What Is IRS Form 1042 and Who Must File It?

What Is Form 1042

• The official name is “Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.”
• Its purpose is to report withholding taxes on certain U.S. source income paid to foreign persons under Chapter 3 and Chapter 4 of the Internal Revenue Code, as well as certain procurement payments (Section 5000C) when applicable.
• It’s a withholding agent’s return, not one that the foreign recipient files. The foreign recipients generally get Form 1042-S (and sometimes Form 1042-T for transmittal) showing their specific payments and tax withheld.

Who Must File Form 1042

You must file Form 1042 if you are a withholding agent (U.S. or foreign) who:

1. Has control, receipt, custody, disposal, or payment of U.S. source fixed or determinable annual or periodic (FDAP) income (or withholdable payments) to foreign persons.
2. Withholds (or is required to withhold) under Chapter 3 or Chapter 4 on such payments.
3. Makes payments that are reported on Form 1042-S (so if you file 1042-S, you likely must also file 1042).
4. Receives certain federal procurement payments to foreign persons subject to withholding under section 5000C.

From the IRS:

“Every withholding agent, whether U.S. or foreign, must file Form 1042 and Form 1042-S to report payments of amounts subject to NRA withholding and chapter 4 reportable amounts, unless an exception applies.”

The “unless an exception applies” part means some payments may be exempt or excluded (e.g. wages reported on W-2, payments already reportable on other forms).

If you file Form 1042-S, do you in all cases also need to file Form 1042?

Yes.

• The IRS instructions for Form 1042-S explicitly state: “If you file Form 1042-S, you must also file Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.”
• The IRS “Who Must File / Returns Required” page reiterates: “If you are required to file Form 1042-S, you must also file Form 1042.”
• The “Discussion of Form 1042, 1042-S, 1042-T” document also frames them as a set: the 1042 is the summary withholding return, while 1042-S reports by recipient/income type.

So broadly: yes, filing 1042-S triggers the obligation to file 1042 (unless another specific exception applies, but none general for that).