What is Form 1042-S?
Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, is used to report income paid to foreign persons (nonresident aliens, foreign corporations, etc.) that is subject to U.S. tax withholding or exempt from withholding under a tax treaty.
Who Must File Form 1042-S?
Withholding agents must file Form 1042-S if they pay U.S. source income to foreign persons, including:
- Compensation for services
- Scholarships and fellowships
- Interest
- Dividends
- Royalties
- Pensions and annuities
When is Form 1042-S Due?
Withholding agents must:
- Provide Form 1042-S to recipients by March 15
- File Form 1042-S with the IRS by March 15
What is Reported on Form 1042-S?
The form reports:
- Amount of income paid
- Tax withheld (if any)
- Tax treaty information (if applicable)
- Exemption codes (if applicable)
- Recipient's identifying information
Chapter 3 vs. Chapter 4 Withholding
Form 1042-S is used for both:
- Chapter 3 withholding: Traditional withholding on payments to foreign persons under sections 1441-1443
- Chapter 4 withholding (FATCA): Additional reporting requirements under the Foreign Account Tax Compliance Act
Tax Treaty Benefits
When a foreign person is eligible for reduced withholding under a tax treaty, this is documented on Form 1042-S. The recipient typically provides Form W-8BEN or another Form W-8 to claim treaty benefits.
Relationship to Form 1042
Form 1042-S is filed along with Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons. Form 1042 summarizes the total tax withheld, while Form 1042-S provides details for each recipient.
Official Source: IRS Form 1042-S
