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About Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding
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About Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding
What is IRS Form 1042 s?
Forms 1042, 1042-S and 1042-T are United States Internal Revenue Service tax forms dealing with payments to foreign persons, including non-resident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts.
Every withholding agent or intermediary, whether U.S. or foreign, who has control, receipt, custody, disposal or payment of any fixed or determinable, annual or periodic U.S. source income over foreign persons, must file these forms with the IRS. For example, employers that employ non-resident aliens (such as foreign workers or foreign students) would need to file a 1042-S Form with the IRS for every non-resident alien they employ and also send a (completed) copy of that form to the non-resident alien they employ.
Forms 1042 and 1042-S are filed separately. The main difference between forms 1042 and 1042-S is that form 1042-S is concerned with payments made to foreign persons, while form 1042 is concerned with determining how much income will be withheld for tax withholding purposes. Also, Form 1042-S must always be filed together with Form 1042-T, but Form 1042 can be filed by itself.
Who Must File Form 1042-S
Every withholding agent must file an information return, Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, to report amounts paid to foreign persons that are described under Amounts Subject to NRA Withholding and Reporting, even if you did not withhold any tax. Refer to Amounts Not Subject to NRA Withholding and Withholding.
A separate Form 1042-S is required for:
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Each recipient regardless of whether or not you withheld tax.
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Each tax rate (if you withheld at more than one tax rate) of a specific type of income that you paid to the same recipient.
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Each type of income that you paid to the same recipient.
The Form 1042-S can be filed electronically, or on paper. Withholding agents are required to file electronically if there are 250 or more Forms 1042-S. The electronic submissions are filed using the Filing Information Returns Electronically (FIRE) System.
Payments made to joint owners
You are required to file one Form 1042-S to report the payment made to the joint owners of that payment. If, however, any one of the owners requests its own Form 1042-S, you must provide Form 1042-S to the person who requests it in the amount allocable to that person. If more than one Form 1042-S is issued for a single payment, the total amount paid and tax withheld reported on all Forms 1042-S cannot exceed the total amounts paid to joint owners. Example, ABC Bank paid $100 in dividend to Jane and John Smith (who have equal share of ownership) with the withholding rate of 30%. If Jane and John requested separate Forms 1042-S, ABC Bank must file one Form 1042-S with the IRS of $100 dividend income and $30 tax withheld to “John and Jane Smith”; and provide two Forms 1042-S (one to Jane and the other to John) of $50 dividend income and $15 tax withheld on each.
Note: If you are required to file Form 1042-S, you must also file Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons. For more information about the Form 1042, refer to Discussion of Form 1042, Form 1042-T, and Form 10420S.
PURPOSE
Form 1042-S is used to report taxable federal payments and federal tax withholding relating to the following types of income received by U.S. nonresidents:
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Wage payments made to employees who have claimed tax treaty benefits.
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Tax reportable fellowship/scholarship income.
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Service payments made to independent contractors for work performed in the U.S.
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Royalty payments issued to individuals or entities.
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Non-employee prize or award payments.
For an explanation of the information on Form 1042-S, see the article, Alien – Form 1042-S Box Descriptions.
How to get Form 1042-S
Form 1042-S is generated through the GLACIER online tax reporting system and is distributed to all eligible recipients on or before March 15 of each year following the year of payment.
Forms issued to individuals are distributed directly through GLACIER, unless the individual has opted to receive their form by mail. Forms issued to foreign entities are distributed by mail.
When are the forms due?
Forms 1042, 1042-S and 1042-T are due to be filed by March 15 of the year following the calendar year in which the income subject to reporting was paid. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.
Penalties
If Form 1042 and/or Form 1042-S are filed late, or the tax isn’t paid or deposited when due, the filer may be liable for penalties, unless they show that the failure to file or pay was due to reasonable cause and not willful neglect.
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