Form 1042-S, titled “Foreign Person’s U.S. Source Income Subject to Withholding,” is an IRS form used to report income paid to nonresident aliens, foreign partnerships, foreign corporations, or other foreign persons that is subject to U.S. income tax withholding. It is similar to a W-2 or 1099 but specifically for foreign persons receiving U.S. source income.
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Key Facts
- Used For Foreign Payees Only: Form 1042-S is not for U.S. citizens or residents - it’s for nonresidents receiving certain types of U.S. income.
- Types of Income Reported:
- Scholarships or fellowships
- Dividends and interest
- Royalties
- Compensation for services performed in the U.S.
- U.S. pensions
- Rental income
- Other fixed or determinable annual or periodic (FDAP) income
- Withholding Agent Responsibility: The payer (withholding agent) must withhold U.S. tax, report it on 1042-S, and file it with the IRS.
- Form Details: Shows gross income paid, tax withheld, exemption code (if applicable), and treaty benefit info. Foreign recipients use it to file their U.S. tax returns (usually Form 1040-NR).
- Filing Deadlines:
- Recipient Copy Due: March 15
- IRS Filing Deadline: March 15 (paper or electronic via FIRE system)
- Treaty Benefits: If a tax treaty between the U.S. and the payee's country reduces or eliminates withholding, it’s recorded here with the appropriate treaty exemption code.
1. Who receives a Form 1042-S?
Foreign individuals or entities that received U.S. source income subject to withholding - like international students with scholarships or foreign investors.
2. How is Form 1042-S different from Form 1099 or W-2?
1042-S is for nonresident aliens or foreign entities, while 1099 and W-2 are for U.S. persons.
3. What do I do if I receive a 1042-S?
You use it to file your U.S. tax return (typically Form 1040-NR), even if tax was already withheld.
4. Can I receive both a W-2 and a 1042-S?
Yes, in rare cases, such as international students who have wage income (W-2) and scholarship income (1042-S).
5. What should I do if there's an error on my 1042-S?
Contact the withholding agent or institution (like a university or employer) to issue a corrected form.
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