Home > Basics > What is Form 1042-S and Who Needs to Submit One?

What is Form 1042-S and Who Needs to Submit One?

Foreign workers and students who are considered non-resident aliens and are working in the United States are subject to tax withholding. IRS Form 1042-S is an annual information return for any monetary amounts given to a non-resident alien by a United States based institution or business.

The IRS says that any withholding agent (such as an employer, business, or university) that paid any amount subject to withholding (as described on Form 1042-S on page 4) to a non-resident alien would need to submit a 1042-S information return for every payment recipient.

Some of the payments which are required to be reported on Form 1042-S include but are not limited to: corporate distributions, interest, rents, royalties, compensation for dependent and independent services, pensions and other deferred income, and most gambling winnings.

Some payments are not subject to withholding such as scholarships used for tuition, expense, books, and fees for universities. Also, any service payment that was performed in the person’s country of origin is not subject to withholding. However, these payments are still required to be reported on a 1042-S form. There are more circumstances that are detailed on page 4 of Form 1042-S.

For non-resident alien employees, the form’s purpose is somewhat similar to the W-2 form that employees who are American citizens receive from their employers. The withholding agent files the 1042-S form with the IRS and sends a copy to the payee for information purposes. However, employment earnings are not the only transaction that the form covers.

Non-resident aliens have different laws that regulate tax withholdings than resident aliens. It is important that employers, businesses, universities, and anyone who pays foreign nationals any type of payment to know the resident status of their payees. For tax purposes, resident aliens are treated the same as U.S. citizens.

A non-resident alien can briefly be described as any person who is not a citizen or resident of the United States. If an alien meets the “green card test” or the “substantial presence test” for the calendar year, they are considered a resident alien. If any alien does not meet either one of those tests, they are considered an alien.

It should be noted that any amounts paid to residents of a U.S. possession or territory are not required to be reported on Form 1042-S as long as the payee is a U.S. citizen, resident alien, or U.S. national.

Some of people who would receive a 1042-S form from a withholding agent include students and postdoctoral fellows at American universities who are considered non-resident aliens, and employees at any business who are non-resident aliens under a tax treaty.

A tax treaty between the United States and the foreign national working in the United States may override U.S. income tax laws. Since each scenario is different due to tax treaties, a foreign national should consult an accountant or their employer on whether or not taxes should be withheld from the transaction amount.

Regardless of whether or not taxes are withheld from the transaction amount, any withholding agent that pays an amount of money to a non-resident alien in the U.S. is still required to file a 1042-S form.

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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.

  1. John Wilson
    March 30th, 2016 at 19:04 | #1

    I won a $100 gift card for a contest (which I never used as the company did not ship to Canada). I received a 1042-S form showing $42.86 tax witholding credit. Do I need to do anything? I am a Canadian citizen.

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  2. March 30th, 2016 at 20:28 | #2

    Its up to you if you want to do something. A US business paid you $100 (which you didnt use). They withheld
    money and sent part to the IRS. As a Canadian citizen, you have an opportunity to get the withheld money but
    its more paperwork. If you do nothing, the IRS keeps that money.

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  3. DJ
    April 3rd, 2016 at 01:54 | #3

    So if I am paying someone to perform services for my business, ie. developing a website and the person is NOT a citizen of the US and is NOT performing their duties for you within the US then would I need to provide them a 1042S? There could be potentially dozens of persons which a business owner would pay directly many times throughout the year for services provided. It’s not very feasible to provide a 1042S for this type of service, right?

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  4. April 3rd, 2016 at 08:50 | #4

    > So if I am paying someone to perform services for my business, ie. developing a website and the person
    > is NOT a citizen of the US and is NOT performing their duties for you within the US then would I need
    > to provide them a 1042S?

    Yes. It doesnt matter where they perform their duties. A US business paying a non-US resident money
    then they must withhold 30% and fill Form 1042-S.

    > There could be potentially dozens of persons which a business owner would pay directly many times
    > throughout the year for services provided. It’s not very feasible to provide a 1042S for this type of
    > service, right?

    I dont understand the question. If you pay a non-US resident who does not have a valid SSN money, then you are
    supposed to withhold 30% and send that to the IRS and File Form 1042-S. To say “its not very feasible to
    provide a 1042S” doesnt make sense. Its not easy withholding and/or filling out that form but you have
    to do it. I dont like filling out 1040’s and but I do it because the penalty for not doing it is extremely
    large. I dont like filling out the 1099-MISC forms either but I do that as well.

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  5. John O’Brien
    July 15th, 2016 at 14:16 | #5

    When shoukd we receive a 1042S form? We have surrendered an annuity and, despite recording a W-8BEN with the investment company, they did not send us a 1042S…..(overlooked this fact) and just deducted 30%. We are non resident aliens under the USA Spain tax treaty. They have told us to claim back the reduction from the IRS but refuse to send us the 1042S forms till early March 2017….leaving only two weeks for our tax lawyer here to file before March 15th cut off date.
    Any advice welcome, plus an address of a tax lawyer in the USA.

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  6. August 3rd, 2016 at 05:25 | #6

    If you did this transaction (surrender an annuity) in 2016, then you wont receive the 1042-S form
    until the due date which is March 15, 2017. The withholding agent has to print, mail and efile
    the 1042-S forms by March 15 for the prior calendar year.

    I dont have any address for tax lawyers in the US.

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  7. Joseph Barksdale
    August 3rd, 2016 at 06:52 | #7

    The IRS instructions indicate that the services must be performed in the US – would not include those performed in another country.

    From the IRS website on International Taxpayers – Pay for Personal Services Performed
    This section explains the rules for withholding tax from pay for personal services. You generally must withhold tax at the 30 percent rate on compensation you pay to a nonresident alien individual for labor or personal services performed in the United States, unless that pay is specifically exempted from NRA withholding or subject to graduated withholding, Wage Withholding under Internal Revenue Code Section 3402. This rule applies regardless of your place of residence, the place where the contract for service was made, or the place of payment.

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  8. Joy
    February 22nd, 2017 at 14:27 | #8

    I received a form 1042-S and there is no Federal Tax Whthheld since I’m a foreign student. Do I still have to file a tax return regarding Gross income that I received? If I have to file a form, which form should I use?
    Thank you!

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  9. February 22nd, 2017 at 14:30 | #9

    The most important box on the 1042-S form is Box 10 which is Total Withholding Credit. If that is $0, then there is nothing to do. The form is for informational
    purposes only. If Box 10 > 0, then you can use that credit on Form 1040-NR which NR stands for non-resident. Its the personal tax returns non-residents submit.

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  10. Jasmine
    February 25th, 2017 at 17:21 | #10

    I am a foreign student whose income is $1100 per year. Should I still file 1040-NR EZ? One of my check was tax withhold less than $20. The question is can I file form 1042-S to retrieve the tax withhold money if I were not to file 1040-NR EZ? Regarding interest, if an interest from bank account is less than $150 per year, do I have to report that income in form 1099?
    Thank you

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  11. February 26th, 2017 at 08:46 | #11

    > Should I still file 1040-NR EZ?

    If you have US source income, you are supposed to report it to the IRS.

    > The question is can I file form 1042-S to retrieve the tax withhold money if I were not to file 1040-NR EZ?

    No. Or at least, not to my knowledge. You receive Copy B of 1042-S in the mail. Box 10 shows Total Withholding
    Credit. Its the most important box on that form. If Box 10 > 0, then you have a credit waiting for you. The
    only way to use that credit is on Form 1040-NR where there is a field asking for the Total Withholding Credit from
    Form 1042-S. If you owe tax to the IRS, the withholding credit will reduce the amount of tax you owe.

    > Regarding interest, if an interest from bank account is less than $150 per year, do I have to report that income in form 1099?

    I dont know. The banks do have some threshold before they even send you a 1099-INT. If you earn very little interest
    from a bank account, then most banks wont report it.

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  12. Elvin
    March 3rd, 2017 at 15:33 | #12

    So I had a few foreign vendors perform services for my business in US. Upon paying them, I checked their country, and as per tax treaty it said there should be no withholding tax, so I paid them the full amount. Would I need to provide them a 1042S?

    Thanks,

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  13. March 3rd, 2017 at 16:14 | #13

    Yes. You still have to provide the form. And the form will show how much you paid them, that you withheld nothing, and that
    the recipient should expect $0 credit from withholding (Box 10). If you paid any foreign person US source money, you have to report it
    on Form 1042-S even though nothing was withheld.

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  14. Maria
    March 14th, 2017 at 11:07 | #14

    Hello, I have both a w2 and a 1042-S form.
    In 1042-S form, Box 3a says Exemption code 04, while Box 4a says Exemption code 16. Boxes 7a, 8, 9 and 10 say 0. If I understand correctly, I don’t need to report any information of my 1042-S in my 1040. Is that correct?
    Thanks in advance!

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  15. March 14th, 2017 at 11:51 | #15

    The 1042-S is for non-US residents. A non-US resident would receive the form in the mail and on the 1040-NR where NR stands
    for non-resident, they would be able to apply the total withholding credit as a reduction for any tax due.

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  16. Leonard
    March 16th, 2017 at 09:45 | #16

    Hi Erich,
    Thanks your blog is very helpful.

    I have been in US from 2012, for tax purposes i am an alien resident (substantial residency requirement), i rented my place for 14 days in 2016 and they have issued me 1042S with income code 54 and no tax withheld. If no tax is withheld, that is informational only?
    I believe i should be reporting this earning as 1099 rental income to IRS and shouldn’t use the 1042S.
    I have written to the airbnb but they are very slow in responding.
    Can you suggest what is the right way to file taxes?
    Is it better to file with rental property income in Turbo tax. or since the income code is 54, i should put in as other income and subject it as apartment sharing?
    If i do as rental property, IRS do not withhold any tax since the 15day rule applies, however if i add the income property as other, i am taxed on it. Any inputs insights on this would be helpful.
    Thanks

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  17. March 16th, 2017 at 10:17 | #17

    > If no tax is withheld, that is informational only?

    Yes. If Box 10, Total Withholding Credit, is $0 then the form is purely informational.

    It really comes down to which 1040 form you submit. If you file IRS Form 1040-NR where NR stands for non-resident, then there is a field on that form that asks for the total withholding credit. In this case, you should receive 1042-S and use it (if possible) to file 1040-NR.

    If you file IRS Form 1040 for your personal tax returns, then you are a US citizen and have a US social security number. In this case, you should have received a 1099 instead of a 1042-S.

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  18. Leonard
    March 16th, 2017 at 12:43 | #18

    Thanks a lot, since box 7 and 10 on 1042S is $0, it is informational only and the withholding agent need not report to IRS? is that a correct inference

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  19. Bee
    March 21st, 2017 at 16:54 | #19

    I received a 1042-S form from an old online shop I forgot about that operates out of the US. I am in Canada, a Canadian citizen living in Canada.

    My gross income is only 20$. Do I really need to file with the IRS? I believe my income counts as royalty payments.

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  20. March 21st, 2017 at 17:29 | #20

    You received Copy B of the 1042-S in the mail. Look at Box 10 which is Total Withholding Credit. If that
    box is $0, then there is nothing to do. If its greater than $0, then you have to decide how large of a value
    it is to motivate you to seek the credit.

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  21. Bee
    March 21st, 2017 at 17:34 | #21

    @Erich J. Ruth
    I appreciate your reply so much.

    The amount in box 10 is only 4.84. I just want to know if I can get in any kind of trouble with the iRS if I don’t file…it isn’t worth it to me to get a tiny credit.

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  22. March 21st, 2017 at 18:12 | #22

    @Bee
    There is no problem with doing nothing in this case. You essentially donated $4.84
    to the IRS. Thank for you for contribution.

    The IRS knows many people have no desire to chase these low credits and so they
    get the money/credit that is unclaimed. As a side note, the state of California created a 7% withholding on top of the federal withholding and the state of Illinois
    is considering the same. They see this as free money.

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  23. Jay
    March 22nd, 2017 at 11:14 | #23

    Hi Erich,

    Thanks for the blog. I am a US Citizen, who married a nonresident (now she is a resident alien). I filed the IRS form 1040 as married filing jointly, and already received a refund from IRS. I got a 1042-S just a couple days ago, since she did Airbnb last year.

    The 1042-S has
    – 1, Income Code: 54
    – 2, Gross Income > 0
    – 7a, Federal tax withheld: 0
    – 8, Tax withheld by other agents: 0
    – 9, Tax paid by withholding agent: 0
    – 10, Total withholding credit: 0

    Questions:
    1. Is this for informational purposes only?
    2. Do I have to amend my already filed 1040?
    3. If yes above, how can I properly include the 1042-S in there? (there is no 1042-S for 1040)

    Thanks!

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  24. March 22nd, 2017 at 11:17 | #24

    Total Withholding Credit is $0 which means this is just for informational purposes. There is nothing to amend.

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