1042-S Form – Practical Information You Need To Know

What You Need To Know About The 1042-S Form

The 1042-S Form is used to report amounts paid to foreign persons (including persons presumed to be foreign) that are subject to income tax withholding, even if no amount is deducted and withheld from the payment because of a treaty or exception to taxation, or if any amount withheld was repaid to the payee. 

The United States Internal Revenue Service (IRS) 1042-S Form for a Foreign Person’s U.S. Source Income Subject to Withholding applies to the reporting of annual income and amounts to be withheld as described in IRS Instructions for Form 1042-S. Other items attendant to the Form 1042-S filing include specified Federal procurement contract payments that have been paid to a foreign national, and meet the criteria for being subject to withholding under IRS code section 5000C, as well as any distribution of income attained by a publicly traded partnership, or effectively connected to a nominee.

The standard rate of tax withholding for a nonresident alien that has received a 1042-S Form is 30%, but there are exceptions including scholarship/fellowship income to F, J, M and Q visa holders.

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 over foreign persons, must file these forms with the IRS. For example, employers that employ non-resident aliens (such as foreign workers or foreign students) would need to file a 1042-S Form with the IRS for every non-resident alien they employ and also send a (completed) copy of that form to the non-resident alien they employ.

Forms 1042 and 1042-S are filed separately. The main difference between forms 1042 and 1042-S is that form 1042-S is concerned with payments made to foreign persons, while form 1042 is concerned with determining how much income will be withheld for tax withholding purposes.

Definition of Foreign Person’s Filing Form 1042-S

IRS criteria for mandatory income tax withholding defines nonresident aliens as individuals who are not a citizen or legal resident of the United States. Persons falling under this classification should file a return using IRS Form 1040NR in conjunction with the Form 1042-S to report amounts paid subject to income tax withholding.

Form 1042-S items in Box 7 US Federal Tax Withheld, and Box 10 Withholding Credit determine if there has been withholding. If those boxes contain a ‘0’ on a filing, nothing has been withheld. Exceptions to taxation may be applicable and may also be specified by tax treaties of the recipient’s country of residence.   

Tax Samaritan is Your Form 1042-S Tax Filing Solution 

With a reputation for helping people with their tax and financial goals, Tax Samaritan is an international tax accounting firm experienced at assisting taxpayers that received a 1042-S form. Our enrolled tax agents bring the convenience and collaboration of a local office to your home or office, wherever you are located in the world, whether abroad or in the United States. We strive to make U.S. tax preparation both accessible and easy for you, providing expert advice, tax solutions, and wealth management to our U.S. taxpayer clients.

If you’re a U.S. taxpayer requiring assistance with a Form 1042-S, or with another tax or financial accounting issue, we can help make the process easy for you. Experience the straightforward approach to tax and financial services with Tax Samaritan.

Our goal at Tax Samaritan is to provide the best counsel, advocacy and personal service for our clients. We are not only tax preparation and representation experts, but strive to become valued business partners. Tax Samaritan is committed to understanding our client’s unique needs; every tax situation is different and requires a personal approach in providing realistic and effective solutions.

If you would like a quote, please click on the button below for a free, no-obligation Tax Preparation quote and/or free 30-minute consultation to discuss your situation regarding filing your 1042-S Form further:

Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self-prepare, providing specific tips and pitfalls to avoid.

When looking for a tax professional, choose carefully.  We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts). If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).

Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections, and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits, and adhere to a stringent code of ethics.

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.

All About Randall Brody
Randall is the Founder of Tax Samaritan, a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the other unique tax issues that apply to taxpayers. Here, they help taxpayers save money on their tax returns.

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