Form 1042

Form 1042-S, 2016.

Forms 1042, 1042-S and 1042-T are United States Internal Revenue Service tax forms dealing with payments to foreign persons, including non-resident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts.[1]

Every withholding agent or intermediary, whether U.S. or foreign, who has control, receipt, custody, disposal or payment of any fixed or determinable, annual or periodic U.S. source income over foreign persons, must file these forms with the IRS. For example, employers that employ non-resident aliens (such as foreign workers or foreign students) would need to file a 1042-S Form with the IRS for every non-resident alien they employ, and also send a (completed) copy of that form to the non-resident alien they employ.[2]

Forms 1042 and 1042-S are filed separately. The main difference between forms 1042 and 1042-S is that form 1042-S is concerned with payments made to foreign persons, while form 1042 is concerned with determining how much income will be withheld for tax withholding purposes. Also, Form 1042-S must always be filed together with Form 1042-T, but Form 1042 can be filed by itself.

Filing

When are the forms due?

Forms 1042, 1042-S and 1042-T must be filed by March 15 of the year following the calendar year in which the income subject to reporting was paid. If March 15 falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.[1] These forms should be addressed to Ogden Service Center, P.O. BOX 409101, Ogden, UT 84409.[1]

Penalties

If Form 1042 and/or Form 1042-S are filed late, or the tax isn't paid or deposited when due, the filer may be liable for penalties unless they show that the failure to file or pay was due to reasonable cause and not willful neglect.[1]

Form 1042

Form 1042, also "Annual Withholding Tax Return for U.S. Source Income of Foreign Persons", is used to report tax withheld on certain income of foreign persons.

The employer only needs to submit Form 1042 to the IRS, not to their employee. Form 1042 does not have to be accompanied by a Form 1042-T.[1]

Form 1042-S

Form 1042-S, also "Foreign Person's U.S. Source Income Subject to Withholding", is used to report any payments made to foreign persons.

Non-resident alien employees receive a completed version of this form from their withholding agent if they have one. For example, a postdoctoral student from a foreign country who receives a stipend from an American university would receive Form 1042-S from their university. This form's purpose is somewhat similar to the W-2 Form that American citizens receive from their employer (non-resident aliens will receive both Form 1042-S and Form W-2 from their employer[3]).

Note that a separate Form 1042-S must be filed for each type of income paid to the same recipient.[4] For example, if a non-resident alien works for a bank and the bank wants to both pay the alien a salary and also give them stock options, two 1042-S forms must be filed.

If an employer needs to file 250 or more of Form 1042-S, then each Form 1042-S must be filed electronically.[1]

Comparison with Forms 1099 and 1099-MISC

Form 1099 is one of several IRS tax forms used to prepare and file an information return to report various types of income other than wages, salaries, and tips (for which Form W-2 is used instead). Form 1099-MISC is a variant of Form 1099 used to report miscellaneous income. As a general rule, if the person receiving the withholdable payment is a nonresident alien, Forms 1099 and 1099-MISC should not be used, and instead Form 1042-S should be used.

One use of Form 1099 is for reporting gross rent on property. However, if for example a property manager manages property owned by nonresident aliens, the manager must issue the nonresident alien owner a Form 1042-S, not a Form 1099.[5]

A common use of Form 1099-MISC is to report amounts paid by a business to a non-corporate US resident independent contractor for services. If the independent contractor is a nonresident alien, then the business must instead use Form 1042-S.

Form W-2 is issued to all US citizens and residents, and is issued to foreign employees who either don't fall under a tax treaty, or whose earnings exceed allowable maximums of a tax treaty.[6]

Form 1042-T

Form 1042-T, also "Annual Summary and Transmittal of Forms 1042-S", is used to transmit Form 1042-S to the Internal Revenue Service. Form 1042-T is simply a 1 page summary of Form 1042-S. This form (along with Form 1042-S) is submitted to the IRS only, not to the non-resident alien. A Form 1042-T must accompany each Form 1042-S.

External links

References

  1. 1 2 3 4 5 6 "Discussion of Form 1042, Form 1042-S and Form 1042-T". www.irs.gov. Retrieved 2016-02-15.
  2. ↑ "1099 Tax Software Blog» What is Form 1042-S and Who Needs to Submit One?". www.1099fire.com. Retrieved 2016-02-15.
  3. ↑ "1042-S and W-2 Tax Forms | International Tax | Global Support Services | Vanderbilt University". www.vanderbilt.edu. Retrieved 2016-04-22.
  4. ↑ "Who Must File Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding". www.irs.gov. Retrieved 2016-02-15.
  5. ↑ "The Difference Between IRS Forms 1099 and 1042-S | Las Vegas Real Estate". www.shelterrealty.com. Retrieved 2016-04-25.
  6. ↑ "Duke Financial Services - Payroll - Year End Tax Forms (W-2, 1099, 1042S)". finance.duke.edu. Retrieved 2016-04-25.
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