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Instructions for IRS Form 1042-S: How to Report Your Annual Income

US foreign taxpayers use IRS Form 1042-S, officially known as the Foreign Person’s U.S. Source Income Subject to Withholding, to report state and federal income. If you are a nonresident alien earning income that is not reported on your W-2, you must file a 1042-S form. The IRS issues this form to individuals annually. Filing a 1042-S is not possible until you’ve submitted all other tax forms used for reporting your United States income. Some US foreign taxpayers are issued a 1042-S while others may receive a W-2 and some taxpayers may be requested to file both.

Who Files IRS Form 1042-S?

Form 1042-S must be filed by every withholding agent to declare income received for the previous year. Payments that must be reported are determined under the Amounts Subject to Reporting on Form 1042-S. If you are an individual withholding agent and the payment you’re making is not the part of your business or trade, you should not report it on your 1042-S.

There are four copies of the form used for different types of income subject to tax withholding:

  • Copy A is for use by the IRS.
  • Copy B is for the recipient.
  • Copy C must be attached to any federal tax return filed.
  • Copy D must be attached to any state tax return filed.

When submitting IRS Form 1042-S you must also prepare Form 1042, known as the Annual Withholding Tax Return for U.S. Source Income of Foreign Persons. Check the instructions for preparing both of these documents on irs.gov.

What is IRS Form 1042-S Used for?

This IRS form is used to report income types such as scholarship or fellowship, award or non-employee payments, salaries paid to employees who requested some treaty benefits, payments to contractors who worked for some time in the U.S. and royalty payments made to entities or individuals.

If you’re planning to report federal payments made to foreign individuals that are subject to tax withholding, IRS Form 1042-S must be used. The form may also be used to report compensations or distributions from trusts to expatriates.

How to Complete IRS Form 1042-S?

On Form 1042-S it is required to indicate the following information: income code, gross income, tax rate, net income, withholding allowance, federal tax withheld, personal information about the withholding agent, recipient’s account number, date of birth and other relevant information. To determine which income code to indicate, check the IRS website.

When to File IRS Form 1042-S?

You must submit your 1042-S to the Internal Revenue Service by March 15th, 2018.