Tag Archive for Form 1042-S

The Newly Issued Form 1042-S – Foreign Person’s U.S. Source Income Subject to Withholding

Ronald Marini

IRS has issued the 2016 version of Form 1042-S, Foreign Persons’ U.S. Source Income Subject to Withholding, and the instructions for that form. The form requests even more information then the 2015 version of this form!

What’s New In 2016:

Substitute forms. A substitute form furnished to a recipient must conform in format and size to the official IRS form and contain the exact same information as the copy filed with the IRS. However, the size of the form may be adjusted if the Read more

No Form 1042 Extensions, Higher Penalties And No Refunds – IRS Changes Its Ways!


As readers may recall, in 2013 IRS launched a new foreign payment practices (FPP) division under the LB&I to specifically oversee withholding agents’ compliance activities. The short article is intended to make the withholding agents and other affected taxpayers/ tax professionals aware that FPP has recently begun proposing significantly higher penalties for late filing of Form 1042-S and 1042 by the withholding agents.

Generally, Form 1042 and 1042-S are required to be filed by the withholding agent with regard to the U.S. source income paid to the non-U.S. persons. The forms must be prepared for the calendar year regardless of the withholding agent’s taxable year. These Forms are due on or before March 15th of the following calendar year. They must also be furnished to the payees by the same date.  Read more

Only 13% of US Source Payments Are Subject To US Withholding Tax!

TaxConnections Picture - Tax and Clock 1 - square

The IRS has issued 2 tabular presentations of data for Tax Year 2012 from Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. The table for 2012 shows that:

Only 13.10% of all US source payments are subject to US withholding tax and of this 13.10%, which is subject to US withholding tax, the average withholding tax rate is 25.37%.

Effectively what this means is, that for 2012 the effective rate of withholding tax on all US tax payments was roughly 3.33% as compared to the statutory 30% withholding tax rate on US income not otherwise exempt or reduced by tax treaty. Read more

IRS Released Forms 8966 And 1042 Updated For FATCA Reporting Requirements

TaxConnections Picture - Blue Checkmark - square

On March 5, 2014 the Internal Revenue Service released new versions of three critical forms to help financial institutions and withholding agents meet the requirements of the Foreign Account Tax Compliance Act, including draft versions of Form 8966 and Form 1042-S, and a final version of Form 1042.

Form 8966, FATCA Report, is a new form that foreign financial institutions (FFIs) would use to report information on their U.S. account holders under the 2010 law. The statute requires FFIs to report accounts held by U.S. taxpayers to the IRS or face, in some cases, a 30% withholding tax on certain U.S. source payments that are made to them.

Form 1042-S now incorporates FATCA and includes ways to account for withholding under Read more