What is the 1042-s?

Written by J. Hirby and Fact Checked by The Law Dictionary Staff  

You use the 1042-s to record income paid during the year you are filling it out for, not the previous year. This is payment that you, the withholding agent, administered to a foreign worker or student who is considered a non-resident alien working in the United States. It is important for you to know the residential status of your employees to make sure you fill these out correctly. You must fill out the 1042-s for each individual you paid during the tax year.

The forms must be filed in the year following the year of payment by March 15th. You can file electronically or by paper as long as it is in by the due date. While the person may have made money during that time working in their country this is not subject to withholding, but it does need to be listed in the 1042-s. You should remember not to use the form to report anything that will be found on the W-2, 1099, 8288-A, or 8805.

Who Has to File a 1042-s?

Any withholding agent, which is an employer, business or university, must file to report amounts paid during the preceding year. This only applies to those agents paying as part of their business or trade with withholding is expected to be paid. Payments used for scholarships used for tuition, expense, books, and fees for a college student are not included in what must be reported. It is important to remember that you are required to file a 1042-s even if you did not withhold taxes because the income was exempt from tax by the US tax treaty and it has to be recorded. You do not have to report amounts paid to bona fide residents of US possessions and territories.

Other Payments that must be reported by a non-resident alien include:

? Corporate distributions
? Interest rents
? Royalties compensation for dependent and independent services
? Pensions and other deferred income
? Most gambling winnings

What is the Purpose of the 1042-s?

The purpose of the 1042-s sent by the company is to give the payee the form for information to do their taxes. Since non-resident aliens have different tax laws than resident aliens it is important that the withholding agent fill out the 1042-s correctly. You should keep copies of the filed paperwork for three years after filing to protect yourself and keep the information where the IRS can easily see it if asked.

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