Discussion of Form 1042, Form 1042-S and Form 1042-T

 

Use Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, to report:

  • Tax withheld under chapter 3 on certain income of foreign persons, including nonresident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts;
  • The tax withheld under chapter 4 on withholdable payments;
  • The tax withheld pursuant to section 5000C on specified federal procurement payments;
  • The tax withheld under section 877A on payments of eligible deferred compensation items or distributions from nongrantor trusts to a covered expatriate;
  • Payments that are reported on Form 1042-S under chapter 3 or 4.

Use Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, to report:

  • Amounts paid to foreign persons from U.S. sources that are reportable under chapter 3 or 4 (regardless of whether or not withholding was required);
  • Amounts withheld under chapters 3 and 4;
  • Specified federal procurement payments subject to withholding under section 5000C, and certain payments subject to section 877A;
  • Certain distributions by publicly traded trusts, qualified investment entities, and publicly traded partnerships.

Caution! Carefully review the Instructions for Form 1042-S and ensure that the proper Form 1042-S is used for income paid during that year. For example, the 2019 Form 1042-S must be used to report income paid in 2019.

Use Form 1042-T, Annual Summary and Transmittal of Forms 1042-S, to transmit paper Forms 1042-S to the Internal Revenue Service. Use a separate Form 1042-T to transmit each type of Form 1042-S.

Caution! Do not use Form 1042-T if you submit Forms 1042-S electronically.

Foreign Account Tax Compliance Act (FATCA). The Form 1042, Form 1042-S and Form 1042-T were modified in 2014 primarily for withholding agents to report payments and amounts withheld under the provisions commonly known as FATCA (or Chapter 4 of the Internal Revenue Code), in addition to those payments and amounts required to be reported under Chapter 3 of the Internal Revenue Code.

When Due

The Forms 1042, 1042-S and 1042-T must be filed by March 15 of the year following the calendar year in which the income subject to reporting was paid. If March 15 falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.

Who Must File

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, or a withholdable payment (to which chapter 4 withholding applies) must file Form 1042.

Caution! File only one Form 1042 consolidating all Form 1042-S recipient information for both chapter 3 and 4 purposes, regardless of the number of different clients, branches, divisions, or types of income for which you are the withholding agent. However, if you are acting in more than one capacity (for example, you are acting as a qualified Intermediary for certain designated accounts and as a nonqualified Intermediary for other accounts), file a separate Form 1042 for each capacity in which you are acting.

Do not attach paper Forms 1042-S with your Form 1042. Form 1042 could be filed separately and does not have to be accompanied by Form 1042-T with attached paper Form(s) 1042-S.

Where to File

You must file Forms 1042 with the:

Ogden Service Center
P.O. BOX 409101
Ogden, UT 84409

You must use Form 1042-T to transmit paper Forms 1042-S. Use a separate Form 1042-T to transmit each type of Form 1042-S.

Electronic filing requirement. Financial institutions must file Forms 1042-S electronically. The IRS encourages all other filers of Form 1042-S to file them electronically; however, they are not required to do so unless the number of forms they are required to file exceeds a certain threshold. See Electronic Reporting.

Reporting Agent Authorization

You must use Form 8655, Reporting Agent Authorization to inform the IRS if a different entity is acting as your reporting or paying agent for Forms 1042 or 1042-S. See Reporting Agents File.

Extension of Time to File

You may request an extension of time to file Form 1042 by filing Form 7004, Application for Extension of Time to File Certain Excise, Income, Information, and Other Returns. Form 7004 does not extend the time for payment of tax. A separate extension Form 8809, Application for Extension of Time to File Information Returns, is used to request an extension of time to file Forms 1042-S.

Interest and Penalties

If you file Form 1042 and/or Form 1042-S late, or fail to pay or deposit the tax when due, you may be liable for penalties and interest unless you can show that the failure to file or pay was due to reasonable cause and not willful neglect. For more information refer to the instructions attached to Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.

Refer to the Instructions for Forms 1042, 1042-S and 1042-T, and Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for more details.

References/Related Topics