What Is IRS Form 1042 and Who Must File It?

IRS Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, is used to report certain payments made to foreign individuals and entities, along with the federal tax withheld on those payments.

The form is filed by the withholding agent — not the foreign recipient. In most cases, the withholding agent is the U.S. business, financial institution, partnership, university, or organization responsible for making the payment and withholding the tax.

What Does Form 1042 Report?

Form 1042 summarizes:

• Total payments made to foreign persons that are subject to withholding
• Federal tax withheld under Chapters 3 and 4 of the Internal Revenue Code
• Certain federal procurement payments under Section 5000C
• Amounts reported on related Forms 1042-S

Common types of reportable income include:

• Royalties
• Dividends
• Interest
• Rents
• Scholarship or fellowship payments
• Compensation payments
• Other FDAP income (Fixed, Determinable, Annual, or Periodical income)

Who Must File Form 1042?

You generally must file Form 1042 if you are a withholding agent that:

• Controls, receives, pays, or distributes U.S.-source income to foreign persons
• Is required to withhold tax under Chapter 3 or Chapter 4 (FATCA)
• Files one or more Forms 1042-S
• Makes certain federal procurement payments subject to withholding

The IRS broadly defines a withholding agent as any person or entity responsible for withholding and remitting tax on qualifying payments to foreign persons.

Do You Also Need to File Form 1042-S?

Usually, yes.

Form 1042 works together with Form 1042-S:

• Form 1042 = annual summary return
• Form 1042-S = recipient-level reporting form

If you file Form 1042-S for foreign recipients, you will generally also need to file Form 1042.

When Is Form 1042 Due?

Form 1042 is generally due:

• March 15 following the calendar year being reported.

This due date usually aligns with Form 1042-S filing requirements.