IRS Form 1042-S: How Can Recipients Receive a Refund of Withheld Money?
This is a common question. You received Copy B of IRS Form 1042-S in the mail or by e-mail. The form says that a US company withheld some amount of money from you and sent that withheld money to the IRS. How can you, the recipient of this 1042-S form, get that withheld money? Its your money.
Form 1042-S, Chapter 3, Non-Resident Withholding
The withheld amounts are known as Chapter 3 payments, and the IRS actually makes it easier for non-residents than US citizens to apply for a refund using Form 1040NR, the current non-resident alien income tax return. This has wide application to foreign students who are on scholarship or otherwise earn taxable US income. In many cases, a tax treaty may exist between the US and the non-resident’s home country that would supersede the withholding requirement, or reduce the taxable amount.
On Form 1040NR, Line 12 the filer can list 1042-S scholarship payments as an income amount, and Line 22 is available to list the amount of income exempt under a tax treaty. Any remaining amounts are subject to US taxation after deductions. Presumably, other types of income would be listed as wages or other type of investment gain that would be listed in the appropriate spaces.
More importantly, amounts withheld for any reason and reported on 1042-S would be listed under Payments, Line 61 (d) on 1040NR. This would be a credit against any tax owed on any type of income, and in case no tax is owed, then a refund would be available even to an address or account outside the US.
This process is identical to where anyone filing taxes may have had amounts withheld that exceed their tax, and have to wait for a refund. There is no form or method to simply request a return of over-withheld amounts, and the non-resident is limited to the standard filing and refund process. This may be frustrating for those non-residents who will not owe any tax in the end, but nonetheless have had amounts withheld.
Form 1042-S, Chapter 4, Non-Resident Withholding
Withholding agents who make payments from a US source to non-US financial institutions are required to file informational Form 1042-S as a part of FATCA, designed to identify US account holders who have assets outside the US borders. 1042-S can also include payments to non-US citizens receiving payments from a US source. Each type of payee is designated differently, as either Chapter 3 (non-US citizens) or Chapter 4 (FFIs with US account holders).
Typically, the withholding agents are banks or other payers in the US that are making the payments to foreign financial institutions (FFI), who have a US account holder. These withholding agents are the ones who file the form with the IRS, and if the FFI is not registered with the IRS and does not have a Global Intermediary Identification Number, then the US source must withhold 30% of the payment, and deposit that money with the IRS.
The withholding amount of 30% would be deposited with the IRS, similar to the way that tax is withheld on employee wages. This information would be supplied to the payee in Copy B of Form 1042-S that would detail the amount withheld from the payment, similar to a W-4. The question for many recipients of these forms is how to obtain the withheld amount, assuming the transfer was legitimate and not an effort to avoid payment of tax or a taxable inclusion in gross income.
The amounts withheld would be presumably treated like any amounts withheld and deposited with the IRS, and would be available for refund with the filing of the US taxpayer’s annual return. On Form 1042-S, Box 1 requires an income code for the US sourced payments (i.e. dividends, independent contractor services, capital gains, etc.). It would depend upon the type of payment and whether it would be included on the 1040 annual return as taxable income for possible refund amounts.
Form 1040: No Place to List 1042-S Payments
The real issue is that there is no place on Form 1040 to list the 1042-S withheld amounts, since the recipient was technically the FFI. The US citizen as the ultimate beneficiary simply receives the 1042-S copy B to list the amounts withheld, similar to a W-2 for employees. Assuming that the payment was not taxable, then the only place to list the withheld amounts is Line 67 on the 1040, which is “Reserved”. An alternative is to list it on Line 62 with amounts withheld in Forms W-2 and 1099. Then one could attach Copy C of 1042-S to the return to document the amount. This differs dramatically from the other instance where 1042-S Chapter 3a mounts are listed for non-residents. The 1040-NR has two places to list amounts withheld under 1042-S, making the process easier.
The fact that the IRS has implemented an international network of FFIs to monitor US account holders is not a surprise. However, the fact that there is no specific instruction or form to request withheld amounts makes the 30% almost appear to be a tax penalty for holding assets offshore. In other words, a US taxpayer should make sure that an FFI is registered with the IRS and has a GIIN prior to making any US sourced transfers. Failure to do so could result in a long delay in receiving withheld amounts under 1042-S.
by 
Erich J. Ruth
Erich J. Ruth provides technical support for National Software which is the parent company for 1099FIRE. 1099FIRE develops and markets a comprehensive range of products that enables any size of business or institution to effectively manage and comply with year-end filing requirements. 1099FIRE is an employee-owned company located in Phoenix, Arizona.
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I have a 1042-S Form C to be attached with my federal tax return.
Most of the efiling softwares like turbotax and hrblock don’t have this form listed. They are suggesting me to go through a CPA.
The form 1042-S has $189 gross income and $57 federal withheld.
The CPA is charging me $100+ just to include this form.
Online softwares are free or less than $20 to file.
Is it ok to skip reporting this? What are the consequences if I don’t report this form.
Please suggest.
hi i have received form 1042-s form against my winnings in las vegas and they detucted 30% amount from all the winnings of mine so as i am a visitor can i get refund on all the amounts that i they detucted and how if i dont have a itin number regards
Look at the 1042-S form. Specially look at Box 10 which is Total Withholding Credit. That credit is how much
you may or may not be eligible for. You dont get a refund. Instead, if you fill out Form 1040-NR where NR stands
for non-resident, you have the box on that form where you can enter the total withholding credit from the 1042-S.
If you owed tax to the IRS, the withholding credit will offset what you owe.
With that said, it depends on where you are from and whether the US has a tax treaty with that country. If the US
does not have a tax treaty with the country that you are from, then the 1042-S is just for informational purposes.
Hi,
I am an international student from India on a F-1 visa at Houston, Texas. I have a Graduate Assistant position at the school and hence I get W-2 and fairly understand about 1040 NREZ as I filed it last year.
This year (2016), I received a travel ” Award” from the school to work on a research project over summer. The school’s department says that since this was an “award” category and I did not have to submit any receipts for it, it will be treated as other U.S. source income and it was taxed at 30% instead of 14% and I received only 70% of the amount.
Am I supposed to receive 1042-S from the school? If yes, how do I file for this 30% withheld this year on 1040 NR and what is the best way to go about it.
Any help is much appreciated 🙂
Other US source income means the 1042-S applies. You dont get the 30% that was withheld directly. Instead, when you fill out 1040-NR, there is a box that asking for total withholding amount from the 1042-S and there you can type in how much was withheld and use that as a credit toward any tax paid.
I filed a 1120-f to claim withheld income refund due to tax treaty benefit. I would like to ask how I can check the refund status online? Or i need to make a call to IRS? Any help is much appreciated
I dont know anything about Form 1120-F. Typically you dont get a refund check for withheld income. For the 1042-S, you get to apply that credit toward tax due on Form 1040-NR. You dont get a check in the mail.
Hi,
I submitted form 1040 NR with form 1042-S copy C. However, it seems that due to mailing issues, IRS was not able to receive the tax return mailing packet. Also, I included original copy c of form 1042-s. Can I just send 1042-S copy b to IRS when I send my tax return packet again?
Any help is much appreciated 🙂
Copy B and Copy C are the same. I think you will be fine sending Copy B. I dont think you need to send the original. A photocopy of Copy C is fine. A photocopy of Copy B is probably fine as well.
I am a Canadian citizen on vacation in the US. I had $4600 winnings in a Casino. They withheld 30% in Fed and 4 some % in NM state income tax. I don’t have any other US income and retired in Canada. Can I get approximately $1700 in total taxes withheld? How do I go about it? Much appreciated.
> Can I get approximately $1700 in total taxes withheld?
Kinda. You can use the amount withheld toward any tax due to the IRS. Specifically
what this means is on Form 1040-NR (where NR stands for non-resident) there is a box
that asks “Total Withholding Credit from 1042-S” which is Box 10 on Form 1042-S. You
can apply that withholding credit (which in your case is $1700+) toward any tax due on
that Form 1040-NR. You can only apply this withholding credit if you are from a country
which has a tax treaty with the IRS which Canada does.
The IRS doesnt just write you a check for the withheld amount.
I’m nonresident and my bank witheholded a tax of 15% on return of capital.
I would like to cliam a refund. I understood that I have to fill in the form 1040NR – Schedule NEC
But where I have to write return on capital? line 12 of Schedule NEC?
You dont get a refund where the IRS mails you a check. Instead whatever amount
that was withheld can be applied toward any tax that is due on Form 1040-NR.
Box 12 on Form 1040-NR is one box you can use to fill out total withholding credit.
Box 62d is another. Box 62 is:
62 Federal income tax withheld from:
a Form(s) W-2 and 1099 . . . . . . . . . . . . .
b Form(s) 8805 . . . . . . . . . . . . . . . .
c Form(s) 8288-A . . . . . . . . . . . . . . .
d Form(s) 1042-S .
Dear Sir,
Thank you for your reply. But if I have no other tax to pay, the IRS will refund the amount?
In fact the bank withheld 15% on companies distribution because the classification of income was not yet unknown. At the end of tax period REITs reclassified their income payments in Return of Capital (income 37).
What I should do in this case. Thank you in advance.
> But if I have no other tax to pay, the IRS will refund the
> amount?
Not to my knowledge. Its a withholding credit. You can
receive credit for any tax due but the IRS doesnt write a
check for refund. You can try calling the IRS at any time
and ask them as well.
> In fact the bank withheld 15% on companies distribution
> because the classification of income was not yet unknown. At
> the end of tax period REITs reclassified their income
> payments in Return of Capital (income 37).
I cant give tax advice. A tax attorney could probably help
more then me. If the bank withheld 15% and they were supposed
to, they can efile a correction with 0% withholding and then
send you that money. Corrections can be filed at any time.
Thank you for your advise!
I received a 1042s from a casino but Iam a resident from US and file my taxes with my ITIN how do I do it to receive my witholdings is that Ok if I use w2g instead of a 1042s Thanks
You have to contact the casino and ask them to void this 1042-S and issue a
W-2G instead. The 1098, 1099 and W-2G forms are for US residents and the 1042-S
is for a non-US resident. Im guessing you have a non-US mailing address and the
casino was confused and issued a 1042-S.
Hi, I am from Mexico but I work in Texas, I am a resident for tax purposes, and I’ve been filing 1040 for 2 years, in 2016 I received a W-2G from gambling winnings with no withholding, but now I received (2) 1042-S Forms in 2017 because they did not know what to do when I showed them my passport. I have withholding credit on those forms. I’m going to file 1040 but I don’t know if it’s fine to declare the income and withholding as if it was a W-2G and send a letter of explanation. What do you think is my best option? Thank you.
Form 1042-S is for non-US residents. A non-US resident who has a withholding credit on Box 10 may
be eligible use that credit to reduce tax owed to the IRS on Form 1040-NR (not Form 1040). The
recipient may or may not be eligible to use that credit depending on what country they are from and
whether the US has a tax treaty with that country.
You say “I am a resident for tax purposes” and that you have filed a 1040. You must have a SSN then.
For tax purposes, the casino or race track where you won should have issued you a W-2G instead of 1042-S.
What you have to do is call the payer and ask them to void the 1042-S and issue you a W-2G.
The bad news is, getting a payer to void one form and reissue another information returns takes time
and typically costs them money. And the payer is typically not excited to do that. The IRS knows
that many recipients just abandon that withholding credit and that’s why they like Form 1042-S. You
have to ask yourself, how much effort do you want to put in to get this withholding credit?
You ask “Im going to file 1040 but I don’t know if its fine to declare the income and withholding as
if it was a W-2G”. You have to declare the income. The IRS will eventually double check that what
the payer paid and the recipient received matches. That is, the IRS double checks what the payer paid
on the 1099 and W-2G forms matches what the recipient claims as income on Form 1040. And when their
are discrepancies, the IRS issues a letter. So you have to clear this us with the payer (casino or race
track).
Hi Erich,
I just received a Form 1042-S in the mail today from my bank. It was mailed to my Philippine address, but I am currently a non-resident alien living in New York, and I have already submitted my tax return based on what was in my W-2. Apparently I have deposit interest of $17 on my bank account, which was included in the 1042-S. I have two questions:
1) Everything in the withholding section (withholding allowance, net income, etc) was listed as 0, which I’m assuming means that I don’t get anything back, which is fine. Do I still need to file that 1042-S even though there was literally 0 tax withheld?
2) This arrived in the mail two weeks after Tax Day…do I need to file an amended return?
Its all very confusing and I can explain everything but the big question is, what value is in Box 10
which is the Total Withholding Credit? If that is $0, then there is nothing else to read or do. The form
is for informational purposes.
Also, if you received a W-2, then it sounds like you have a US Social Security Number and if you filed before April 15,
then it sounds like you Filed IRS Form 1040. The 1042-S applies to non-US residents who file a 1040-NR. On the 1040-NR,
there is a box where the recipient can apply the withholding credit toward any tax due (depending on which country the
non-resident is from and whether the IRS has a tax treaty with that country). The IRS doesnt write a refund check for
the withholding credit.
Im convinced that many non-residents which receive a small withholding credit just let it go and dont pursue that credit.
Thats why the IRS likes this form and the state of California was the first state to demand a 7% withholding on top of the 30%
IRS withholding. I read that Illinois is looking at the 7% withholding as well. Its like free money for a state.
Hi I am from Brazil and I recently started receiving my Social Security retirement (last September).
I received a substantial one time payment in September and started receiving regular monthly payments from October on. SSA withheld 25% of all payments I received for Federal Income tax purposes and I was told that in January 2020 I would receive a SSA-1042S form listing the amounts withheld. How do I go about claiming a refund of the amounts taken? I am retired and have no other income and this would be the first return i would file while living outside the US.
Form 1042-S will show what was withheld. I never heard of SSA-1042S; the form was
created by the IRS and withholding agents have to efile that data to the IRS.
The recipient, like yourself, receives Form 1042-S in the mail. Form 1040-NR where
NR stands for non-resident has a box that you can fill out stating how much was withheld.
You dont get a refund from the IRS. Instead, you can apply that withheld amount toward
taxes due on Form 1040-NR.
@Erich J. Ruth Hi Erich, the form I received is called
SSA-1042S – R-OP1 SOCIAL SECURITY BENEFIT STATEMENT it looks just like a 1099 form and it is completely different from a 1042-S.
It states in its top: this form is for use in filing a United States Federal Income Tax Return.
In the form 1040NR on the first page it has a area that says: Attach Form(s)
W-2, 1042-S,
SSA-1042S,
RRB-1042S,
and 8288-A
here. Also
attach Form(s)
1099-R if tax
was withheld
I copied the info above from the form. As you can see it says from SSA-1042S but nowhere in the form it shows in what line i should report the earnings.
Hello Erich:
Thank God for you that you are going beyond the surface to explain the 1042s puzzle. I am still unclear of the end result after filing the 1042s. And yes I have a 2019 SSA-1042s that a Jamaican non resident sent to me to see if she can get a refund. She was never a resident nor work in the US.Her husband worked in the US and was entitled to social security pension. He is now deceased so the wife who lives in Jamaica was told she had to stay, I think a month in the US the get benefits resulting from her husband. Box 5 shows total benefits for 2019 $12,154.8, box 6 says $30%, box 7 says tax withheld $2955.6. Are you saying that even if this scenario shows a refund due , the IRS wont pay it, but hold it with the expectancy that this lady will have some tax liability in the future to offset this credit?. If that is so, is it fair to say that this credit will apply to her next batch of receipts before the 30% of 85% withholding is done.?
Regards
Selvyn
Box 10 on Form 1042-S is the most important field on that form. It shows Total
Withholding Credit (and not Refund). The recipient gets Copy B of Form 1042-S in
the mail. If Box 10 = $0, then its just an information return and means nothing to
the recipient. If Box 10 > $0, then you can apply that credit toward tax due on
Form 1040-NR if the recipient country code has a tax treaty with the IRS.
You can see how the IRS keeps the amount withheld if:
1. The recipient is from a country that does not have tax treaty with the IRS.
2. The recipient doesn’t fill out Form 1040-NR. They get source income from the
US but don’t report it to the IRS for whatever reason.
The IRS asks that agents withhold 30% and send that to the IRS. California, which is
struggling for cash, was the first state to up the ante and append 7% withholding
on top of the 30% and create a new form CA-592 and new rules. It’s a way for California
to get free, abandoned and withheld money that is not applied for as a credit. I
read that Illinois, which also is struggling for cash, is considering this type of
withholding as well.
Most of our 1042-S clients our book publishers, athletes or casinos. Book publishers hire
writers around the world and pay them in royalty. The non-US recipient (a writer) get US
source income (royalties book sales) and money might be withheld.
Hi Erich,
I live in Virginia, but have worked for the same employer in Maryland for nearly 30 years. Until last year, my employer reliably withheld Virginia state taxes from my paycheck. Part way into last year, my employer determined that Virginia residents needed to have a particular form on file to authorize withholding of Virginia taxes. As none of us had ever been asked to submit that form, beginning in May the employer switched our withholding to begin withholding Maryland state taxes. When the change was discovered, Virginia residents filed the proper form, and the employer once again began withholding Virginia taxes. At the end of the year, I paid Virginia state taxes on the full amount of my yearly income, and filed a Maryland state tax return for a refund of taxes withheld in error. My question is, do I need to report the Maryland refund of taxes withheld in error as income in the state tax refunds section of my Federal 1040 form? Thanks!
A great question but I honestly dont know the answer.
Hi Erich, I live in Germany and I received some money from a US court settlement, as well as the 1042-S form. 30% was withheld and is listed in Chapter 10. I don’t have a ssn. Germany and the US have a tax treaty. So which identification number do I have to put in the 1042NR-EZ form? There is my german tax identification number or the EIN. I have no other options or do I? also you mention the IRS won’t refund the money. Will it be credited to my tax due in Germany then? Thank you by the way. Very helpful answers. You are awesome. Kind Regards.
If you do not have and are not eligible to get an SSN, you must enter your ITIN whenever an SSN is requested
on 1040-NR EZ. For details on how to apply for an ITIN, see Form W-7, Application for IRS Individual Taxpayer
Identification Number, and its instructions. Get Form W-7 online at IRS.gov/FormW7.
It usually takes about 7 weeks to get an ITIN.
Hello Eric,
I am a trainee at NIH. I have received 1042-S, income code 16 and and box 10 is $6747. the country that I am from don’t have tax treaty with USA. My question is: Am I able to file the tax return with 1042-S and get some refund(if applicable)? Thanks
The short answer is no. You have to be from a country that has a tax treaty with the IRS. Otherwise, you are
not eligible for the refund.
A follow up question: do you file 1040-NR where NR stands for non-resident. My guess is you do not. You dont
get a direct refund; instead Box 10 represents a withholding credit which you can apply to any tax due.
Thank you for the response. I am from turkey. I got confused about tax treaty between Turkey and USA. I have filled tax in 2017, 2018,2019 but have lived USA since 2015. I didn’t received 1040-NR. Also, I didn’t quite understand “You don’t
get a direct refund; instead Box 10 represents a withholding credit which you can apply to any tax due.” this sentences. Thanks
> I didn’t received 1040-NR.
What form do you fill out at the end of the year? Do you fill out a 1040 or a 1040-NR? US residents fill out and submit 1040’s every year while a non-US resident can fill out Form 1040-NR.
If you fill out Form 1040-NR, there is a field on that form that asks for the total withholding credit from From 1042-S. You fill that in and can receive a credit for any tax due to the IRS. The IRS doesnt write you a check for the withholding amount.
I am a graduate student. I had W-2 from my university for 2017,2018, and 2019. However, in 2020, I was working on a project at NIH as a trainee and they only provide 1042-S. It is the first time I have received this form and I haven’t filled out the tax return because I don’t know how to do it.
Hello Eric,
I need help to fill out the tax return form. Could you please help me? my email is ezkomo@hotmail.com
Hi, I am an US resident on h1b visa. I forgot to send w9 to fidelity in 2020 and ended up having 1042-s form for my dividend income. The amount withholding is not much, less than $100. I wonder if I can just not reporting that form (let the irs keep the withholding amount) to make my life easier.
You dont have to apply for the withholding credit. The IRS is happy to retain
your money.
As a side note, more states are coming up with withholding. California requires
7% additional withholding above and beyond the IRS withholding. Its free money
for the state because if its a small amount, nobody is going to put in the effort
of filling out forms to get that withheld money back.
Thanks for your fast response. Really appreciate it 🙂
I am Canadian, own and rent out a property in Florida as of 2020. I applied for the ITIN with my tax return in March 2021 which included W-8ECI, 1040-NR and 1040 Schedule D. I just received my ITIN # and would now like to request a refund of my tax withheld by my withholding agent who manages my property.
I can’t figure out what to send to the IRS, where I should send it, and what forms that I need to send. Any help would be greatly appreciated. thanks!
There are no forms that you can fill out to apply for a withholding refund. They
dont exist. Instead, non-US residents who fill out Form 1040-NR, where NR stands
non-resident, can apply the total withholding credit (Box 10) toward any tax due.
Hello I have a couple clients that have yet to receive their overpayments on Form 1040-NR regarding the withholding amount from their 1042-S from 2019… Would you happen to know why the IRS still hasn’t refunded them or how to maybe speed up the process in the future? They have a US direct deposit account as well. I know the IRS notes to allow up to 6 months after filing date or due date whichever is later but it’s been over a year. Thanks!
> Would you happen to know why the IRS still hasn’t refunded them or how to maybe speed up the process in the future?
I have never seen the IRS issue a refund for any amount withheld on Form 1042-S. Instead, you file Form 1040-NR
and you can apply any amount withheld on Form 1042-S toward any tax due on Form 1040-NR.
My friend lives in Thailand with her mother and goes to school there. She is a US citizen, living there for the past 10 years since her father, a US citizen passed away. It took several years, but she finally received money from his 401k. They withheld 30% and she recived a 1042-S from 2020. I suppose it was dated because the withdrawal was requested then, but they had to reissue it this year.
What does she need to do to receive a refund?
Thank you
The recipient doesn’t get a direct refund from the IRS. The IRS doesnt write a check for the
amount withheld. Instead, depending on what country the recipient is from and whether the IRS
has a tax treaty established with that country, the recipient can apply that withheld amount toward
any tax due on Form 1040-NR where NR stands for non-resident. Form 1040-NR is the foreign personal
income tax statement and there is a box on that form to apply amount withheld on Form 1042-S toward
any tax due.
Hi,
I was in US from 2016-2018. I paid funds for 401k. I came back to India in 2018 and received part of the funds as hardship withdrawal in 2021 where 30% of the funds were withheld. Now I want to file tax. Will I get any refund?
The IRS doesn’t write a check for 1042-S refunds. Instead, if money was withheld, you would
receive 1042-S from a withholding agent and Box 10 would show “Total Withholding Credit”. You
can apply that withholding credit on Form 1040-NR, where NR stands for non-resident, and there
may be an opportunity to reduce any tax owed to the US depending on where you are from and whether
that country has a tax treaty with the US.
Hi,
I withdrew money from my USA 401K account in 2021 while I was a UK resident and a full time university student in the U.K. with no income. I am an Indian citizen and have received form 1042-S this year filed by the withholding agent for my withdrawal last year. I was in USA on a H1B visa prior to 2019 during which I had contributed to the 401K. I would like to know if I can file for a refund from the withholding on 1042-S by filing a 1040-NR.
You can’t file for a refund for any of the withheld money from the 1042-S. The
IRS does not and will not issue a refund for that withheld money.
Instead the recipient can apply that withheld money toward any tax due on
Form 1040-NR. And you can only apply that withheld money toward any tax
due if you are from a country that has a tax treaty with the IRS. This is,
in many ways, a way for the IRS to get free money because its work to get
anything from that withheld money.