Instructions for Filling Out Form 1042-S

Instructions for Filling Out Form 1042-S

Written by 
Pilot Team
January 13, 2023
Instructions for Filling Out Form 1042-S

This article offers a concise overview of Form 1042-S, a document used to report amounts paid from U.S. sources to foreign persons subject to income tax withholding. It covers various types of income, including interest, dividends, royalties, scholarships, and fellowship grants. Additionally, the form reports amounts withheld under chapters 3 and 4 of the Internal Revenue Code, effectively connected income, and distributions from publicly traded partnerships subject to withholding.

In this article, we'll provide information on Form 1042-S and a step-by-step guide on how to fill it out, keeping it straight to the point.

What is Form 1042-S?

Form 1042-S is a document used to report income from U.S. sources paid to foreign persons, including those presumed to be foreign, or included in a U.S. payee pool. This form is applicable even if no amount is withheld due to a treaty or tax exception, or if any withheld amount was repaid to the payee. It covers income subject to reporting under chapters 3 and 4, specified federal procurement payments, eligible deferred compensation items, distributions from nongrantor trusts to covered expatriates, and certain distributions made by publicly traded trusts and QIEs. Key components of the form include income codes, exemption codes, recipient status codes, limitation on benefits (LOB) codes, and specific boxes for reporting various income and tax-related information.

Who Must File Form 1042-S?

Every withholding agent must file Form 1042-S to report amounts paid during the preceding calendar year from U.S. sources to foreign persons, including those presumed to be foreign or included in a U.S. payee pool, that are reportable under chapters 3 and 4. This is applicable even if no amount is deducted and withheld from the payment due to a treaty or tax exception, or if any withheld amount was repaid to the payee. However, individual withholding agents not making payments as part of their trade or business and with no withholding requirement are not required to report payments on Form 1042-S.

Form 1042-S Tax Filing Deadlines and Due Dates

  • March 15, 2025: Forms 1042-S, whether filed on paper or electronically, must be filed with the IRS and furnished to the recipient by this date.
  • Extensions: To request an extension of time to file Forms 1042-S, file Form 8809. An automatic 30-day extension can be obtained, and a second Form 8809 may be submitted for an additional extension before the end of the initial extended due date.
  • Special Cases:
    • If a partnership withholds on a foreign partner’s share of income after March 15 of the subsequent year, the due date for filing and furnishing the applicable Form(s) 1042-S is September 15 of the subsequent year.

Form 1042-S Late Payment Penalty

There isn’t specific amount for late payment penalty for Form 1042-S in the instructions, though they do discuss penalties related to the failure to file the correct form when due, failure to furnish the correct form to the recipient, and failure to file electronically when required. These penalties vary depending on the timing of the correct filing and the nature of the failure.

Step-by-Step Instructions for Form 1042-S

Step by Step Instructions for Filling Out Form 1042-S:

  1. Determine if you have a filing obligation for Form 1042-S based on the types of payments made to foreign persons.
  2. Identify the correct income code for the type of income paid from Appendix A.
  3. Enter the gross amount of income paid to the recipient in Box 2.
  4. Determine the correct chapter indicator (3 or 4) based on the nature of the payment and enter it in Box 3.
  5. If applicable, enter the correct exemption code for chapters 3 and 4 in Boxes 3a and 4a.
  6. Enter the appropriate tax rate in Boxes 3b and 4b.
  7. Fill in the recipient's information, including name, country code, address, and TIN or GIIN if applicable, in Boxes 13a through 13h.
  8. Report the total amount of U.S. federal tax withheld in Box 7a.
  9. Complete the remaining boxes as applicable, including information about the withholding agent and any intermediary or flow-through entity involved.
  10. Review the form for accuracy, sign, and date it before submission.

The instructions also emphasize the importance of electronic filing for those required to file Form 1042-S electronically and outline the penalties for failure to file correctly or on time.

How to Submit Form 1042-S

To submit Form 1042-S, first determine if you have a filing obligation and identify the appropriate chapter indicator for the payment. Complete all required fields on the form, including income code, gross income, chapter indicator, exemption codes, tax rates, withholding allowance, net income, federal tax withheld, withholding agent's information, and recipient's information. Ensure all information is accurate and follows the specific instructions provided for each box. Once completed, sign and date the form before submission.

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