An orchestra must file Form 1042-S when it pays U.S.-source income to nonresident aliens. These can include performers, conductors, guest artists, or music licensors. The form reports both the income and the tax withheld.
1. Nonresident Alien Musicians or Performers
If an orchestra hires nonresident alien musicians to perform in the United States, it may have to withhold U.S. income tax from their pay.
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The orchestra reports this income and the withheld tax to the IRS using Form 1042-S.
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For example, a European violinist performing in New York would receive a Form 1042-S for their U.S. earnings.
2. Nonresident Guest Conductors or Artists
Guest conductors or artists from outside the United States may also be subject to withholding.
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If they are paid for their services in the U.S., the orchestra must file Form 1042-S.
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In addition, the form must show both the amount paid and the tax withheld.
3. Royalty Payments
An orchestra may pay royalties to nonresident alien songwriters, composers, or music publishers.
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These payments—such as for the right to perform a copyrighted piece—must be reported on Form 1042-S.
4. Withholding Tax Obligations
The standard withholding rate is 30% unless a tax treaty lowers or eliminates it.
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The orchestra must report the amount withheld on Form 1042-S and send it to the IRS.
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As a result, the payee will see the withholding amount when they receive their copy of the form.
5. Filing Requirements
When filing Form 1042-S, the orchestra must:
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Provide a copy to the nonresident alien payee
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File the form with the IRS
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Submit Form 1042 (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons) to report total withholding for the year