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Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding 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.

If you are filing a Form 1040-NR U.S. Nonresident Alien Income Tax Return, to enter your withholding on scholarship or fellowship income in the program:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Form 1042-S in the Federal Quick Q&A Topics menu.
  3. Click + Add Form 1042-S to create a new copy of the form or click Edit to review a form already created.
  4. Continue with the interview process to enter all of the appropriate information.

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:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Education in the Federal Quick Q&A Topics menu to expand, then click Student Worksheet (tuition, scholarships).
  3. Click + Add Student Information to create a new copy of the form or click Edit to review a form already created.
  4. On the screen titled Student Information - Education Assistance, enter any additional assistance amounts, then click Continue.
  5. 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.
  6. On the following screen, 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 Tax Benefits for Education to determine which educational expenses are qualified or for additional information.

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Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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