Home > IRS Form 1042-S > IRS Form 1042-S: How Can Recipients Receive a Refund of Withheld Money?

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.

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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.

If you have any questions or comments about our software, feel free to contact us at any time.

Categories: IRS Form 1042-S Tags: ,
  1. Vincent
    April 6th, 2022 at 16:14 | #1

    My friend is a Uk resident and he received a 1042-S relating to a small dividend he received from a US company. Taxes were withheld at a rate of 30%. He has no other US source income. Can he file a 1040-NR and request a refund?

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  2. April 6th, 2022 at 16:58 | #2

    You can’t request a refund. The IRS doesnt issue checks. Instead, when you file a 1040-NR
    there is an option to add Total Withholding Credit (Box 10 from 1042-S) to the 1040-NR
    form and that will reduce whatever tax the recipient owes.

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  3. Vicky
    April 21st, 2022 at 20:41 | #3

    I’m long haul truck driver from Canada and yesterday I won jackpot 5382$ in Colorado they withheld 1614$
    I can gate back?
    How?

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  4. April 21st, 2022 at 20:45 | #4

    Congratulations on winning! The IRS does not issue a refund. Instead, you have the opportunity
    to apply the total withholding credit (Box 10 on Form 1042-S) toward any tax due on Form 1040-NR.
    If you dont file Form 1040-NR to the IRS, then the withheld money stays with the IRS.

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  5. juan reinosa
    March 10th, 2023 at 11:11 | #5

    I made 33 k with herbalife last year. I live in Ecuador, and got a 1042 -s where shows a withholding amount of over 9k. I do not reside in the states and I made that income while in my country. Can I got full refund filing 104-nr ?

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  6. March 10th, 2023 at 11:38 | #6

    You dont get a refund for the total withholding credit on Form 1042-S. Instead you can
    apply that withholding credit for any tax due on Form 1040-NR if you are from a country that
    has a tax-treaty with the IRS.

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  7. Margaret fegers
    March 15th, 2023 at 13:09 | #7

    My husband, who lives in germany, gets a small pension from an american company he worked for. Last year he filled out a W8BEN form to indicate no withholding but made an error on the form which caused it not to be accepted, therefore 30% was withheld each month for the year. Today he got a 1042-S form. Can he get the money back from the IRS by filling out 1040-NR? He always, in the past, reported that pension money on his german taxes. What does he do now for 2022 tax year?

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  8. March 15th, 2023 at 13:20 | #8

    > Can he get the money back from the IRS by filling out 1040-NR?

    The IRS doesnt mail out refunds for the 1042-S forms. Instead, the recipient can apply the total withholding
    credit on Box 10 to any tax due on Form 1040-NR.

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  9. Margaret fegers
    March 15th, 2023 at 15:01 | #9

    Hi, me again. My husband has an account in a US credit union to which the monthly pension payments were made and no other US income. So no other taxes to pay. Can the credit unions info be put on the form for a deposit of the withheld taxes? He uses the money in the CU account for when we travel to the US.

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  10. Hareem Ahmad
    March 21st, 2023 at 15:19 | #10

    Hi, I have airbnb in the USA. I’m a Canadian citizen. I filled the W8BEN form and Airbnb is withholding 30% from my USA payments. At the end of the year, I’m assuming ill get the 1042-S from them.

    What do I do with the 1042-S to get my money back? I read the IRS will not send out checks and that I need to apply for total withholding or something. That confuses me a little, I just want to know if I can get back that 30% or a percentage of it, yes or no. Thanks

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  11. March 21st, 2023 at 15:51 | #11

    > I just want to know if I can get back that 30% or a percentage of it, yes or no

    The answer is no. You can apply any withholding credit (Box 10 on Form 1042-S) toward any tax due to
    the IRS on Form 1040-NR.

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  12. Luke Duffy
    April 4th, 2023 at 18:35 | #12

    Hi i am an international student. I paid $1123 in scholarship tax as my scholarships took me above tuition room and board. Is it possible to get the whole amount back when filing taxes. I have my 1042s form. I’m from the UK.

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  13. April 4th, 2023 at 20:37 | #13

    The IRS doesnt mail back a refund. Instead, you can apply whatever is in Box 10 Total Withholding Credit toward any tax
    due on Form 1040-NR.

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  14. Luke Duffy
    April 5th, 2023 at 04:57 | #14

    @Erich J. Ruth
    Ok, what if the withholding amount is more than the total tax due?

    Thanks

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  15. Support
    April 10th, 2023 at 14:04 | #15

    One of my friend sold his shares and taxes are withheld on form 1042-s, though there was capital loss as they have not considered the cost value of shares while withholding. How can I get the refund back?

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  16. April 10th, 2023 at 14:08 | #16

    I must get this question 3-4 times a week. The IRS doesnt mail out a refund for Form 1042-S. Instead, the total withholding credit
    in Box 10 can be applied toward any tax due on Form 1040-NR if you are from a country that has a tax treaty with the US and the IRS.

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  17. Gambling income
    December 19th, 2023 at 09:11 | #17

    Hi, I won poker tournament as non resident alien on March and taxed 30% I got 1042-s then. Now Im US resident. Can I get refund for that now?

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  18. December 19th, 2023 at 13:56 | #18

    The IRS wont issue a refund for withholding from the 1042-S form. Instead Form 1040-NR where
    NR stands for non-resident has a box where you can put in how much was withheld from 1042-S forms
    and use that withheld amount as a credit toward any tax due. Box 10 on Form 1042-S says “Total
    Withholding Credit” and the most the IRS is willing to grant to the recipient to credit toward
    tax due.

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  19. Travis Kaufman
    January 19th, 2024 at 17:04 | #19

    Box 13i of the 1042 S has my Foreign Tax Identification Number in it. It starts with a 1. Can I use this on the 1040 NR to file for the taxes withheld in box 7a? Or, do I need to apply for an ITIN?

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  20. January 23rd, 2024 at 07:17 | #20

    I believe so. Form 1040-NR is the 1040 for non-residents. The IRS doesnt keep track of or foreign
    tax identification numbers. The ITIN is something the IRS issues.

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