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.

  1. Lili
    April 27th, 2015 at 20:10 | #1

    I am a non –Us Citizen, live in Australia, published an eBook on amazon in July 2014 and now received 1042-s form, from Amazon, and information is as follow:
    Income code: 12
    Gross income: 0.32
    Federal tax withheld: 0.02
    Total withholding: 0.02

    Shall I do any action, shall I fill tax report file to IRS, or is at just for my information, as you know this is so small amount and I don’t want any money from withholding but I heard I should fill some tax report because my income is more than a dollar( based on Australia tax report ) and I can’t afford to pay accountant for this small amount. Many thanks in advanced.

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  2. April 27th, 2015 at 20:44 | #2

    When the payer, here Amazon, electronically files with the IRS, they can only efile whole numbers.
    They cant efile $0.32; so either they rounded down to $0 or rounded up to $1 for Gross Income. The
    tax withheld was 0.02 and Im guessing they rounded down to $0 for that. The point is, they withheld $0.02
    (or rounded down to $0) and sent that withheld money to the IRS. You may have the option to use that withholding
    credit (which is Box 10 on Form 1042-S), but its such a small amount that the Copy B you received in the mail is
    just for informational purposes.

    If you did file 1040-NR (where NR stands for non-resident), there is a box on that form that asks if you want to
    apply the 1042-S Withholding Credit (which is Box 10 on 1042-S). If you owed money to the IRS, that which was withheld
    from you can be applied toward the tax due to the IRS.

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  3. Lili
    April 27th, 2015 at 22:35 | #3

    @Erich J. Ruth
    Thank you so much for your wise reply .
    I didn’t file 1042Nr, i don’t want to apply for withholding ,is it compulsory to fill 1042 Nr , or is it optional for this small amount of income. should i fill any other form for tax purpose? sorry if i ask many silly questions :)

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  4. Randy
    May 13th, 2015 at 04:32 | #4

    I am a USA citizen living in the Philippines with my Filipina spouse [Never been to the USA] which has an ITIN number and I opened a bank account for her in the USA in 2014.

    For taxes I file “married filing jointly” and she received a 1042-S this year from that bank.
    It shows “income code”=Deposit Interest
    “Gross income”=$300
    with box 3a “Exemption code 02″=Exempt under IRC (other than portfolio interest)

    Is she exempt from paying taxes on the interest she made or should it be reported along with my interest on my 1040 Schedule B “interest & ordinary dividends”?

    Thank You

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  5. May 13th, 2015 at 09:09 | #5

    > Is she exempt from paying taxes on the interest she made or should it be reported
    > along with my interest on my 1040 Schedule B “interest & ordinary dividends”

    I honestly dont know the answer to this question. The purpose of Form 1042-S is to
    show a withholding credit. How much money is in Box 10, Total Withholding Credit? If its
    $0, then Form 1042-S is really for informational purposes. If its > $0, then you can apply
    that withholding credit on Form 1040-NR (where NR stands for non-resident) and the withholding
    credit will reduce the amount of taxes owed.

    Whether your wife owes taxes or is exempt from paying taxes is something you want to ask
    a local accountant.

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  6. May 13th, 2015 at 09:22 | #6

    Its optional. Consider this, the IRS withholds around 30%. The state of California is the
    first state to apply an additional 7% withholding. So if you do business in California with
    someone who doesnt have a valid SSN, that business must withhold 30% and send that to the IRS
    and 7% to the Franchise Tax Board in California. We all know 7% of a small amount of withheld
    money is just alittle cash. And most people dont fill out the paperwork to get that 7% withheld.
    The state politicians know this as well; they know its more work for you to fill out more forms
    to get this small amount of withheld money and so its bonus money for the state.

    I read that the state of Illinois was considering this additional withholding as well.

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  7. Randy
    May 14th, 2015 at 05:47 | #7

    Yes box 10 is 0. I want to file “married filing jointly” so I can claim my spouse as a dependent to reduce my taxes.
    So she would not file 1040-NR and from pub 519, it states that we can make a declaration that she is treated as a “resident alien” and claim the interest along with mine on 1040 schd B “Interest & dividends”.
    I don’t know what “other than portfolio interest” is?
    This would be the safe bet I believe since claiming the $300 doesn’t even change my refund!
    It also states that she would have to claim worldwide income, [but she has no other income], and be subject to social security and medicare, but that doesn’t apply since its not earned income/wages but interest.
    I called the IRS today, but their help desk shuts down 15 Apr, and only adjustments & refunds will be addressed due to budget cuts.
    Since we are overseas are deadline to file is 15 June, but help is shutdown for all.

    Going to talk to an overseas guy that does taxes for people here & see what he says, if a cover letter is even needed…

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  8. Vic
    May 27th, 2015 at 01:53 | #8

    Do we have to submit a 1042 form for all vendors that completed a W-8 form? Thanks

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  9. May 27th, 2015 at 09:09 | #9

    Form W-8 is Certificate of Foreign Status. If a US business pays a non-US resident money for services, then
    the US business is supposed to withhold money and send that money to the IRS and issue a 1042-S form.

    This link here

    https://www.1099fire.com/software/1042s.htm

    has software and/or outsourcing options where they can efile your 1042-S data on your behalf.

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  10. Marco
    May 29th, 2015 at 16:01 | #10

    Hello
    I’m a non US citizen or US resident but i possess a US bank account and i received 3 copies of form 1042-s from my bank. The gross income is just for interests paid in 2014 for 200 dollars, with exception code 02 for box3a and 15 for box 4a.Tax rate is 0 in both boxes 3b and 4b. Total withholding credit is empty. I understand that copy B is for me, but what do i do with copies C and D ? Are they also for information purposes (as i dont have to pay any federal or state income tax) ?

    Thanks!

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  11. May 29th, 2015 at 18:08 | #11

    If total withholding credit, which is Box 10, is 0, then this is just for informational purposes.
    If the withholding credit was greater than 0, then you can apply that credit on Form 1040-NR where
    NR means non-resident.

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  12. Sergio Torres
    July 16th, 2015 at 05:37 | #12

    Hi,
    my wife, who works in a multinational software company in Spain, has sold some shares the company gave her some time ago. She has received a 2014 Form 1042-S (Consolidated), and we do not know if we have to do something with it, or if some taxes have to be paid or if it is only form information purposes.
    The figures are:
    Box 3: Chapter 3

    Box 1: 06
    Box 2: 473.64
    Box 3b: 0.15
    Box 4a: 15
    Box 7: 71.02
    Box 10: 71.02

    We don’t know if the Withholding Agent has payed the taxes and this is only info for us or if we should pay somothing and how to do it.

    We will really appreciate some light about this issue, as we know nothing about US Taxes.
    Thanks in advance

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  13. July 16th, 2015 at 08:40 | #13

    The key figure is Box 10, Total Withholding Credit. You had $71.02 withheld. The IRS rounds to whole
    numbers. So $71 was withheld.

    That $71 is your money. Its a withholding credit. Do you want it and do you want to pursue that credit?
    That is the purpose of Form 1042-S. The payer is letting you know that they withheld money and sent that
    money to the IRS. If you fill out Form 1040-NR where NR stands for non-resident, there is a box on that
    form that says “1042-S Total Withholding Credit”. On that box, you would enter $71 and submit and you
    get the $71. If you do nothing with Form 1042-S, then the IRS keeps that $71. Its a money maker for the
    IRS.

    As a side note, the state of California was the first state to start withholding 7% on top of the 30% federal
    withholding. Illinois is considering this type of state withholding as well.

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  14. noelle
    July 18th, 2015 at 15:17 | #14

    hi, i worked with a work visa for all 2014 and received a w-2 with my wages and withholding and also a 1042 s
    income code 16
    net income 14400
    federal tax withheld 4320
    tax rate 30

    turbotax did my taxes (not online) and filed a 1040EZ with only my W2 information and i never received my refund. do i need to file an amended return including the information on my 1042 s as other income?
    if so, should i add both of my federal taxes withheld?
    thanks!

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  15. July 18th, 2015 at 20:49 | #15

    I dont really have a great answer. If you received a W-2, that company probably showed
    all income on that form. Why the same company sent a W-2 and 1042-S doesnt make
    sense. You should get one form; the W-2 for US residents and 1042-S for non-US residents.

    Your question is, “do i need to file an amended return including the information on my 1042 s as
    other income?”. I dont know. One company should send one form.

    As a side note, the 1042-S is a withholding statement. Box 10 is the Total Withholding Credit.
    If Box 10 is something other than 0, you can apply that amount on Form 1040-NR where NR stands
    for non-resident.

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  16. Arnoldo T.
    July 23rd, 2015 at 21:00 | #16

    Im a Mexican whit tourist visa to can cross to US. I went to CASINO in Eagle Pass,Tx, and I win in a bingo machinne $3150.00 dlls, the casino pay to me $2250.00, and a form 1042-S whit $947.00 for Taxes,
    Can I recover the taxes ????

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  17. July 23rd, 2015 at 22:51 | #17

    The answer is yes and no. You don’t recover taxes ever. You might be able to apply for a credit.

    Look at Box 10 on Form 1042-S. Box 10 is Total Withholding Credit. How much is in Box 10? It is $947? If so, you can
    use that amount on Form 1040-NR where NR stands for Non-Resident. On Form 1040-NR is a box where you can apply Total
    Withholding Credit from form 1042-S. So if you worked in the US even as a non-resident and owed taxes then the withholding
    credit on Form 1042-S can be applied to reduce your tax owed.

    The IRS never just sends you money. The withholding and paperwork required to apply for a credit leads many to abandon
    the money. The IRS knows this is frustrating and knows you don’t want to go through all of this paperwork and they also
    know that most people walk away from the money withheld.

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