filing Form 1040NR).
- Click +Add Form 1042-S to create a new copy of the form or Review to review a form already created
- Enter the withholding information directly on the form and close the quick-entry window (information entered will auto-save)
Note: Any income entered on Form 1042-S will not transfer anywhere else in the program. It must be manually entered on the applicable form(s) or schedule(s) to be properly reported on your return.
Scholarship or fellowship income reported on Form 1042-S is reported in the education section of the Federal Q&A. If any of the scholarship or fellowship income is exempt by tax treaty, do not include it in your income entry.
To enter your scholarship or fellowship income in the program:
- From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click the icon in the upper left-hand corner, then select Federal.
- Click Education to expand the category, then click Student Worksheet (tuition, scholarships)
- Click +Add Student Information to create a new copy of the worksheet or Review to review a worksheet already created
- Continue through the Education section of the Q&A until you reach the screen titled Student Information - Education Assistance. If you entered scholarship or grant amounts on the Form 1098-T, you will see those amounts here. If you need to enter any additional assistance amounts, enter those now, then click Continue.
- If you entered an amount for scholarships, grants, or fellowships you will now see a screen titled Student Information - Scholarship Income. Enter any amount that was received for teaching, research, or other services, then click Continue.
- On the following screen, you will want to enter any remaining amount that was used for UNQUALIFIED education expenses, then click Continue. Any amount not entered as used for unqualified expenses will then get treated as being used for qualifying expenses.
Any amount not used for qualifying education expenses is reported as taxable wages on your tax return. Please review IRS Publication 970 to determine which educational expenses are qualified or for additional information.