Form 1042-S

What is Form 1042-S? 

Form 1042-S is a document from the Internal Revenue Service (IRS) and is also called “Foreign Person’s U.S. Source Income Subject to Withholding.” If the U.S.-based businesses or institutions made payments to foreign persons (or persons who are presumed to be foreign), these must be reported to the IRS through Form 1042-S. 

Form 1042-A is not to be used in reporting any item that is required to be reported on any of the following: 

• Form W-2
• Form 1099
• Form 8288-A
• Form 8966

Who is required to file Form 1042-S? 

Form 1042-S is used by every withholding agent who made any payment subject to withholding to a foreign person. A withholding agent could be a U.S. employer, business, university, or other institution. Whether the tax was withheld or not, all payments must be reported on Form 1042-S.

One copy is to be sent to the IRS and one copy to the recipient of the payment. Keep in mind that these are payments made to foreign persons only. Payments made to a U.S. citizen, resident alien, or U.S. national are not reported using Form 1042-S. 

What are the types of payments that must be reported on Form 1042-S? 

Payments made from U.S. sources to foreign persons must be reported on Form 1042-S. This includes payments even if no amount was deducted or withheld because of a valid exemption. Additionally, each type of income needs a separate Form 1042-S.

Examples of payments to be reported include: 

• Interest on deposits paid to nonresident aliens
• Interest on deposits from U.S. sources subject to withholding
• Corporate distributions
• Rents
• Royalties
• Compensation for independent personal services performed in the U.S.
• Annuities
• Pension distributions and other deferred income
• Gambling winnings
• Insurance premiums from U.S. sources
• Specified federal procurement payments
• Amounts paid to students, teachers, and researchers
• Amounts paid to foreign governments, foreign central banks, and international organizations

Can I file Form 1042-S electronically?

Yes, Form 1042-S can be filed electronically. The IRS encourages filings to be done this way. However, according to the IRS, electronic filing of Form 1042-S is required for the following:

• Individuals, corporations, partnerships, trusts, or estate that is filing 250 or more Form 1042-S;
• U.S. and foreign financial institutions (regardless of the number of Form 1042-S you will file);

All electronic filings are made through the FIRE system which operates 24/7. You may visit https://fire.irs.gov. If you will file electronically, there is no need to file the same form on paper. You may incur unnecessary penalties for a duplicate filing. 

When should I file Form 1042-S? 

The due date for filing Form 1042-S with the IRS is March 15th of the year after the payment was made. This is also the due date of sending a copy to the recipient of the income. 

If you think you will need more time to complete and file Form 1042-S, don’t worry. You can make an extension request by submitting Form 8809 to the IRS which is the Application for Extension of Time to File Information Returns. If you request additional time before the due date of Form 1042-S, you will get an automatic 30-day extension to file your Form 1042-S.  

Who receives a copy of Form 1042-S? 

Foreign persons who are recipients of payments from U.S. businesses and institutions typically receive a Form 1042-S. They receive a form for each type of income that they incur. From U.S. sources. Examples of recipients are foreign students, teachers, professors, postdoctoral fellows at American educational institutions, and employees who are nonresident aliens under a tax treaty. 

Is Form 1042-S the same as Form 1042? 

These two forms are not the same. Form 1042 is the Annual Withholding Tax Return for U.S. Source Income of Foreign Persons. It is concerned with reporting the tax withheld on the income of foreign persons. On the other hand, Form 1042-S is only focused on the payments made to foreign persons, and not the taxes withheld on these payments.