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.

VN:F [1.9.22_1171]
Rating: 4.7/5 (13 votes cast)
VN:F [1.9.22_1171]
Rating: +10 (from 12 votes)
What is Form 1042-S and Who Needs to Submit One?, 4.7 out of 5 based on 13 ratings facebooktwittergoogle_pluslinkedinby feather
  1. ola
    April 25th, 2014 at 02:49 | #1

    Hi Erich
    I have a problem similar to that of Hely. I am a non resident alien and have been outside the US for some years. My bank has sent me a 1042 S that I received yesterday and my income stated on it is $1. Do I need to file a return ( I have not filed a return after I moved out of the US ).

    Is there a penalty since even if I have to file a return it will not reach before April 30?
    thanks
    Ola

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  2. ola
    April 25th, 2014 at 02:54 | #2

    Hi MN were you able to find out what to do with your 1040S?

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  3. rk
    May 14th, 2014 at 21:08 | #3

    I believe since it is under $10, which is the filing requirement, you are not required to file. @ola

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  4. Mary
    May 15th, 2014 at 13:19 | #4

    Hi Erich, I worked in the US for many years and earned a pension. I began receiving my pension in 2013. I completed Form W8BEN and am not withholding any US taxes. The company issued a Form 1099-R for these pension payments showing that no US taxes were withheld. I am a nonresident alien living in the UK. Shouldn’t I be receiving Form 1042-R and not Form 1099-R? How are these forms different? How is this US income reported on my UK taxes, if at all? Please advise.

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  5. May 15th, 2014 at 14:05 | #5

    1099-R is an information return sent to US residents. The 1099-R is used to report
    distributions from pensions.

    If you are from the United Kingdom, you should instead receive IRS Form 1042-S. 1042-S is
    used to report income from a US payer to a non-US resident. So if I (a US resident and payer)
    paid you (a non-US resident) money, then Id have to report that using form 1042-S. We work with
    lots of book publishers in the US. Book publishers hire writers throughout the world and have
    to report payments to them using Form 1042-S.

    I have no idea how the US income is reported on your UK taxes. I only handle US tax code which
    is a handful as is. The 1042-S form will show withholding and if withholding is greater than 0,
    then you may be eligible to receive that money. If nothing was withheld, then its just an
    informational form.

    You would want to contact the payer and talk with them. Im assuming you do not have
    a social security number. Let them know you are a non-US resident and that the 1099 forms
    do not apply to you.

    I hope this helps. Email anytime.

    VN:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  6. May 15th, 2014 at 14:12 | #6

    The $10 threshold applies to interest on deposits only. Interest described in
    section 871(i)(2)(A) aggregating $10 or more paid with respect to a deposit maintained
    at an office within the United States if such interest is paid to a nonresident alien
    individual.

    Other than interest on deposits, there is no other threshold that I know of.

    VN:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  7. MN
    June 3rd, 2014 at 06:41 | #7

    @ola
    Hi ola,
    I completed the formality by filing my federal taxes by submitting the form 1040NR + Schedule OI which is a part of form 1040NR. In addition submitted form 8840

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  8. ravi
    June 17th, 2014 at 12:42 | #8

    I hold US shares/securities thru two firms. One is E-trade. Another is HSBC Bank Hong Kong. More than US$ 1000 is deducted annually on my dividend income from US securities. Etrade issues me
    Form 1042-s but HSBC HK does not. BBH is the custodian of the securities in USA and I believe they also are the once who deduct withholding tax at source. Who should issue the form 1042-s? I am Indian national resident of India meaning alien.

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  9. June 17th, 2014 at 19:43 | #9

    Excellent question. I appreciate the question. However, Im not sure Im qualified to answer it.

    Form 1042-S is for non-US residents while the 1099 forms are for US recipients. 1042-S is
    used to report income from a US payer to a non-US resident (and where there is income, withholding
    may apply). Since you are an Indian resident and not a US resident and you are receiving income
    from a US payer, then I believe that 1042-S would apply. But I would talk with the respective
    payers, in this case E-trade and HSBC HK.

    VN:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  10. Mani R
    July 15th, 2014 at 00:00 | #10

    Hi Erich,

    Thanks for such a detail answers and I am hoping you can help me here.

    I am a permanent resident of U.S for the past 6 years. But, for 2013 year, Fidelity sent me
    a 1042-S which they should not have done it. So i talked to them and they sent me an “amended” 1042 S form.

    The first 1042S had – code 14, gross income 2341, tax rate 30, Fed. tax withheld=$702.
    The amended 1042S had – code 14, gross income $0, tax rate 0, Fed. tax withheld=$702

    Question is:
    1) Do I need to report this 1042S (I got my W2 from my employer as well)?
    2) If so, how or where should i do it? I am using taxact software.

    3)Is it possible to get the withheld money $702 from IRS?

    Thanks in advance,
    Mani

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  11. Mani R
    July 15th, 2014 at 00:04 | #11

    @Mani R

    Just to let you know, I have extended my tax filing because Fidelity took sometime to generate the “amended” 1042S form. Looking forward to hear from you.

    Thanks,
    Mani

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  12. July 15th, 2014 at 23:22 | #12

    These are all detailed tax questions. I’m not an accountant and cant really answer these questions. As I read your list of questions, I get confused.

    You ask:

    1) Do I need to report this 1042S (I got my W2 from my employer as well)?

    You also say that you received an amended 1042-S with gross income of $0. If the tax rate is 0.0%, then withholding should have been $0 instead of $702.

    The tax amount withheld can be calculated by multiplying box 4 (net income) by box 5 (tax rate). If tax rate is 0.0%, then withholding should be 0.

    If withholding is $0, form 1042-S is just for informational purposes. It means the payer or withholding agent didn’t withhold any money and didn’t send any money to the IRS. So there is nothing you need to do.

    If withholding was $702, then you might have a chance at getting that money from the IRS. But if you are a US resident, you should not have even been issued Form 1042-S.

    I would contact the withholding agent (Fidelity) and ask them to clarify and/or double check the form. It sounds like they were trying to void the earlier form they sent you. You received Copy B in the mail and probably called or emailed someone at Fidelity and told them “I am a permanent resident of the US for the past 6 years”. They then generated a corrected Form 1042-S and its sounds like its still incorrect.

    We work with many, many companies that paper and electronically file Form 1042-S. 1042-S is really a very difficult form. Its easy to make a mistake on that form.

    VN:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  13. Mani R
    July 17th, 2014 at 22:27 | #13

    Erich – thanks for the feedback. Yes, I was also confused when i saw the “amended” 1042S, with income and tax = 0%, but withheld = $702. Looks like i need to go and meet someone in person at Fidelity. Appreciate the input.

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  14. robin
    August 13th, 2014 at 10:55 | #14

    Is there any way to recoop the witholdings? I have a 1042s and would like to file and recoop the withheld taxes.

    VA:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VA:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
  15. August 13th, 2014 at 22:49 | #15

    Yes. You may be eligible for that withheld amount. The first step is which country are
    you from? Some countries have a tax treaty with the US and residents from those countries
    are eligible for that withheld amount.

    VN:F [1.9.22_1171]
    Rating: 0.0/5 (0 votes cast)
    VN:F [1.9.22_1171]
    Rating: 0 (from 0 votes)
Comment pages
1 2 3 4 88
  1. No trackbacks yet.
*

Current day month ye@r *