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.
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.
If you have any questions or comments about our software, feel free to contact us at any time.
The above article discusses foreign nationals (employees, students etc.). How about foreign business and organization that have assests in US financial institutions? Would an organization in Switzerland who has a certificate of deposit of large sum at a U.S. bank will need to be given 1042s for their interest income by the US based bank?. Switzerland has a tax treaty with the US.
I´m a exchange student in LSU (Louisiana State University) and I asked for my 1042-S form and nobody can give me it. Is it right??? Because I´m paying taxes.
The 1042-S must be mailed to the recipient, that’s you, by January 31. I would contact the payer to re-issue the 1042-S.
If they refuse to give you Copy B, you can always contact the IRS. The IRS is the elephant in the room; you get them involved and they will contact that payer and they will get you that Copy B.
As a side note, I didnt receive my 1099-INT from my bank. I called the bank and they said “we just aren’t sending them out” and then later “if you really want it, just come on down and we will create it”. The bank was just not motivated to create that information return but through persistence, I got it.
Oh okay, so Erich the refund goes to the payer and not the payee in this case; does that sound about right? In which case the payer will be one who files for it
What if someone received their green card in 2011 but prior to receiving it was being paid on 1042-s? How would you report that on taxes? Should they still file a 1040NR for 2011 or file a 1040?
I need to know from US Business Organization to foreign Business Organization how does withholding tax taken care of and how does the entry look like
Would we need a 1042-S for individuals who send us a W-8ECI? If not, would a 1099 be required?
If they are foreigners who are doing business with you, a US company or individual, they you need to file a 1042-S. If they are a US company or individual, then you prepare a 1099 (or 1098 depending on the form).
I hope this helps. Email anytime.
I am a resident of Canada working via internet for a US based company. I do not physically work in the US . I am an independent contractor.
I have had 30% off each check withheld for the past year.
I am trying to figure out what the proper forms are to fill out to get that money back, but no one seems to know the answer.
I gave my employer a W8BEN. They provided me with a 1099 Misc. form showing what was withheld as well as what I was paid for the year.
I do not know if they should be withholding since I do not work IN the US even though they pay me in US funds into a US bank account.
Would I need to file just a 1040 NR with a copy of the 1099 Misc. or are there other forms I need to fill out?
I am confused about certain information where it describes withholding for nonresident aliens who work IN the US since I do not.
Hello,
I have a question and would be glad if you could comment anything on my case. I am a professor at a university. My employer withholds from me as if I was a non-resident. I am on J1 visa since Fall 2012 and before that for 10 years was a student on F-1 continuously. I was always a resident and suddenly when I changed my status to J1 the employer (since January 1st) “made me” a non-resident. The employer insists I will have to file as a non-resident.
I indicated to the employer that the form 8843 (usually filed by a non-resident with a tax return ) on line 8 explicitly says that since a person who was on F-1 visa before J1 for at least 2 years in the past 6 years, cannot be exempt ( and as consequence is a resident by the substantial present test).
The employer was unwilling to listen and to change anything. In the end of the year the employer will send 1042S to IRS which will indicate that I was exempt as non-resident. I, on the other hand, will file as a resident since I believe that I am right. Thus, there will be a “discrepancy” between what I say and what the employer says. I am not sure what to do about it. I called IRS and the lady said that it seems that I am right, but maybe there is a treaty which the university uses. I checked with employer, but did not get a precise answer whether they use anything or not. They mentioned a country of which I am not a citizen and said that the treaty seem to work. I checked treaties with all of the countries I have been for the past 3 years. None of the treaties are applicable to me since I am not a tax-resident of any of these countries. Could you suggest anything in my case?
Thanks.
If a USA company paid commissions to a UK salesman in 2012, does the USA company need to Issue a 1042-s and withhold taxes?
Hi is this the first year that they are given this? Because its the first time I got it. I am an International Student in Texas. Any help it’s very appreciated. 🙂
Yes. The IRS says that any withholding agent (such as an employer, business, or university) that paid any amount subject to withholding to a non-resident alien would need to submit a 1042-S information return for every payment recipient.
Do you need to withhold taxes? Yes, if they do not have a US social security number, which they probably dont since they live in the UK. The United Kingdom and the US have a tax treaty and its quite possible that salesman can attain that withholding amount from the IRS.
Hi. Who are we supposed to issue the 1042 forms to if we do business with repair shops in both US and abroad. Some of the repair shops in the US have a foreign owner too… Thanks
If you are doing business with repair shops in the US, you more than likely send them a 1099-MISC. If you do business with non-US residents, then you want to issue a 1042-S. It really comes down to the TIN and residency. If they dont have a US taxpayer identification (SSN or EIN), then they are non-US residents and if you are doing business with them, you want to issue a 1042-S. If they have a US TIN, then a 1099-MISC will work.
I hope this helps. Email anytime.
Hi,
I worked in the US for five years up until August 2012. During this time, I had a 401k which I have now closed. I have received my W-2 for 2012 from my previous employer and also 1042-S. I know how to report the W-2 information on my tax return but do I need to report the 1042-S on the tax return or has the witholding agent taken care of that for me – I have copies B-D.
Really appreciate any help with this.
Hi, my name is Petr. I used to be a student with an F1 visa, then I got an asylee status starting form September 2012. But I still got that 1042S form. So, the first half of the year 2012 I used to be an F1 alien, the last half of the year 2012 I became a resident (asylee). Our school tax counselor recommends me to use that crappy software that gives no tax refund, she says that it is designed for international students. I want to use some other like Turbo Tax, or Tax Slayer… whatever, but not that crappy school software. Can I do this?
I have no idea. Simply put, the 1042-S means that someone withheld money from you and sent that withheld amount to the IRS. You have an opportunity to get that withheld money from the IRS. What software you use to get the withheld amount is up to you.
If you received Form 1042-S, then the withholding agent has reported that amount to the IRS.
@Erich J. Ruth
Thank you for your response. I’d like to elaborate a little more on my prior question about making payments to foreign owned repair shops in the US. If they don’t have a US EIN, are we supposed to withold taxes from them (if so, how much?) or just reporting how much we paid them on form 1042 is enough?
Thanks.
I’m Thai. I got 1042-s from Amazon for Royalties income. They withhold my income at 5% rate, at the treaty tax agreement rate. Can I ask for the withholding tax back since I’m not US citizen? Do I still need to file the 1040nr form?
You can ask for the withheld amount from the IRS.
Hello
Our company has received a form 1042-S with income code 50 and a gross income number given. It states no federal tax withheld in boxes 7,8 and 9. We have only been selling products to this company and have earlier filled out and sent our client a W8 BEN form and are know a bit confused over this form.
Could you please help us understand if we need to do something with this new form or if we could leave it unattended.
Thanks in advance
If withholding is zero, then there is nothing you have to do. The US payer is required to transmit the 1042-S to you and the IRS. They are reporting that nothing was withheld. You retain that copy for your records. If there was something withheld, then you may or may not have the opportunity to receive that withheld money.
Thanks for quick respons
Ingrid
@Erich J. Ruth
What is the difference between 1042-S and W2 form. I am a non-resident alien (doctoral student) receiving stipend income from my university. This year, instead of 1042-S, I received W2 form. Should I be asking for a 1042-S form?
W-2 is for wages. If your receiving a wage or stipend from the University, then they are reporting that to you and the IRS. Some taxes must have been pulled out of that wage and paid.
The 1042-S may also apply. Form 1042-S is for a non-resident who does business with a payer in the US and receives US-source income. The University may withhold up to 30% and send that to the IRS and depending on the country you are from, their may be a tax treaty between the US and that country that makes you eligible to receive that withheld amount. Lots of ‘may apply’ conditions. You would want to talk with the University and a local accountant. Did they withhold anything from your wages?
Hi, Erich,
Thank you for your help here, it’s greatly appreciated.
Once a foreign person receives a 1042-s form with withholdings, what is he required to do? Does he have to file a tax return? Or does he only need to file if he wants the withholding back? What form to use to file? By any chance you know if turbotax can do it?
Thanks much!
You receive a 1042-S. Your not required to do anything; you may have the potential to acquire any money that has been withheld and set to the IRS. Look at Form 1042-S and see if anything was withheld. If nothing was withheld, then the form is just for informational purposes. If something was withheld, then you may want to proceed to get the withholding.
TurboTax is not what you need for 1042-S.
@Erich J. Ruth
Thanks for the quick reply, Erich.
Yes, it did withhold, 10% flat. So how do I get it back if I can get it back? And what do I need to file? Thanks much!
Hi Erich,
I am non-resident alien and got 1042-S. The income code is 06. According the form, 06 means the dividendent by US Corporation. I am filling 2012 1040NR form. Should I include the gross income in the 1042-S (with code 06) into my total ordinary dividents and withheld into 2012 estimated tax payment? Thanks!
Hello Erich J. Ruth,
I have already got form 1042-s (I have got Copy B, C and D). In case I want to claim the withheld amount from IRS. What should I do now?. Just send back the form to IRS, right?. Which part of the copy I should send and what is the mail address?. Please help
Best Regards,
Krai
Hi Erich,
On a related note, I received a 1099-INT statement from my bank this year which is odd as I am a non-resident alien (NRA). I am aware that interest income is not taxable for NRAs. But there seems to be a new rule in place this year ( Link: http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202576445727&Reporting_Interest_on_US_Accounts_of_NonResident_Aliens&slreturn=20130301005725 ). As per these rules, I should be getting a 1042-S. Are the 1099-INT and the 1042-S the same in this case? What should I do next – file a 1099-INT or 1042-S or not do anything at all?
Thank you!
@Erich J. Ruth
Hi Erich,
I was OPT F1 student last January in TX. Then I moved from TX to CA in Feb and got my green card in June. But before I moved to CA, I got a scholarship from my last school and therefore I received a 1042-s from them.
Now I am having trouble to file the 1042-s in my tax return. I am using Form 1040 since I am a resident alien now. I know how to file my W2 and 1099-INT. Please help me with the 1042-s.
Hi Erich,
I am getting only W2 form from my employer and I am consider a non resident alien for the year of 2012 working in the US. I had tax, SSN and medicare withheld from my paycheck each month. But I did not get 1042-S from my employer, should I ask for it? The country I am from has no tax treaty.
Form 1042-S reports taxable income for international persons who have received the following types of income:
1.Wage payments made to employees who have claimed tax treaty benefits.
2.Fellowship/Scholarship income received directly by the student beneficiary. This includes all income not applied directly to the tuition and fees.
3.Independent personal services for work performed in the US.
4.Royalty payments issued to individuals or entities.
5.Non-employee Prize or Award payments
In your case, your getting a W-2 and want to know if you should also be receiving a 1042-S. Item 1 listed above is probably the one that fits you best. However, you said that you are not from (and possibly not claiming benefits from) a country with a tax treaty.
The 1099-INT and 1042-S are separate forms. 1099-INT is interest income and 1042-S is a withholding statement. If you feel you should be getting a 1042, then contact that payer. “Not do anything at all” is never advice I would recommend.
I received a 1042 S form from my employer. I changed from a nonresident alien to a resident alien (married, still a student). I am fling a 1040 for income tax purposes. I am not fling income tax in my “home” country this year. Do I have to enter the amount on my 1042S on my income tax. Where do I enter it?
Hi Erich,
I have received a 1042-S for an award I had received last September. I left the US last April and will file my W-2 return as a resident alien. It appears from your post that I do not have to file a return for 1042-S unless I want any money back from the tax withheld. Can you please confirm? Thanks.
1042-S is a withholding statement. If you dont want to pursue the money that was withheld, then that’s that. As a side note, the state of California started an additional 7% withholding. The state knows that a certain of people will not pursue the withheld money.
I dont know the answer to this question. Try a local accountant. 🙂
Hi Erich,
I was working in the US till sep’11 and had a 401K which I closed in Feb’2012. I do not have any other income in 2012 and have only 1042 S form sent to me. In this form there is some money withheld. My questions are:
1. Can I file a tax return on this? I guess, yes.
2. Previously I used W-2 to file tax, can I use 1042 s in lieu of W-2 to file tax or is there any other way.
3. Previously I filed taxes by filling 1040xx (I do not remember xx), which form I should use now to file the return.
4. Any online tool you know which can help me/
Thanks in advance,
Ankit
Hi Eric,
Your answers are very useful to me. I received 1042-S from my 401k provider (fidelity) reporting a full withdrawal in Dec 2012. I had earlier moved out of US into Canada in July 2012 and subsequently left the company in Nov 2012 in Canada. I am now in India.
1) What is the process to claim amount withheld as stated in 1042-S? (Box 1 says 14)
2) 3) Where can I get more information on the claiming the amount withheld?
3) In TurboTax, Can I use the ‘Estimated and Other taxes withheld” section to report income withheld? The problem when I do this is that Turbotax calculates the federal refund by adding the amount withheld in 1042-S thereby giving me a HUGE refund.
Thank you for your help.
Priya
Im not sure about TurboTax.
With regards to what is the process to claim the amount withheld, you want to file Form 1040-NR. There is a box that asks about how much was withheld on 1042-S.
The IRS International Assistance Group can be reached by phone at
267-941-1000 x2 x3 (extension 2 then 3 provides a 1042-S specialist)
I hope this helps.
Hi Erich , I live in Mexico and received the 1042-s form, What I need to do to claim amount withheld? also I have a form last year, I can still claim it?
Use Form 1040-NR to claim the amount withheld.
I dont know if there is a time limit to claiming the amount withheld or not. If you have a prior year 1042-S, I dont know if you can claim that.
Hi Erich
Thank you so much for posting this blog and responding to queries. I have a unique query about 1042s. I was a US resident in 2012 and received my W2. However, before 2012 I was not in US and had a ESPP account with ETrade. I changed my address from India to US but didn’t file W9 form, so ETrade started doing federal tax withholding on stock dividends. Sometime in 2012, I filed W9 and then ETrade changed my status to resident and stopped withholding tax. Now I have 2 dividend forms for same stocks account. One is 1042s which reports div income and tax withheld. Second is 1099-DIV. I want to know what am I supposed to do with 1042s form? Turbo Tax has no option to report that.
Thank again!!
-Anish
You say “ETrade changed my status to resident and stopped withholding tax”. You must have received at that time a valid US social security number. Its the only way they can stop withholding.
You ask “what am I supposed to do with 1042s form”. If there is withholding, you may be able to get that money. If you are a US resident, then you fill out the 1040. Non US residents complete 1040-NR which has a box for 1042-S withholding. You may be eligible to receive that withheld amount. If there was money withheld and you do nothing, then the IRS keeps that cash.
Erich,
Appreciate your generosity with your time and expertise.
Once upon a time my friend had a green card, but not for several years. He is from a non-tax treaty country. He has not lived or worked in the US for years, so does not even meet the substantial presence test. Definitely a non-resident alien. He is minister who works in his home country but receives a 1099 every year from a US-based ministry using the SSN he got when he had a green card.
From everything I have read on the IRS website, he should not get a 1099. He should not even get a 1042-S because ministry income outside the US is exempt from withholding and self employment tax for a non-resident alien, even if paid by a US company (ministry). Is this how you see it? Is there something I can cite to the US ministry for them to rely on in not reporting any of these amounts?
I have no idea. 🙂
If he is paid by a US company, then they (the payer) have to report at least the transaction. They may not withhold anything but they still have to report the transaction. Your saying the payer doesnt have to report the transaction if the money is going to a ministry and that’s something I dont know. Your best source is to call the IRS and ask them. The IRS International Assistance Group can be reached by phone at
267-941-1000 x2 x3 (extension 2 then 3 provides a 1042-S specialist)
The 1042-S specialist at that extension is the person I call whenever I have a question about any money paid or withheld to a non US resident that might involve Form 1042-S. They have answered every question I have and we efile a ton of 1042-S forms per year.