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.
@Erich J. Ruth
Do I need to file form 1040-NR in case if there’s any withhold tax on my income or it’s compulsory for a Non-Resident to file it every year by mid-June? Thanks!!!
I dont know the details of Form 1040-NR. You would want to contact the IRS or someone who specializes in
Form 1040-NR.
Form 1042-S is a withholding statement. The payer typically withholds money and sends that money to the IRS.
You, the recipient, can apply that withheld amount as a credit for any tax due on Form 1040-NR.
So, If I am a Non-Resident and my payer needs to send me a copy of 1042-S which is a withholding statement.
Currently there’s no withhold tax on my income, so if my payer send me a copy of 1042-S. Would that be just for information?
So if there’s no withhold amount on 1042-S, I do not need to file any return…Right??
If the withheld amount is for $0, then yes, Form 1042-S is just for informational purposes. The payer is satisfying their tax obligation by reporting that information, however meaningless, to the IRS.
You file Form 1040-NR is you have tax obligation. I honestly dont know the details of Form 1040-NR.
@Erich J. Ruth
Thanks Erich for your Patience & Help in explaining everything.
I am an American Citizen living aboard but work and pay taxes in the US. I was giving a 1042s form. But as an American Citizen is this the correct form? I have been arguing with Wells Fargo that a 1099R is needed. But I keep getting it is because I live aboard. Any suggestions?
US Citizens receive a 1099 form. Non-US residents receive a 1042-S. You have to
keep arguing with Wells Fargo to void the 1042-S and issue a 1099-R.
When the withholding agent has the obligation to provide a 1042-S to any applicable individual, does a W8 BEN need to be presented to the individual as well?
If so, what are the withholding agent obligations outside of providing the W8 BEN to the individual?
I dont know of any requirement where the W8 BEN has to be included with Copy B of the 1042-S form. Clients
that we work with just mail Copy B. I dont think there is any harm in including the W8 BEN form.
What are the withholding requirements for us to send profit participation funds to a resident of the UK? Must we withhold 30% and complete 1042 or 1042-S?
Form 1042-S is an annual withholding form and the form you would you to report
withholding to the IRS. Form 1042 is a monthly and weekly breakdown of how much you
withheld. You can electronically file 1042-S to the IRS but Form 1042 is something you
fill out manually and mail.
The big question your asking is “must we withhold” and Im not a lawyer and
can’t answer that. The IRS defines on their website Chapter 3 and Chapter 4
withholding and if you have to see if you have to figure out if you sending funds
to a resident in the UK involves withholding.
I’m non resident alien for tax purpose but I have a SSN and US driver’s license. When I won a $1500 jackpot at a casino, the casino checked my SSN and issued me a W2G instead of 1042-S. No tax was withheld. I’m going to report this on my 1040NR “non effectively connected income schedule NEC” and pay my tax. Will the casino or I face any penalties or audit, because W2G was not the correct form?
It is confusing. I thought that if someone had a SSN that they filed a 1040 and anyone
that does not have a SSN (non-US resident) files a 1040-NR. I didnt know that you could
have a SSN and still file a 1040-NR.
What you can do is contact the casino and explain the situation. They would void the W-2G
and issue you a 1042-S. Its work. It takes time. But filing corrections and re-issuing
forms is what the IRS asks you do to avoid penalties.
Erich, buenas tardes!
Una pregunta, recibí por correo el Form. 1042-S 2019, copia B, C y D. En la casilla 1 el “income code” es 29. En la casilla 2 el “Gross income” $20.00. Todas las demas casillas, 5, 6, 7, 8 y 10 con $0.00.
Este formulario me lo han enviado solamente como informacion? , o debo enviarlo a algun organo gubernamental?
Recibe la Copia B. El IRS recibe la Copia A.
El cuadro 10 es el cuadro más importante. Si el recuadro 10 es $ 0, significa que no se retuvo dinero.
Asi es, no se retuvo dinero.
O sea, solo fue enviado como informacion?
Que debo hacer con el formulario?, enviarlo o guardarlo?
Disculpe Erich, escribo bien y se publica mal.
El formulario solo fue enviado como informacion?
Que debo hacer con el formulario?
El formulario solo fue enviado como informacion?
Si.
Que debo hacer con el formulario?
Guárdelo durante unos años, luego puede tirarlo.
@Carlos Agustin
@Erich J. Ruth
Muchas gracias Erich y disculpe la molestia.