Specific Instructions for Withholding Agents

All amounts must be reported in U.S. dollars.

Rounding Offto Whole Dollars

You may round off cents to whole dollars. If you do round to whole dollars, you must round all amounts. To round off amounts to the nearest whole dollar, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3. If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding and only round off the total.

AMENDED Checkbox

See Amended Returns, later.

PRO-RATA BASIS REPORTING Checkbox

Withholding agents must check this box to notify the IRS that an NQI that used the alternative procedures of Regulations section 1.1441-1(e)(3)(iv)(D) failed to properly comply with those procedures. See Pro-rata reporting, earlier, for additional information and examples.

Box 1, Income Code

All filers must enter the appropriate 2-digit income code from the list, earlier. Use the income code that is the most specific. See Pub. 515 for further explanation of the income codes. Below are examples on how to use some of the income codes. 

  1. Use code 09 for the following types of capital gain:

    1. Gains on disposal of timber, coal, or domestic iron ore with a retained economic interest, unless an election is made to treat those gains as income effectively connected with a U.S. trade or business;

    2. Gains on contingent payments received from the sale or exchange after October 4, 1966, of patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and other like property;

    3. Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966; and

    4. Certain gains from the sale or exchange of original issue discount obligations issued after March 31, 1972.

  2. Use code 16 for payments for personal services performed by an independent contractor as contrasted with those performed by an employee. This includes payments that are subject to the business profits article of a treaty.

  3. Use code 29 if you are paying bank deposit interest, not code 01 (interest paid by U.S. obligors—general).

  4. Use code 24 for distributions of capital gains from a real estate investment trust (REIT). Use code 36 for capital gain distributions (dividends) paid or credited by mutual funds (or other regulated investment companies). Include short-term capital gain dividends (use exemption code 02 in box 6).

    Note.

    Exempt-interest dividends should be reported under income code 01 (use exemption code 02 in box 6).

  5. Use code 28 for gambling winnings. These are proceeds from a game other than blackjack, baccarat, craps, roulette, or big-6 wheel. For more information, see Pub. 515.

  6. Use code 33, 34, or 35 for all substitute payment transactions. For more information, see Regulations sections 1.861-2(a)(7) and 1.861-3(a)(6) and Notice 2010-46.

  7. Use code 37 for a nondividend distribution (return of capital). This is a distribution that is not paid out of the earnings and profits of a corporation. It represents a distribution in part or full payment in exchange for stock.

  8. Use code 40 for other U.S.-source dividend equivalents. These are dividend equivalent payments under section 871(m) that are not substitute dividend payments identified with income code 34.

  9. Use code 41 for certain guarantee of indebtedness payments. These are amounts paid for the provision of a guarantee of indebtedness that was issued after September 27, 2010.

  10. Use either code 42 (earnings as an artist or athlete—no central withholding agreement) or 43 (earnings as an artist or athlete—central withholding agreement) for payments to an artist or athlete. A central withholding agreement is Form 13930, Application for Central Withholding Agreement, plus additional information specified in the instructions, that is entered into by the artist or athlete, a designated withholding agent, and the IRS. For more details, see Pub. 515.

If you paid more than one type of income to or on behalf of the same recipient, you must complete a separate Form 1042-S, Copy A, for each income type.

Note.

Although income codes are provided for deposit interest, short-term OID, and notional principal contract income, those items are not always subject to reporting on Form 1042-S. For example, bank deposit interest is reportable if it is effectively connected with the conduct of a U.S. trade or business or is paid to a resident of Canada. Short-term OID or bank deposit interest may need to be reported by an NQI or flow-through entity if those amounts are paid to foreign persons and another withholding agent backup withheld on those amounts under the presumption rules. (See Example 3 in Amounts Paid by Nonqualified Intermediaries and Flow-Through Entities, earlier.) Notional principal contract income is reportable if it is effectively connected with the conduct of a trade or business in the United States or results in the payment of interest under Regulations section 1.446-3(g)(4) or a dividend equivalent under section 871(m). For more information, see the regulations under Chapter 3 of the Code and Pub. 515.

Box 2, Gross Income

For each income type, enter the gross amount you paid to or on behalf of the recipient during calendar year 2012, including withheld tax. The following special procedures apply to the reporting of gross income.

  • You must report the entire amount of a corporate distribution made with respect to stock even if you elect to reduce the amount of withholding on the distribution because all or a part of the distribution is nontaxable or represents a capital gain dividend.

  • You must report the entire amount of a payment if you do not know at the time of payment the amount that is subject to withholding because the determination of the source of the income or the calculation of the amount of income subject to tax depends upon facts that are not known at the time of payment.

  • You must report the entire amount of gains relating to the disposal of timber, coal, or domestic iron ore with a retained economic interest and gains relating to contingent payments received from the sale or exchange of patents, copyrights, and similar intangible property.

  • You must report only the amount of cash paid on notional principal contracts.

Box 3, Withholding Allowances

This box should be completed only if the income code reported in box 1 is 15 (scholarship or fellowship grants), 16 (compensation for independent personal services), 17 (compensation for dependent personal services), 18 (compensation for teaching), 19 (compensation during studying and training), or 42 (earnings as an artist or athlete—no central withholding agreement). See Pub. 515 for more information.

Box 4, Net Income

Complete this box only if you entered an amount in box 3. Otherwise, leave it blank.

Box 5, Tax Rate

Enter the correct rate of withholding that applies to the income in box 2 (gross income) or box 4 (net income), as appropriate. (See Valid Tax Rate Table, later.) The correct tax rate should be included even if you withheld at a different rate. For example, if an NQI is reporting dividends paid to a beneficial owner who is a resident of a country with which the United States does not have a tax treaty and a U.S. withholding agent paid the dividend and withheld only 15% (rather than the required 30%) and the NQI withholds an additional 15%, the NQI should report “30.00” in box 5. See Example 2 in Amounts Paid by Nonqualified Intermediaries and Flow-Through Entities, earlier.

The tax rate on dividends paid to a corporation created or organized in, or under the law of, the Commonwealth of Puerto Rico may be 10%, rather than 30%. See Pub. 515 for more information.

Enter the tax rate using the following format: two digits, a decimal, and two digits (for example, “30.00” for 30%). However, if the income is exempt from tax under a U.S. tax treaty or the Code, enter “00.00.” If the tax rate is less than 10%, enter a zero before the tax rate (for example, “04.00” for 4%).

If you withheld at more than one tax rate for a specific type of income that you paid to the same recipient, you must file a separate Form 1042-S, Copy A, for each amount to which a separate rate was applied.

Valid Tax Rate Table

00.00 07.00 14.00 27.50
04.00 08.00 15.00 28.00
04.90 10.00 17.50 30.00
04.95 12.00 20.00 35.00
05.00 12.50 25.00  

Exception for central withholding agreements.   If you are the designated withholding agent who has entered into a central withholding agreement and you report an amount in box 2 using income code 43, you do not have to enter a tax rate in box 5.

Box 6, Exemption Code

Note.

If you are filing a Form 1042-S to correct certain information already provided to you by another withholding agent on a Form 1099 or Form 1042-S (for example, as required under Amounts Paid by Nonqualified Intermediaries and Flow-Through Entities, earlier), see item 5 under this heading.

In most cases, if the tax rate you entered in box 5 is 00.00, you should enter the appropriate exemption code (01 through 10) from Income Codes, Exemption Codes, and Recipient Codes, earlier.

If an amount was withheld under Chapter 3 of the Code (the tax rate you entered in box 5 is greater than zero and is not due to backup withholding), enter “00” in box 6. If the tax rate you entered in box 5 is due to backup withholding, leave box 6 blank.

  1. If exemption code 01 (income effectively connected with a U.S. trade or business) may apply, you must enter the recipient's U.S. TIN in box 14. If the recipient's U.S. TIN is unknown or unavailable, you must withhold tax at the foreign-person rate of 30% (30.00) and enter “00” in box 6.

  2. A withholding agent should use exemption code 06 (qualified intermediary that assumes primary withholding responsibility) only if it is making a payment to a QI that has represented on its Form W-8IMY that it is assuming primary withholding responsibility under Chapter 3 of the Code.

  3. A withholding agent should use exemption code 07 (withholding foreign partnership or withholding foreign trust) only if it is making a payment to a foreign partnership or trust that has represented that it is a withholding foreign partnership or trust.

  4. A withholding agent should use exemption code 09 (qualified intermediary represents income is exempt) only if it makes a payment to a QI that has not assumed primary withholding responsibility under Chapter 3 of the Code or primary backup withholding responsibility, but has represented on a withholding statement associated with its Form W-8IMY that the income is exempt from withholding.

  5. A withholding agent should use exemption code 10 (qualified securities lender that assumes primary withholding responsibility for substitute dividends) only if the withholding agent makes a substitute dividend payment to a financial institution that is a QSL.

  6. If you have failed to provide another withholding agent with appropriate information regarding the status of the person to whom you are making a payment, the other withholding agent may be required to withhold on the payment based on the presumption rules. If the income is in fact exempt from withholding, you must submit a Form 1042-S providing the correct information. In this situation, you must:

    1. Indicate the correct rate at which the income should have been subject to withholding in box 5 (usually 00.00),

    2. Enter “99” in box 6, and

    3. Enter the actual amount of U.S. federal tax withheld by the other withholding agent in box 8.

You also must provide the correct recipient code and the name and address of the actual recipient in boxes 13a through e.

Boxes 7 Through 9, Federal Tax Withheld

Box 7.   Enter the total amount of U.S. federal tax you actually withheld in box 7. If you did not withhold any tax, enter “-0-.

Box 8.   If you are a withholding agent filing a Form 1042-S to report income that has already been subject to withholding by another withholding agent, enter the amount actually withheld by the other agent(s) in box 8. Further, report in box 8 any credit forward of prior withholding as determined under Notice 2010-46 with respect to substitute dividend payments.

Box 9.   Enter the total amount of tax withheld by you and any other withholding agent in box 9.

  
Boxes 7 and 9 must be completed in all cases, even if no tax has actually been withheld.

Box 10, Amount Repaidto Recipient

This box should be completed only if:

  • You repaid a recipient an amount that was overwithheld; and

  • You are going to reimburse yourself by reducing, by the amount of tax actually repaid, the amount of any deposit made for a payment period in the calendar year following the calendar year of withholding.

In most cases, a QI should not enter an amount in box 10 unless it is a QI that has represented on its Form W-8IMY that it is assuming primary withholding responsibility under Chapter 3 of the Code.

You also must state on a timely filed Form 1042 for the calendar year of overwithholding that the filing of the Form 1042 constitutes a claim for refund.

The adjustment for amounts overwithheld does not apply to partnerships or nominees required to withhold under section 1446.

Box 11, Withholding Agent's Employer Identification Number (EIN)

In most cases, you are required to enter your EIN. However, if you are filing Form 1042-S as a QI, withholding foreign partnership, or withholding foreign trust, enter your QI-EIN, WP-EIN, or WT-EIN and check the QI-EIN box.

If you do not have an EIN, you can apply for one online at  
www.irs.gov/businesses/small or by telephone at 1-800-829-4933. Also, you can apply for an EIN by filing Form SS-4, Application for Employer Identification Number. File amended Forms 1042-S when you receive your EIN.

To get a QI-EIN, WP-EIN, or WT-EIN, submit Form SS-4 with your application for that status. (See the definitions for Qualified intermediary (QI) and Withholding foreign partnership (WP) or withholding foreign trust (WT) in Definitions, earlier, for more information.)

Box 12, Withholding Agent's Nameand Address

Enter your name and address in the appropriate boxes. If your post office does not deliver mail to the street address and you have a P.O. box, show the box number instead of the street address.

If you are a nominee that is the withholding agent under section 1446, enter the PTP's name and other information in boxes 17 through 20.

Note.

On statements furnished to Canadian recipients of U.S. source deposit interest, in addition to your name and address, you must include the telephone number of a person to contact. This number must provide direct access to an individual who can answer questions about the statement. The telephone number is not required on Copy A of paper forms or on electronically filed forms. You also must include a statement that the information on the form is being furnished to the United States Internal Revenue Service and may be furnished to Canada.

Box 13, Recipient'sName, Recipient Code, and Address

Name.   Enter the complete name of the recipient in box 13a.
  • If you do not know the name of the recipient, enter “Unknown Recipient.

  • If Form 1042-S is being completed by a QI, WP, or WT for a withholding rate pool, enter “Withholding rate pool” in box 13a. No address is necessary.

  • A QI reporting payments made to a PAI on a withholding rate pool basis must include the name and address of the PAI in boxes 13a through 13e.

Recipient code.   Enter the recipient code from Income Codes, Exemption Codes, and Recipient Codes, earlier, in box 13b. The following special instructions apply.
  • If applicable, use recipient code 09 (artist or athlete) instead of recipient code 01 (individual), 02 (corporation), or 03 (partnership other than a withholding foreign partnership).

  • Use recipient code 12 if you are making a payment to a QI and 04 if you are making a payment to a WP or a WT.

  • If you are making a payment to an NQI or flow-through entity, in most cases you must use the recipient code that applies to the type of recipient who receives the income from the NQI or flow-through entity.

  • Use recipient code 03 (partnership other than withholding foreign partnership) only if you are reporting a payment of income that is effectively connected with the conduct of a trade or business of a nonwithholding foreign partnership in the United States. Otherwise, follow the rules that apply to payments to flow-through entities.

  • Use recipient code 20 (unknown recipient) only if you have not received a withholding certificate or other documentation for a recipient or you cannot determine how much of a payment is reliably associated with a specific recipient. Do not use this code because you cannot determine the recipient's status as an individual, corporation, etc. The regulations under Chapter 3 of the Code provide rules on how to determine a recipient's status when a withholding agent does not have the necessary information.

  • Use recipient code 21 (qualified securities lender—qualified intermediary) or 22 (qualified securities lender—other) if you make a payment to a QSL.

  • Only QIs may use recipient codes 13 (private arrangement intermediary withholding rate pool—general), 14 (private arrangement intermediary withholding rate pool—exempt organizations), 15 (qualified intermediary withholding rate pool—general), and 16 (qualified intermediary withholding rate pool—exempt organizations). A QI should use recipient code 14 or 16 only for pooled account holders that have claimed an exemption based on their tax-exempt status and not some other exemption (for example, treaty or other Code exception). A U.S. withholding agent making a payment to a QI should use recipient code 12.

Address.   In most cases, you must enter a foreign address in boxes 13c through 13e. However, there are limited exceptions. For example, you may enter a U.S. address when reporting payments of scholarship or fellowship grants (income code 15).

  For addresses outside the United States or its commonwealths and possessions, follow the foreign country's practice for entering the postal code.

  For addresses within the United States, use the U.S. Postal Service 2-letter abbreviation for the state name. Do not enter “United States” or “U.S.

  If you want to enter the recipient's account number, use box 22.

Box 14, Recipient's U.S. Taxpayer Identification Number (TIN)

You must obtain and enter a U.S. taxpayer identification number (TIN) for any of the following recipients.

  • Any recipient whose income is effectively connected with the conduct of a trade or business in the United States.

    Note.

    For these recipients, enter exemption code 01 in box 6.

  • Any foreign person claiming a reduced rate of, or exemption from, tax under a tax treaty between a foreign country and the United States, unless the income is an unexpected payment (as described in Regulations section 1.1441-6(g)) or consists of dividends and interest from stocks and debt obligations that are actively traded; dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund); dividends, interest, or royalties from units of beneficial interest in a unit investment trust that are (or were, upon issuance) publicly offered and are registered with the Securities and Exchange Commission under the Securities Act of 1933; and amounts paid with respect to loans of any of the above securities.

  • Any nonresident alien individual claiming exemption from tax under section 871(f) for certain annuities received under qualified plans.

  • A foreign organization claiming an exemption from tax solely because of its status as a tax-exempt organization under section 501(c) or as a private foundation.

  • Any QI.

  • Any WP or WT.

  • Any nonresident alien individual claiming exemption from withholding on compensation for independent personal services.

  • Any U.S. branch of a foreign bank or foreign insurance company that is treated as a U.S. person.

  • Any QSL that was paid a substitute dividend.

In all other cases, if you know the recipient's TIN or if a foreign person provides a TIN on a Form W-8, but is not required to do so, you must include the TIN on Form 1042-S.

Box 15, Recipient's Foreign TaxIdentifying Number

Enter the recipient's identifying number used in the country of residence for tax purposes (optional).

Box 16, Recipient's Country Code

You must enter the code (from Country Codes, later) for the country of which the recipient claims residency under that country's tax laws. Enter “OC” (other country) only when the country of residence does not appear on the list or the payment is made to an international organization (for example, the United Nations). Enter “UC” (unknown country) only if the payment is to an unknown recipient. If you are making a payment to a QI, QSL, WP, or WT, or if you are a QI, QSL, WP, or WT and are making a payment to a QI, WP, or WT withholding rate pool, enter the country code of the QI, WP, or WT.

If exemption code 04 (exempt under tax treaty) appears in box 6 or if a reduced rate of withholding based on a tax treaty is entered in box 5, the country code entered in box 16 must be a country with which the United States has entered into an income tax treaty.

Boxes 17 Through 20, NQI's/Flow-Through Entity's Name, Country Code, Address, and TIN

If you are reporting amounts paid to a recipient whose withholding certificates or other documentation has been submitted to you with a Form W-8IMY provided by an NQI or flow-through entity, you must include the name, address, and TIN, if any, of the NQI or flow-through entity with whose Form W-8IMY the recipient's Form W-8 or other documentation is associated.

You also must provide this information about the NQI or flow-through entity when the NQI or flow-through entity provided a Form W-8IMY but you cannot associate part or all of the payment with valid documentation for a specific recipient or you cannot determine how much of the payment should be associated with a specific recipient.

Note.

An NQI or flow-through entity will leave these boxes blank unless it is making the payment to an NQI or flow-through entity.

For box 18, you must enter the country code from Country Codes, later, for the country where the NQI or flow-through entity is located.

If you are a nominee that is the withholding agent under section 1446, enter the PTP's name and other information in these boxes.

Box 21, Payer's Name and Taxpayer Identification Number (TIN)

See the definition of a payer in Definitions, earlier. Include the payer's name and TIN if different from that in boxes 11 and 12.

Box 22, Recipient's Account Number

You may use this box to enter the account number assigned by you to the recipient.

Boxes 23 Through 25, State Income Tax Withheld and Related Information

Include in these boxes information relating to any state income tax withheld.

Amended Returns

If you filed a Form 1042-S with the IRS and later discover you made an error on it, you must correct it as soon as possible. To correct a previously filed Form 1042-S, you will need to file an amended Form 1042-S.

You may be required to submit amended Forms 1042-S electronically. See Electronic Reporting, earlier, and Pub. 1187.

If any information you correct on Form(s) 1042-S changes the information you previously reported on Form 1042, you also must correct the Form 1042 by filing an amended return. To do this, see the Form 1042 instructions.

If you are filing electronically, see Amended Returns in Pub. 1187.

If you are not filing electronically, follow these steps to amend a previously filed Form 1042-S.

Step 1.   Prepare a paper Form 1042-S.

  
  • Enter all the correct information on the form, including the recipient name and address, money amounts, and codes.

  • Enter an “X” in the AMENDED box at the top of the form.

AMENDED checkbox.   Enter an “X” in the AMENDED checkbox of Copy A only if you are amending a Form 1042-S you previously filed with the IRS. Enter an “X” in the AMENDED checkbox on the copy you give to the recipient only if you are correcting a Form 1042-S previously furnished to the recipient. You must provide statements to recipients showing the corrections as soon as possible.

Step 2.   File the amended paper Form 1042-S with a Form 1042-T. See the Form 1042-T instructions for information on filing these forms.

  
If you fail to correct Form(s) 1042-S, you may be subject to a penalty. See Penalties, earlier.


More Online Instructions