Form 1042 Utasítások
1042-es formanyomtatvány, éves visszatartási adóvisszatérítés az Egyesült Államok Forrás jövedelméhez
Rev. 2023
Kapcsolódó űrlapok
- Form 1042 - Éves visszatartási adó-visszatérés az Egyesült Államok Forrás jövedelem a külföldi személyek
- Form 1042 Q ütemterv - A minősített származékok adóhatósága (QDD)
Department of the Treasury
Internal Revenue Service
2023
Instructions for Form 1042
Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
Section references are to the Internal Revenue Code unless
otherwise noted.
Centralized partnership audit regime. Section 1101 of the
Bipartisan Budget Act (BBA) of 2015 repealed the TEFRA
partnership procedures and the electing large partnership (ELP)
provisions and replaced them with a new centralized partnership
audit regime effective for partnership tax years beginning on or
after January 1, 2018. The new regime provides for
Future Developments
For the latest information about developments related to Form
1042 and its instructions, such as legislation enacted after they
determination, assessment, and collection of underpayments at
the partnership level unless certain elections are made by the
partnership. Under these rules, a partnership (or a pass-through
partner) may be required to withhold under chapter 3 or
chapter 4 when there has been an adjustment under the
centralized partnership audit regime to an item of income or gain
allocable to a foreign person (or any other person subject to
withholding). If the adjustment is to an amount subject to
withholding that is reportable on Form 1042, the partnership (or
pass-through partner) should report the withholding on Form
1042 for the year in which it pays the tax required to be withheld.
See section 6241(9).
What’s New
Section 1446(f) withholding. Starting for tax year 2023, a
withholding agent that is a broker for the transfer of a publicly
traded partnership interest is required to withhold tax under
section 1446(f) and report the withholding on Form 1042.
Electronic filing. New electronic filing requirements apply to
Form 1042 beginning for tax year 2023 (Forms 1042 filed in
2024). For general information about electronic filing, see Pub.
File, later, for more information on the electronic filing
requirements for Form 1042.
Qualified derivatives dealers (QDDs). A withholding agent
that is a QI acting as a QDD must assume certain withholding
and reporting responsibilities with respect to payments made on
potential section 871(m) transactions in its QDD capacity. Form
1042 includes Section 4, which a QI that is a QDD (or has a
branch that is a QDD) must complete if it made any payments in
its QDD capacity that are reportable on this form. For more
information on the withholding and reporting requirements of a
QDD, see the QI Agreement in Rev. Proc 2022-43, 2022-52
I.R.B. 570, available at IRS.gov/irb/2022-52_IRB#REV-
PROC-2022-43. See also section 871(m) and Notice 2022-37,
2022-37 I.R.B. 234, available at IRS.gov/irb/
Revised QI Agreement and QDD reporting. The qualified
intermediary (QI) agreement in Rev. Proc. 2017-15, 2017-3
I.R.B. 437, expired December 31, 2022, and the QI Agreement in
Rev. Proc. 2022-43, 2022-52 I.R.B. 570, applies beginning
January 1, 2023. Under the QI Agreement, any QI that was a
QDD (as defined later) or had a QDD branch during the tax year,
including a QI that was a partnership, must complete
Schedule(s) Q (Form 1042).
Reminders
These instructions provide guidance to QDDs regarding the
proper withholding agent status code to use when filing Form
1042 (and Form 1042-S). See Chapter 3 and 4 status codes of
withholding agent, later.
Reliance on proposed regulations reducing burden under
FATCA and chapter 3. On December 18, 2018, the IRS and
the Department of the Treasury issued proposed regulations (83
FR 64757) to reduce the burden on taxpayers of certain
requirements under chapters 3 and 4 of the Internal Revenue
Code. The proposed regulations provide that, under section
7805(b)(1)(C), taxpayers may generally rely on the proposed
regulations until final regulations are issued. Specifically, for
purposes of these instructions, a withholding agent may rely on
the following provisions of these proposed regulations in
connection with completing Form 1042.
Potential 871(m) transactions. Section 3 of Form 1042
applies to payments made by a withholding agent under any
potential section 871(m) transaction (rather than just payments
made under notional principal contracts or other derivatives
contracts that reference a U.S. stock or underlying security). Any
withholding agent making such a payment must complete
Section 3.
Withholding and reporting in a subsequent year. A
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2022-37 was published announcing the Department of the
Treasury and the IRS intention to amend the section 871(m)
regulations to further delay the effective/applicability date of
certain rules in those final regulations and certain requirements
of a QDD.
partnership or trust that is permitted to withhold in a subsequent
year with respect to a foreign partner's or beneficiary's share of
income for the prior year may designate the deposit of the
withholding as attributable to the preceding year and report the
associated amounts on Forms 1042 and 1042-S for the
preceding year. See Foreign partners of U.S. partnerships and
Schedule Q (Form 1042). If the taxpayer, or any branch of the
taxpayer, is a QDD, the taxpayer must attach to Form 1042 a
Dealer (QDD), for each QDD. Schedule Q (Form 1042) replaces
the previous requirement to attach a statement to the Form 1042
to provide information regarding a QDD's tax liability.
Adjustments to overwithholding under the
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reimbursement and set-off procedures. A withholding agent
may make adjustments to overwithholding using either the
reimbursement or set-off procedure until the extended due date
for filing Form 1042-S (unless the Form 1042-S has already been
filed or furnished). Additionally, a withholding agent may use the
extended due date for filing a Form 1042 to claim a credit for any
adjustments made to overwithholding.
Chapter 3 and 4 status codes. The chapter 3 and 4 status
codes of withholding agents are required regardless of the types
of payments reported on this form.
Oct 27, 2023
Cat. No. 54843T
1042-S that is subject to withholding under section 1445, must
file Form 1042 for the preceding calendar year.
General Instructions
You must file Form 1042 if any of the following apply.
Purpose of Form
You are required to file or otherwise file Form(s) 1042-S for
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Use Form 1042 to report the following.
purposes of either chapter 3 or 4 (whether or not any tax was
withheld or was required to be withheld to the extent reporting is
required). File Form 1042 even if you file Form(s) 1042-S
electronically.
The tax withheld under chapter 3 (excluding withholding
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under sections 1445 and 1446 except as indicated below) on
certain income of foreign persons, including nonresident aliens,
foreign partnerships, foreign corporations, foreign estates, and
foreign trusts.
You file Form(s) 1042-S to report to a recipient tax withheld by
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your withholding agent.
You pay gross investment income to foreign private
The tax withheld under chapter 4 on withholdable payments.
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For the withholding requirements of chapter 4, see Regulations
sections 1.1471-2(a), 1.1471-4(b), and 1.1472-1(a).
foundations that are subject to tax under section 4948(a).
You pay any foreign person specified federal procurement
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The tax withheld pursuant to section 5000C on specified
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payments that are subject to withholding under section 5000C.
federal procurement payments.
You pay an eligible deferred compensation item to a covered
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The tax withheld under section 877A on payments of eligible
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expatriate or you are a trustee making a distribution from a
nongrantor trust to a covered expatriate under section 877A.
deferred compensation items or distributions from nongrantor
trusts to a covered expatriate.
You are a QI, withholding foreign partnership (WP),
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Payments that are reported on Form 1042-S under chapter 3
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withholding foreign trust (WT), participating foreign financial
institution (FFI), or reporting Model 1 FFI making a claim for a
collective refund under your respective agreement with the IRS.
See Regulations section 1.1471-1(b)(114) for the definition of a
reporting Model 1 FFI.
or 4. See Regulations section 1.1474-1(d)(2)(i) for the definition
of a chapter 4 reportable amount (which are amounts required to
be reported on Form 1042-S for chapter 4 purposes) and
Regulations section 1.1461-1(c)(2) for amounts subject to
reporting for chapter 3 purposes.
Withholding Agent
Certain distributions subject to section 1445 withholding
tax. Publicly traded trusts, real estate investment trusts (REITs),
and regulated investment companies that are qualified
investment entities (as defined under section 897(h)(4)) must
withhold section 1445 tax on certain distributions and report
such amounts on Form 1042. For more information, see
Regulations section 1.1445-8 and the Instructions for Form
A withholding agent is a U.S. or foreign person that has control,
receipt, custody, disposal, or payment of any item of income of a
foreign person that is subject to withholding. A withholding agent
may be an individual, trust, estate, partnership, corporation,
nominee, government agency, association, or tax-exempt
foundation, whether domestic or foreign. For purposes of
chapter 4, a withholding agent includes a participating FFI (PFFI)
or registered deemed-compliant FFI (RDCFFI) to the extent such
FFI is required to withhold tax. See Regulations section
1.1473-1(d) for the definition of a withholding agent for purposes
of chapter 4.
Publicly traded partnerships (section 1446 withholding
tax). For purposes of reporting on Form 1042, a publicly traded
partnership (PTP) must withhold section 1446(a) tax on
distributions of effectively connected taxable income (ECTI) or
amounts realized on distributions for section 1446(f) purposes
made to its foreign partners. A nominee that receives a
Liability for tax. As a withholding agent, you are personally
liable for any tax required to be withheld as well as interest and
any applicable penalties. A withholding agent acting through an
agent is liable for any failure of the agent to deposit any tax
required to be withheld and deposited even if the agent is also a
withholding agent and is itself separately liable for the failure to
comply with the provisions of chapter 3 or 4.
For purposes of chapter 3, if you fail to withhold and the
foreign payee fails to satisfy its U.S. tax liability, then both you
and the foreign person are liable for tax, as well as interest and
any applicable penalties. The applicable tax will be collected
only once. If the foreign person satisfies its U.S. tax liability, you
are not liable for the tax but remain liable for any interest and
penalties for failure to withhold.
distribution of ECTI from a PTP and is treated as the withholding
agent for section 1446 purposes must use Form 1042 to report
the tax withheld. For purposes of section 1446(f), starting for the
2023 year a broker is generally required to withhold on an
amount realized from the sale of a PTP interest that it effects for
a foreign person that is the transferor of the interest. Absent an
applicable exception to the withholding, a broker is required to
withhold at a 10% rate on the amount realized and report the
amount realized and withholding on Forms 1042 and 1042-S.
See Regulations section 1.1461-1(c)(2)(i)(Q) and (R) for further
information on this reporting. A broker is also required to
withhold under section 1446(f) on an amount realized on a PTP
distribution. For this purpose, a nominee is a person that holds
an interest in the PTP on behalf of one or more foreign partners
and that is a domestic person, a QI that assumes primary
responsibility for the distribution, or a U.S. branch of a foreign
person that agrees to be treated as a U.S. person. For more
information, see Regulations sections 1.1446-4 and 1.1446(f)-4,
Intermediary
An intermediary is a person who acts as a custodian, broker,
nominee, or otherwise as an agent for another person,
regardless of whether that other person is the beneficial owner of
the amount paid, a flow-through entity, or another intermediary.
Qualified intermediary (QI). A QI is a foreign intermediary (or
a QDD) that is a party to a QI Agreement with the IRS described
in Regulations section 1.1441-1(e)(5)(iii) or (e)(6). For
information on the QI Agreement, see IRS.gov/Businesses/
Who Must File
Every withholding agent or intermediary who receives, controls,
has custody of, disposes of, or pays a withholdable payment (to
which chapter 4 withholding applies) or an amount subject to
withholding, must file an annual return for the preceding calendar
year on Form 1042 unless an exception to filing applies. Also,
any PTP or nominee making a distribution of ECTI under section
1446, or any entity required to report a distribution on Form
Withholding foreign partnership (WP) or withholding for-
eign trust (WT). A WP or WT is a foreign partnership or trust
that has entered into a withholding agreement with the IRS
described in Regulations section 1.1441-5(c)(2) and (e)(5) in
which it agrees to assume primary withholding responsibility
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Instructions for Form 1042 (2023)
under chapters 3 and 4 for all payments that are made to it for its
direct partners, beneficiaries, or owners.
required under chapter 4 to determine the account holder’s
status or to enable the FFI to report the account as a U.S.
account. See Regulations section 1.1471-5(g).
Nonqualified intermediary (NQI). An NQI is any intermediary
Passive nonfinancial foreign entity (NFFE). A passive NFFE
is a nonfinancial foreign entity other than an excepted NFFE,
including a WP, WT, QI, or direct reporting NFFE. See
Regulations sections 1.1471-1(b)(80) and 1.1472-1(b).
that is not a U.S. person and that is not a QI.
Nonwithholding foreign partnership (NWP). An NWP is a
foreign partnership that is not a WP.
Nonwithholding foreign trust (NWT). An NWT is a foreign
For chapter 4 purposes, an intermediary must provide its
trust that is not a WT.
chapter 4 status to a withholding agent to determine
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CAUTION
whether withholding applies to the payment. Thus, a
Qualified derivatives dealer (QDD). A QDD is a QI that is an
eligible entity that agrees to assume the requirements of a QDD
and the other requirements in the QI Agreement. Any applicable
home office or branch that seeks to be a QDD must qualify and
be approved for QDD status. A QDD must document itself to a
indicating that it is acting as a QDD for payments with respect to
potential section 871(m) transactions and underlying securities
that it receives in a principal capacity, separately identify the
home office or branch as the recipient on a withholding
statement (if necessary), and indicate on the form that it will
assume primary chapters 3 and 4 withholding responsibilities
and primary Form 1099 reporting and backup withholding
responsibilities for certain payments it makes and receives as a
QDD, as well as including any other information required by the
QI Agreement. See Regulations section 1.1441-1(e)(6) and the
earlier.
chapter 4 status must be provided for a withholdable payment
made to a foreign entity.
Where and When To File
Paper filing. Mail Form 1042 by March 15, 2024, to:
Internal Revenue Service
P.O. Box 409101
Ogden, UT 84409
Electronic filing. Electronic filing of Form 1042 is required for
tax year 2023, for a withholding agent that is a financial
institution. Otherwise, electronic filing of Form 1042 is required
for a withholding agent that is required to file 10 or more
information returns, as described in Regulations section
301.6011-2, during the year or that is a partnership with more
than 100 partners. For general information about electronic filing,
Qualified securities lender (QSL). A QSL is an FFI that is a
bank, custodian, broker-dealer, or clearing organization subject
to regulatory supervision in its home jurisdiction and that is:
1. Regularly engaged in the business of borrowing securities
of U.S. corporations and lending such securities to unrelated
customers; and
Extension of time to file. If you need more time to file Form
1042, you may submit Form 7004, Application for Automatic
Form 7004 does not extend the time for payment of tax.
Additional Information
2. Subject to audit by the IRS under section 7602 or, in the
For details on the withholding of tax, see Pub. 515, available at
case of a QI, an external auditor.
For further information about requirements for QSL status and
the withholding requirements for substitute dividend payments,
see Notice 2010-46, 2010-24 I.R.B. 757, available at IRS.gov/irb/
and be treated as a recipient for substitute dividend payments
Need Assistance?
If you need help completing Form 1042, call 267-941-1000 (not a
toll-free number) from 6:00 a.m. to 11:00 p.m. Eastern time or
write to:
Internal Revenue Service
International Section
Foreign financial institution (FFI). An FFI is a foreign entity
described in Regulations section 1.1471-5(d).
Philadelphia, PA 19255-0725
Registered deemed-compliant FFI (RDCFFI). A RDCFFI (as
defined in Regulations section 1.1471-5(f)(1)) is an FFI that is
deemed to satisfy the requirements of section 1471(b). This
includes a reporting Model 1 FFI or branch of an FFI that is a
reporting Model 1 FFI (see Regulations section 1.1471-1(b)(114)
for the definition of a reporting Model 1 FFI).
Income Tax Withholding on Wages,
Pensions, Annuities, and Certain
Other Deferred Income
Participating FFI (PFFI). A PFFI is an FFI that has agreed to
satisfy the obligations of an FFI agreement under chapter 4 with
respect to all of its branches of the FFI, other than a branch that
is a reporting Model 1 FFI or a U.S. branch. This includes a
reporting Model 2 FFI (that has entered into an FFI agreement
with respect to a branch) and a QI branch of a U.S. financial
institution unless such branch is a reporting Model 1 FFI.
report income tax withheld and social security and Medicare
taxes on wages paid to a nonresident alien employee.
Payments of pensions, annuities, and certain other deferred
income paid to a foreign person are subject to withholding under
section 1441 (rather than section 3405). Report these payments
on Forms 1042 and 1042-S.
Nonparticipating FFI. A nonparticipating FFI is an FFI that is
to report income tax withheld and social security and Medicare
taxes on wages paid to a nonresident alien household employee.
not a PFFI, deemed-compliant FFI, or exempt beneficial owner.
Recalcitrant account holder. Generally, a recalcitrant account
holder is an account holder of a participating or
deemed-compliant FFI that failed to provide the documentation
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Instructions for Form 1042 (2023)
a speech disability, dial 711 and then provide the TRS assistant
the 800-555-4477 number above or 800-733-4829.
Depositing on time. For deposits made by EFTPS to be on
time, you must submit the deposit by 8 p.m. Eastern time the day
before the date the deposit is due. If you use a third party to
make deposits on your behalf, they may have different cutoff
times.
Election To Withhold Under Section
3406
If you are a PFFI that has made an election to withhold under
section 3406 instead of withholding under chapter 4, use Form
tax withheld on a withholdable payment that is also a reportable
payment made to any of your recalcitrant account holders that
are also U.S. nonexempt recipients subject to backup
withholding. Also, use Form 945 to report tax withheld on a
withholdable payment that is also a reportable payment made to
recalcitrant account holders of a PFFI or RDCFFI that is an NQI,
NWP, or NWT, or a QI that elects to be withheld upon under
section 1471(b)(3), and from whom you received a withholding
statement that indicates that such FFI has elected for
withholding under section 3406 to apply instead of withholding
under chapter 4 with respect to one or more recalcitrant account
holders. See Regulations sections 1.1471-4(b) and 1.1474-1(d)
(4)(i)(B). A withholding QI, WP, or WT that is an FFI should also
use Form 945 if it elects to withhold under section 3406 on
withholdable payments made to certain recalcitrant account
holders.
Same-day wire payment option. If you fail to initiate a deposit
transaction on EFTPS by 8 p.m. Eastern time the day before the
date a deposit is due, you can still make your deposit on time by
using the Federal Tax Collection Service (FTCS). If you ever
need the same-day wire payment method, you will need to make
arrangements with your financial institution ahead of time. Check
with your financial institution regarding availability, deadlines,
and costs. Your financial institution may charge you a fee for
payments made this way. To learn more about the information
you will need to provide to your financial institution to make a
Same-Day Payment Worksheet.
Note. All payments should be made in U.S. dollars.
later, if you are using the escrow procedure under Regulations
section 1.1471-2(a)(5)(ii) or 1.1441-3(d) (and are not depositing
the amount of tax withheld with the IRS during the year). Under
Regulations section 1.1471-2(a)(5)(ii) or 1.1441-3(d), if a
withholding agent is not able to determine the portion of a
payment subject to withholding (for example, because it is
unable to determine the source of the income at the time of the
payment), a withholding agent can follow the escrow procedures
by withholding 30% on the entire payment and depositing the
amount withheld in an escrow account instead of depositing
such amounts with the IRS. With respect to such payment, the
withholding will be due the earlier of the date a determination is
made with respect to the amount subject to withholding or 1 year
from the date the amount is placed in escrow. To the extent that
withholding is not required, the escrowed amount must be repaid
to the payee. Note that generally an amount placed in escrow
during 1 calendar year will be reported on a Form 1042 the
if you are using the escrow procedures and are not depositing
the amount of tax withheld with the IRS during the year.
Deposit Requirements
You are required to use the Electronic Federal Tax Payment
System (EFTPS), discussed later, to deposit the tax withheld
and required to be shown on Form 1042 (regardless of whether
withholding was applied under chapter 3 or 4 or with respect to a
specified federal procurement payment).
To avoid a penalty, do not mail your deposits directly to
the IRS.
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CAUTION
The amount of tax you are required to withhold determines
the frequency of your deposits. The following rules explain how
often deposits must be made.
Note. If you are requesting an extension of time to file using
Form 7004, follow these rules to see if you must make a deposit
of any balance due or if you can pay it with Form 7004. See Form
7004 and its instructions for more information.
1. If at the end of any quarter-monthly period the total
amount of undeposited taxes is $2,000 or more, you must
deposit the taxes within 3 business days after the end of the
quarter-monthly period. (A quarter-monthly period ends on the
7th, 15th, 22nd, and last day of the month.) A business day is
any day other than a Saturday, Sunday, or legal holiday in the
District of Columbia.
2. If at the end of any month the total amount of undeposited
taxes is at least $200 but less than $2,000, you must deposit the
taxes within 15 days after the end of the month. If you make a
deposit of $2,000 or more during any month except December
under rule 1, earlier, carry over any end-of-the-month balance of
less than $2,000 to the next month. If you make a deposit of
$2,000 or more during December, any end-of-December
balance of less than $2,000 should be remitted with your Form
1042 by March 15, 2024.
Deposits made during subsequent year. If you are making a
deposit of tax withheld in the year following the calendar year in
which the related payment was made (to the extent permitted
under an applicable regulation section in chapter 3 or 4), you
must designate the deposit at the time that it is made as
attributable to the calendar year in which the payment was
made. In such a case, you should report the tax paid on line 65b.
For example, if a REIT declares a dividend to shareholders of
record in October, November, or December of 2023, but pays the
dividend in January of 2024, under section 857(b)(9), the
dividend is treated as having been paid by the REIT and
received by each shareholder on December 31, 2023. If the
REIT chooses to withhold when it pays the dividend in January
of 2024 (pursuant to the procedures for adjusting
underwithholding in Regulations section 1.1461-2(b) or
1.1474-2(b)), it should report the liability with respect to the
distribution on its 2023 Form 1042 and should designate the
deposit of such tax as being made for 2023 (if the deposit is
made by March 15, 2024).
Additionally, under proposed regulations (83 FR 64757), a
partnership or trust that is permitted to withhold in a subsequent
year with respect to a foreign partner's or beneficiary's share of
income may designate the deposits of the withholding as
attributable to the preceding calendar year. See Foreign partners
3. If at the end of a calendar year the total amount of
undeposited taxes is less than $200, you may either pay the
taxes with your Form 1042 or deposit the entire amount by
March 15, 2024.
Electronic deposit requirement. You must make electronic
deposits of all depository tax liabilities using EFTPS. If you fail to
use EFTPS, you may be subject to a 10% penalty. To enroll in or
get more information about EFTPS, call 800-555-4477 or visit
Services (TRS) for people who are deaf, hard of hearing, or have
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Instructions for Form 1042 (2023)
Interest and Penalties
Specific Instructions
If you file Form 1042 late, or fail to pay or deposit the tax when
due, you may be liable for penalties and interest unless you can
show that the failure to file or pay was due to reasonable cause
and not willful neglect.
File only one Form 1042 consolidating all Form 1042-S
recipient information for both chapter 3 and 4 purposes
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CAUTION
regardless of the number of different clients, branches,
divisions, or types of income for which you are the withholding
agent. However, if you are acting in more than one capacity (for
example, you are acting as a QI for certain designated accounts
and as an NQI for other accounts), file a separate Form 1042 for
each capacity in which you are acting.
You do not have to figure the amount of any interest or
penalties you may owe. Because figuring these amounts
can be complicated, the IRS will do it for you and send
TIP
you a bill for any amount due.
If you include interest or penalties with your payment, identify
and enter the amount in the bottom margin of Form 1042. Do not
include interest or penalties in the balance due on line 69.
A U.S. branch of a PFFI that is required to report amounts
under chapter 4 must file a separate Form 1042.
Rounding off to whole dollars. You must round off cents to
whole dollars. To round off amounts to the nearest dollar, drop
amounts under 50 cents and increase amounts from 50 to 99
cents to the next dollar. For example, $1.39 becomes $1 and
$2.50 becomes $3. If you have to add two or more amounts to
figure the amount to enter on a line, include cents when adding
and only round off the total.
Interest. Interest is charged on taxes not paid by the due date,
even if an extension of time to file is granted. Interest is also
charged on penalties imposed for failure to file, negligence,
fraud, and substantial understatements of tax from the due date
(including extensions) to the date of payment. Interest is figured
at a rate determined under section 6621.
Late filing of Form 1042. The penalty for not filing Form 1042
when due (including extensions) is 5% of the unpaid tax for each
month or part of a month the return is late, up to a maximum of
25% of the unpaid tax.
Employer identification number (EIN). You are required to
enter your EIN. If you are filing Form 1042 as a QI, WP, or WT,
enter your QI-EIN, WP-EIN, or WT-EIN.
If you are a QSL that is also a QI, enter your QI-EIN.
Late payment of tax. The penalty for not paying tax when due
is usually one-half of 1% of the unpaid tax for each month or part
of a month the tax is unpaid. The penalty cannot exceed 25% of
the unpaid tax.
Otherwise, enter the EIN you have been assigned.
If you are, for chapter 4 purposes, a PFFI or other financial
institution that has been issued a global intermediary
identification number (GIIN) for chapter 4 reporting purposes,
you must nevertheless get an EIN to file Form 1042 (or use your
existing EIN, such as a QI-EIN in the case of a QI if filing in such
capacity).
Other penalties. Penalties may be imposed for negligence,
substantial understatement of tax, and fraud. See sections 6662
and 6663.
If you are a PFFI or other financial institution filing this form on
behalf of a branch other than your U.S. branch, you cannot use
the EIN of the U.S. branch to file this form and you must get a
separate EIN to file this form on behalf of all your branches other
than your U.S. branch.
If you do not have an EIN, you can apply for one online at
Employer Identification Number, by fax or mail. File amended
Forms 1042-S when you receive your EIN.
To get a QI-EIN, WP-EIN, or WT-EIN, submit Form SS-4 with
your application for that status. Do not send an application for a
QI-EIN, WP-EIN, or WT-EIN to the addresses listed in the
Instructions for Form SS-4. Send the application along with Form
SS-4 to:
Avoid Common Errors
To ensure that your Form 1042 can be correctly processed, be
sure that you do the following.
Carefully read the information provided in Pub. 515 and these
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instructions.
Complete all required information for the withholding agent
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including the withholding agent’s name, address, chapter 3 and
chapter 4 status codes, and the EIN, QI-EIN, WP-EIN, or
WT-EIN. Note that you must include the withholding
agent’s chapter 3 and chapter 4 status codes regardless of
the types of payments being reported on Form 1042.
Ensure that the correct EIN is provided. If you are filing Form
•
1042 as a QI, WP, or WT, enter your QI-EIN, WP-EIN, or WT-
EIN.
Lines 1 through 60, Record of Federal Tax Liability, must show
•
the federal tax liability for payments made during the applicable
quarter-monthly period. This section reports the tax liability, not
the tax deposited by the withholding agent.
Internal Revenue Service
LB&I: International: QI Group 1031
290 Broadway, 12th floor
The sum of the monthly totals in Section 1 (lines 5, 10, 15, 20,
•
New York, NY 10007-1867 USA
25, 30, 35, 40, 45, 50, 55, and 60) must match the amount of
total tax liability reported on lines 64b, 64c, and 64d.
Do not include amounts reported as adjustments on line 64a
•
Address. Include the suite, room, or other unit number after the
street address. If your post office does not deliver mail to the
street address and you have a P.O. box, show the box number
instead of the street address.
in the Record of Federal Tax Liability (lines 1 through 60).
You must designate the tax liability as either a chapter 3 tax
•
liability or a chapter 4 tax liability. Report the portion of the tax
liability for the calendar year that is a chapter 3 tax liability on
line 64b. Report the portion of the tax liability for the calendar
year that is a chapter 4 tax liability on line 64c.
Chapter 3 and 4 status codes of withholding agent. Enter
your chapter 3 and chapter 4 status codes from the list of “Type
of Recipient, Withholding Agent, Payer, or Intermediary Code” on
Form 1042-S. You must enter both a chapter 3 and a chapter 4
withholding agent status code regardless of the type of payment
being made. See pages 2 and 3 of these Form 1042 instructions
You must complete Section 2, Reconciliation of Payments of
•
U.S. Source FDAP Income. Section 2 must be completed even if
you have not withheld any amounts under chapter 4.
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Instructions for Form 1042 (2023)
deemed-compliant FFI (RDCFFI). See the Form 1042-S
instructions for definitions of U.S. branch of a PFFI or RDCFFI
treated as a U.S. person, territory financial institution (FI) treated
as a U.S. person, and flow-through entity.
Regulations section 1.1441-2(e)(7) for certain amounts with
respect to section 871(m) transactions and the rule for QDDs in
the QI Agreement. For distributive shares not actually
distributed, the partnership must include any tax liability on lines
1 through 60 of the Form 1042 for the following year. Include the
tax liability on the line that represents the earlier of the following
dates.
Withholding agents should use the applicable code that
is most specific to your status (for example, chapter 3
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CAUTION
status code 12 (Qualified Intermediary)).
The date on which the Schedule K-1 (Form 1065), Partner's
•
Share of Income, Deductions, Credits, etc., is sent or otherwise
furnished to the foreign partner.
Withholding agents are to use specified chapter 4 status
codes on Forms 1042-S for payments made. See the 2023
Instructions for Form 1042-S. A U.S. financial institution should
continue to use its own withholding agent chapter 4 status code
(code 01) for purposes of completing Form 1042 if there are any
payments made by the U.S. home office reflected on the form.
Otherwise, use chapter 4 status code 50 (U.S. Withholding
Agent-Foreign branch of FI) unless a more specific status code
applies (for example, chapter 4 status code 07 (Registered
Deemed-Compliant FFI-Reporting Model 1 FFI)).
The due date for furnishing Schedule K-1 (Form 1065) to the
•
partner.
Include such tax liability for the period that includes the date
the tax was required to be withheld. See Regulations section
1.1441-5(b)(2)(i)(A).
A domestic trust should report on lines 1 through 60 in the
same manner as a U.S. partnership to the extent that it is
required to distribute, but has not actually distributed, a foreign
beneficiary's share of distributable net income subject to
withholding under section 1441, 1442, or 1443, or under
chapter 4, before the date (without extensions) on which the
income is required to be reported on Form 1042-S. See
Regulations section 1.1441-5(b)(2)(ii).
Example. In 2023, USP, a U.S. partnership, has foreign
partners that are individuals and for which it has obtained valid
documentation to establish their foreign status. The withholding
tax under section 1441 relating to the distributive shares of the
foreign partners was $120. USP made no distributions in 2023.
On the 2023 Form 1042, USP did not enter any amount as tax
liability on lines 1 through 60 because it did not distribute any
amounts.
USP made a distribution on February 11, 2024, that related to
the 2023 distributive shares of the foreign partners. USP
withheld $100 at the time of the distribution. USP sent the 2023
Schedules K-1 (Form 1065) to its partners on April 2, 2024.
On the 2024 Form 1042, USP entered $100 on line 7. This is
the tax liability for the period (February 8 through 15) during
which it made a distribution. USP entered $20 on line 16. This is
the tax liability for the period (April 1 through 7) during which it
furnished the Schedules K-1 (Form 1065) to the partners.
A QI that is a QDD should use the withholding agent chapter 3
status code for a QI (code 12) for purposes of filing its Form
1042, regardless of the types of payments it made for the
calendar year. However, a QI that is a QDD should use the
withholding agent chapter 3 status code for a QDD (code 35) for
purposes of reporting on Form 1042-S a payment that it made in
its capacity as a QDD.
Section 1. Record of Federal Tax
Liability
Lines 1 through 60. Except as otherwise provided in these
instructions, include the tax liability for the period in which the
income was paid or distributed regardless of whether the liability
is under chapter 3 or chapter 4 and regardless of whether the
liability was satisfied through withholding or was paid by the
withholding agent (see the instructions for box 11 of Form
1042-S). Do not enter any negative amounts on these lines. If
you are required to report a reduction to liability on line 59
(because you made a repayment under the reimbursement or
set-off procedure), and this results in a negative amount of tax
liability for the period corresponding to line 59, you should
instead report any negative amount for the next earlier period(s)
so that you are not reporting any negative amounts on lines 1
withholding tax liability on the partnership's income
TIP
effectively connected with a U.S. trade or business.
Lines 1 through 60 must show the withholding agent’s
record of federal tax liability for payments made during
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CAUTION
the applicable quarter-monthly period. Withholding
Note. For rules that apply to withholding on section 871(m)
transactions, see Regulations section 1.441-2(e). For rules that
apply to withholding by QDDs, see the QI Agreement.
agents should report the tax liability for each period, rather than
the amount of tax actually deposited with the IRS. As such, the
sum of lines 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, and 60
should be reported on lines 64b through 64d, as applicable
(see the instructions for lines 64b through 64d, later).
Withholding and reporting in a subsequent year.
Proposed regulations issued on December 18, 2018 (83 FR
64757) would allow partnerships or trusts that are permitted to
withhold in a subsequent year with respect to a foreign partner's
or beneficiary's share of income for the prior year to designate
the deposit of the withholding as attributable to the preceding
year. In such a case, the partnership or trust will be required to
report the associated amount and tax withheld on Forms 1042
and 1042-S for the preceding year. If a partnership withholds on
a foreign partner's share of income after March 15 of the
subsequent year, the due date for filing the applicable Form(s)
1042-S is September 15 of the subsequent year. For example, if
a partnership withholds on April 1, 2024, with respect to a foreign
partner's share of undistributed income for the 2023 calendar
year, the partnership may designate the deposit as made for
2023 and report the liability and tax withheld on the 2023 Form
1042 and the 2023 Form 1042-S for the partner. The partnership
or trust must also ensure that its chapter 3 status code properly
reflects its status as a partnership or trust (including as a WP or
Withholding and depositing of tax is not required under
both chapters 3 and 4 for the same payment. In the case
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CAUTION
of a payment for which withholding is required under
chapters 3 and 4, a withholding agent may credit the withholding
applied under chapter 4 against its liability for any tax due under
section 1441, 1442, or 1443. For a payment subject to
withholding under section 1445 or 1446, withholding under
chapter 4 does not apply.
Foreign partners of U.S. partnerships and foreign benefi-
ciaries of U.S. trusts. To the extent that a domestic partnership
has not distributed a foreign partner's distributive share of
income subject to withholding under section 1441, 1442, or
1443, or under chapter 4, it should not include any tax liability on
lines 1 through 60 for tax relating to the partner's distributive
share in the year the partnership earns the income, subject to
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Instructions for Form 1042 (2023)
WT). The associated liability should be reported on line 59, with
the share of income to the partner or beneficiary reported on
line 62, and the amount withheld reported on line 65b.
2023 pursuant to the escrow procedure under Regulations
section 1.1471-2(a)(5)(ii) or 1.1441-3(d) should not report such
amount as a liability on lines 1 through 60 or lines 64a through
64d and should not report such amount as withheld on lines 63a
through 63d. An amount held in escrow is required to be
reported on the future calendar year return for the year in which
the withholding agent is required to deposit the amount of tax
with the IRS.
Note. Reporting in the preceding year is also permitted when a
partnership or trust allocates a share of income allocable to a
partner or beneficiary attributable to the preceding year that was
not distributed during that year, provided that the partnership
meets the previously referenced due date of September 15,
2024, for the applicable Form(s) 1042-S.
Withholding after the time of payment. In limited cases, the
regulations under chapters 3 and 4 allow you to withhold after
the time that a payment has been made. In such a case, you
should include the tax liability for the period in which you actually
withheld with respect to the payment. If you withheld in the year
following the calendar year in which the payment was made,
include the tax liability relating to the payment on line 59 for the
year you made the payment. For example, if a deemed
distribution under section 305(c) is made on August 15, 2023,
but you are not required to withhold with respect to the deemed
distribution until a subsequent payment of interest is made on
February 15, 2024 (see Proposed Regulations section
1.1441-2(d)(4)), report the tax liability related to the deemed
distribution on line 59.
Note. A U.S. partnership or trust may rely on the proposed
regulations for 2023 in lieu of the reporting described earlier. See
U.S. trusts, earlier. The proposed regulations may also be
applied by a foreign partnership or trust that itself withholds as
described above.
Note. For rules that apply for WPs and WTs, see Rev. Proc.
2017-21, 2017-6 I.R.B. 791, available at IRS.gov/irb/
Corporate distributions. Do not include on lines 1 through 60
any tax liability caused by adjustments of underwithheld tax on
corporate distributions made in calendar year 2023 if the
following apply.
You should report on line 63c(2) the amounts you withheld in
the following calendar year in which the payment was made. You
should also report deposits of amounts withheld in the year
following the calendar year in which the payment was made on
line 65b.
The distributing corporation made a reasonable estimate of
•
accumulated and current earnings and profits under Regulations
section 1.1441-3(c)(2)(ii)(A) or 1.1474-6(c)(2)(ii).
The distributing corporation or intermediary immediately paid
•
Line 61. Enter the number of Forms 1042-S filed on paper and
over the underwithheld tax by March 15, 2024.
electronically.
Instead, include these payments of underwithheld tax on
Total Gross Amounts Reported
line 64a.
Lines 62a through 62c. Enter the amounts reported on all
Forms 1042-S for the calendar year (regardless of whether the
form was filed electronically or on paper) and for all Forms 1000,
Ownership Certificate.
Excise tax on specified federal procurement payments.
Section 5000C imposes a 2% tax on any foreign person that
receives a specified federal procurement payment. Include on
lines 1 through 60 any withholding obligation under section
5000C with respect to specified federal procurement payments.
Report the amount on the line that corresponds with the date the
deposit was due.
Specified federal procurement payment. A specified
federal procurement payment means any payment made
pursuant to a contract with the U.S. Government entered into
after January 1, 2011, for the provision of goods, if such goods
are manufactured or produced in any country which is not a
party to an international procurement agreement with the United
States, or the provision of services, if such services are provided
in any country which is not a party to an international
procurement agreement with the United States.
Be sure to reconcile amounts on Form 1042 with
amounts on Forms 1042-S (including Forms 1042-S filed
!
CAUTION
electronically) to avoid unnecessary correspondence
with the IRS.
Line 62a. The amount on line 62a should equal the sum of all
amounts shown in box 2 of Form 1042-S that are payments of
U.S. source Fixed, Determinable, Annual, Periodical (FDAP)
income, less the sum of all amounts that are U.S. source
substitute payments reported on line 62b.
Line 62b. The amount on:
Line 62b(1) should equal the sum of all amounts shown in
•
QIs with no primary chapters 3 and 4 withholding respon-
sibility. If you are a QI that did not assume primary withholding
responsibility under both chapters 3 (including sections 1446(a)
and (f)) and 4, enter the total amount of the tax liability of U.S.
withholding agent(s) under both chapters 3 and 4 on line 59.
Report all other amounts on the line that corresponds with the
date the liability was incurred.
box 2 of Form 1042-S that are U.S. source substitute dividend
payments; and
The amount shown on line 62b(2) should equal all amounts
•
shown in box 2 of Form 1042-S that are U.S. source substitute
payments other than substitute dividend payments.
See Regulations section 1.1441-2(b)(4) regarding substitute
payments.
Note. Reporting on line 59 as described above also applies to
any other entity that reports on Form 1042 to the extent such
entity claims a credit on line 67 for amounts withheld by another
withholding agent (whether under chapter 3 or 4).
Line 62c. The amount on line 62c should equal the sum of all
amounts of U.S. source FDAP income shown in box 2 of Form
1042-S and all amounts shown as gross interest paid on Forms
1000.
Adjustments to withholding. If you used procedures for
adjusting overwithholding or underwithholding, see Adjustment
for instructions on reporting on lines 1 through 60.
Line 62d. Enter gross amounts of U.S. source FDAP income
reportable on Forms 1000 and Forms 1042-S if different from the
total gross amounts actually reported on Forms 1000 and Forms
1042-S (as shown on line 62c).
Escrow procedure. A withholding agent that withheld tax
during calendar year 2023 and that was not required to deposit
with the IRS the amount of tax withheld during calendar year
-7-
Instructions for Form 1042 (2023)
liability under chapter 3 (on line 64b) and chapter 4 (on line 64c).
The amounts shown on lines 64b and 64c should not include any
amounts shown on lines 64a and 64d. Do not make any other
adjustments to this line.
Total Tax Reported as Withheld or Paid
Lines 63a through 63e. Except as noted directly below, enter
for each line the amounts reported for all Forms 1042-S
(regardless of whether the form was filed electronically or on
paper) and for all Forms 1000.
Line 64d. Enter on line 64d amounts reported on the Record of
Federal Tax Liability that are attributable to liability for specified
federal procurement payments under section 5000C.
Line 63a. The amounts reported on line 63a should be the
amounts actually withheld by the withholding agent before any
applicable adjustments reported on lines 63c(1) and 63c(2).
Line 63c(1). The amounts reported on line 63c(1) should be
amounts you repaid to the beneficial owner or payee in the year
following the calendar year of overwithholding pursuant to either
the reimbursement or set-off procedures (and should also be
reported as a reduction in tax liability on line 59). See
Adjustment for Overwithholding, later. The total of the amounts
reported on line 63c(1) should equal the sum of all amounts
reported in box 9 of the corresponding Forms 1042-S.
Line 63c(2). The amounts reported on line 63c(2) should be
amounts that you withheld in the year following the calendar year
of underwithholding from future payments made to a beneficial
owner or from other property or additional contributions of a
beneficial owner that you hold in custody or otherwise control.
line 63c(2) any other amounts that you withheld in the year
following the calendar year in which the related payments were
made (to the extent permitted under an applicable regulation
section in chapter 3 or 4). See Withholding after the time of
payment, earlier, for how to report the tax liability related to such
payments.
Line 64e. The amount on line 64e should equal the sum of
lines 64a through 64d.
Reporting of Taxes Paid and Overpayment or
Balance Due
Line 65. Enter the total tax deposits you made for the year
(including amounts paid with an extension of time to file). Enter
deposits of tax withheld during the calendar year in which the
related payment was made on line 65a. Enter deposits of tax
withheld during the year following the calendar year in which the
related payment was made (to the extent permitted under an
applicable regulation section in chapter 3 or 4) on line 65b. See
Line 66. Enter any overpayment reported on the 2022 Form
1042 that you are applying as a credit on the 2023 Form 1042.
Line 67. You are permitted to take a credit for amounts withheld
by other withholding agents that relate to the total net tax liability
reported on lines 64b and 64c. For example, you are a QI and
the amount you entered on line 64b includes amounts withheld
by a U.S. withholding agent under chapter 3 with respect to
payments made to you as an intermediary on behalf of your
account holders. You may take a credit on line 67 for the
amounts that were withheld by the U.S. withholding agent. The
amount on line 67 should equal the sum of all Forms 1042-S,
box 8, that you file for the year.
Note. The total of the amounts reported on lines 63a and 63c(2)
should equal the sum of all amounts withheld by the withholding
agent and reported in box 7a of the corresponding Forms
1042-S.
Note. The total of the amounts reported on lines 63b(1) and
63b(2) should equal the sum of all amounts reported in box 8 of
all Forms 1042-S sent to recipients.
Line 63d. The amounts reported on line 63d should be the
amounts paid by the withholding agent from its own funds rather
than through withholding from the payment to the recipient. The
amount on line 63d should equal the sum of all amounts
reported in box 11 of all Forms 1042-S sent to recipients.
Note. All withholding agents (including QIs, WPs, WTs, NQIs,
NWPs, and NWTs) must substantiate entries on lines 67a and
67b by attaching a supporting Form(s) 1042-S or 1099 to verify
the credit amounts claimed for withholding by other withholding
agents. Failure to do so will result in the denial of the refund or
credit being claimed. If you are a PTP or a nominee withholding
under section 1446, the tax paid for a payee may only be
claimed as a credit by the payee.
Note. Amounts withheld and held in escrow (and not deposited
with the IRS) pursuant to the escrow procedures under
Regulations section 1.1471-2(a)(5)(ii) or 1.1441-3(d) are not
reported on lines 63a through 63d until the year they are
deposited with the IRS. See the instructions for Lines 1 through
60, earlier. Therefore, amounts that are reported as held in
escrow (see box 7b of Form 1042-S) are not taken into account
for purposes of reconciling lines 63a through 63d with the
corresponding Forms 1042-S.
QSL claiming a credit forward. If you are a QSL or other
withholding agent claiming a credit forward of prior withholding
on substitute dividends on line 67b as determined under Notice
2010-46, you should attach Form(s) 1042-S issued to you to
support such credits. If a credit is claimed with respect to any
U.S. source substitute dividends paid to you from a withholding
agent that has not issued a Form 1042-S to you for such
payments, attach a supporting statement to Form 1042
indicating the following to support your credit.
Total Net Tax Liability
The withholding agent's name, address, and EIN (if known).
•
The amount of U.S. source substitute dividends received from
•
Line 64a. Include on line 64a any adjustments to total net tax
the withholding agent.
liability. For example, report any adjustment to liability when:
The amount of credit forward you included on line 67b in
•
A distributing corporation made a reasonable estimate of
•
connection with these substitute dividends.
accumulated and current earnings and profits under Regulations
section 1.1441-3(c)(2)(ii)(A) or 1.1474-6(c)(2)(ii); and
Lines 70a and 70b. Enter on line 70a any overpayment
attributable to payments subject to withholding under chapters 3
and 4. Enter on line 70b any overpayment attributable to
payments subject to the excise tax on specified federal
procurement payments. Do not include on these lines any
overpayment attributable to amounts that were actually withheld
from the beneficial owner (unless such amounts were repaid
pursuant to the reimbursement or set-off procedures).
A distributing corporation or intermediary paid over any
•
underwithheld tax with respect to the distribution by March 15,
2024.
Note. The amount reported on line 64a must not be included in
the Record of Federal Tax Liability (lines 1 through 60).
Lines 64b and 64c. Enter the sum of the amounts reported on
the Record of Federal Tax Liability (that is, the sum of lines 5, 10,
15, 20, 25, 30, 35, 40, 45, 50, 55, and 60) that are attributable to
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Instructions for Form 1042 (2023)
repayment and claim a credit on line 71 for the difference
between your tax liability and your deposits with the IRS. You
may reimburse yourself by reducing any subsequent deposits
you make before the end of calendar year 2024 (the year after
the calendar year in which the amount was overwithheld).
Set-off procedure. Under the set-off procedure, you repay
the beneficial owner or payee the amount overwithheld by
reducing the amount you would have been required to withhold
on later payments you make to that person but only if made
before the earlier of:
Line 71. You may claim an overpayment (the sum of lines 70a
and 70b) as a refund or a credit. Check the applicable box on
line 71 to show which one you are claiming. If you claim a credit,
it can reduce your required deposits of withheld tax for 2024.
Note that if you repaid the recipient overwithheld amounts after
year-end 2023 using the reimbursement or set-off procedures,
you are not able to claim a refund for such an amount on the
2023 Form 1042. Instead, you must indicate on line 71 that you
are claiming a credit to be applied to the 2024 calendar year.
The date you actually file Form 1042-S for the calendar year in
•
which the amount was overwithheld; or
Adjustment for Overwithholding
The due date for filing Form 1042-S for the calendar year
•
What to do if you overwithheld tax depends on when you
discover the overwithholding.
(generally, March 15 of the year after the calendar year in which
the amount is overwithheld).
Overwithholding discovered by March 15 of the following
calendar year. If you discover that you overwithheld tax by
March 15 of the following calendar year, you may use any
undeposited amount of tax to make any necessary adjustments
between you and the recipient of the income before you make a
deposit. Repay the recipient and reduce the amount of your total
deposit. Report the reduced tax liability on lines 1 through 60 for
the period(s) for which you repaid the overwithheld tax.
If the undeposited amount is not enough to make any
adjustments, or if you discover the overwithholding after the
entire amount of tax has been deposited, you can use either the
reimbursement or the set-off procedure to adjust the
overwithholding.
The reductions that you applied pursuant to the set-off
procedure during the calendar year must be reflected on the line
for the period you reduced your liability. The amount reported on
line 59 for the calendar year for which you overwithheld tax must
reflect reductions that you applied pursuant to the set-off
procedure during the subsequent calendar year, if applicable.
Amounts reported on line 63c(1) should be limited to amounts
repaid to the beneficial owner or payee (by reducing the
withholding on a later payment) in the subsequent calendar year
(before the earlier of the filing of the associated Form 1042-S or
the due date for such form). On line 71, indicate that you are
claiming a credit to be applied to the 2024 calendar year for
amounts you set off in the subsequent calendar year (note that
you may not claim a refund for such an amount).
For 2023, a withholding agent may rely on proposed
regulations (83 FR 64757), which allow adjustments to
overwithholding using the reimbursement or set-off procedure
until the extended due date for filing Form 1042-S (unless a
Form 1042-S has already been filed with the IRS or furnished to
the recipient). A withholding agent may also use the extended
due date for filing Form 1042 to claim a credit for any
adjustments to overwithholding.
If March 15 is a Saturday, Sunday, or legal holiday, the
next business day is the final date for these actions.
TIP
Reimbursement procedure. Under the reimbursement
procedure, you repay the beneficial owner or payee the amount
overwithheld. You use your own funds for this repayment and
may reimburse yourself for an amount repaid by reducing the
amount of any subsequent deposit of tax made during the
calendar year or the subsequent calendar year. You must make
the repayment by the earlier of:
Overwithholding discovered at a later date. If you discover
after March 15 of the following calendar year that you
overwithheld tax for the prior year, do not adjust the amount of
tax liability reported on Form 1042 or on any deposit or payment
for that prior year. Do not repay the beneficial owner or payee the
amount overwithheld unless you are a QI, WP, WT, PFFI, or
reporting Model 1 FFI making a claim for a collective refund
under your respective agreement with the IRS. See Regulations
section 1.1471-1(b)(114) for the definition of a reporting Model 1
FFI.
In this situation, the recipient will have to file a U.S. income
tax return (Form 1040-NR or Form 1120-F) or, if a tax return has
already been filed, a claim for refund (Form 1040-X or amended
Form 1120-F) to recover the amount overwithheld.
The date you actually file Form 1042-S for the calendar year in
•
which the amount was overwithheld; or
The due date for filing Form 1042-S for the calendar year
•
(generally, March 15 of the year after the calendar year in which
the amount is overwithheld).
The reimbursement amount may not be more than the
amount you actually repaid. The amount of the reduced tax
liability for amounts repaid to the beneficial owner or payee
during the calendar year must be reflected on the line for the
period you reduced your liability. The amount reported on line 59
for the calendar year for which you overwithheld tax must reflect
the amount of the reduced tax liability for amounts you repaid the
beneficial owner or payee in the subsequent calendar year, if
applicable. Amounts reported on line 63c(1) should be limited to
amounts repaid to the beneficial owner or payee in the
Adjustment for Underwithholding
subsequent calendar year (before the earlier of the filing of the
associated Form 1042-S or the due date for such form). On
line 71, indicate that you are claiming a credit to be applied in the
2024 calendar year for amounts you repay the beneficial owner
or payee in the subsequent calendar year (note that you may not
claim a refund for such an amount).
For example, if you overwithhold tax in 2023, you must repay
the beneficial owner by March 15, 2024 (or the date on which
you filed the associated Form 1042-S with the IRS, if earlier). You
must keep a receipt showing the date and amount of the
repayment and provide a copy of the receipt to the beneficial
owner if you repaid the beneficial owner. If you repaid the
beneficial owner after year-end 2023, you must report the
repayment on line 63c(1). You must reduce your federal tax
liability on line 59 of your 2023 Form 1042 by the amount of the
Under the procedures for adjusting underwithholding (see
Regulations sections 1.1461-2(b) and 1.1474-2(b)), you may
withhold from future payments made to a beneficial owner the
tax that should have been withheld, or satisfy the tax from
property or additional contributions of the beneficial owner that
you hold in custody or otherwise control, before the date (without
extensions) that the Form 1042 is required to be filed. You should
report the liability related to such withholding on lines 1 through
60 for the period during the year in which you adjusted
underwithholding by withholding additional tax. If you adjust
underwithholding by withholding in the year following the
calendar year of underwithholding, you should report the
increased liability on line 59 for the year in which the
underwithholding occurred. Amounts reported on line 63c(2)
should be limited to amounts withheld in the year following the
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Instructions for Form 1042 (2023)
calendar year of underwithholding (before the date that the Form
1042 is required to be filed without extensions). You should
report deposits of amounts withheld in the year following the
calendar year of underwithholding pursuant to these procedures
for how to designate such deposits as attributable to the year of
underwithholding.
line should generally equal the aggregate amount reported in
box 2 of all of the Forms 1042-S you filed for the calendar year
for which the exemption code 14, Effectively connected income,
was included in box 4a.
Line 2e. Enter the sum of all amounts of U.S. source FDAP
income required to be reported on Form 1042 but that are not
required to be withheld upon under chapter 4 (sum of lines 2a
through 2d).
Section 2. Reconciliation of U.S.
Source FDAP Income
Line 4. Enter the sum of all amounts shown in box 2 of Form
1042-S that are payments of U.S. source FDAP income
(including amounts reported under both chapter 3 and
chapter 4). The amount on line 4 should equal the total gross
amounts of U.S. source FDAP income reported on line 62c.
This section is used by the withholding agent to reconcile the
amount of U.S. source FDAP income reportable under chapter 4
and paid by the withholding agent during the calendar year with
the total amount of U.S. source FDAP income reported on all
Forms 1042-S filed by the withholding agent for the calendar
year (including amounts reported under both chapter 3 and
chapter 4). You must complete this section even if you did not
make any payments subject to chapter 4 withholding during the
calendar year. This section also allows reporting of the amounts
of U.S. source FDAP income for which chapter 4 withholding is
required and reporting of the amounts for which withholding is
not required according to the exemption from chapter 4
withholding applicable to each such amount.
Line 5. The amount on line 5 should be the total reported on
line 4 (total amount of U.S. source FDAP income reported on all
Forms 1042-S) less the total reported on line 3 (total U.S. source
FDAP income reportable under chapter 4).
Line 6. If the amount reported on line 5 is other than zero, use
this line to provide an explanation for the variance. If additional
space is needed, attach a sheet to Form 1042 explaining the
difference noted on line 5.
Section 3. Potential Section 871(m)
Transactions
Note. The amounts of U.S. source FDAP income reportable for
chapter 4 are:
Check the box if you are a withholding agent that makes any
payment under a potential section 871(m) transaction during the
year, including a notional principal contract or other derivative
contract that references, in whole or in part, a U.S. stock or
underlying security. See Regulations section 1.871-15(a)(12) for
the definition of a potential section 871(m) transaction and
Regulations section 1.871-15(i) for the meaning of certain
payments with respect to a section 871(m) transaction.
Payments of U.S. source FDAP income for which withholding
•
under chapter 4 was applied to the payment, plus
Payments of U.S. source FDAP income for which withholding
•
under chapter 4 was not required but that are subject to reporting
for chapter 3 purposes on Forms 1042-S.
Line 1. Enter the amounts of U.S. source FDAP income
required to be withheld upon under chapter 4, including amounts
withheld upon but for which no deposit has been made under an
escrow procedure.
Section 4. Dividend Equivalent
Payments by a Qualified Derivatives
Dealer (QDD)
Line 2. Enter amounts of U.S. source FDAP income not
required to be withheld upon under chapter 4 on lines 2a through
2d according to the exception to withholding that applied to each
payment reportable on Form 1042-S. The amount on line 2e
should equal the sum of lines 2a through 2d.
Line 2a. Enter the amounts of U.S. source FDAP income that
are withholdable payments, but for which the withholding agent
has obtained documentation that establishes a chapter 4 status
that does not require withholding under chapter 4 (for example,
PFFI). The amount reported on this line should generally equal
the aggregate amount reported in box 2 of all of the Forms 1042-
S you filed for the calendar year for which exemption code 15,
Payee not subject to chapter 4 withholding, was included in
box 4a.
Line 2b. Enter the amounts of U.S. source FDAP income that
are not withholdable payments because they are nonfinancial
type payments (for example, royalties, services, rents). The
amount reported on this line should generally equal the
aggregate amount reported in box 2 of all of the Forms 1042-S
you filed for the calendar year for which the exemption code 16,
Excluded nonfinancial payment, was included in box 4a.
Line 2c. Enter the amounts of U.S. source FDAP income that
are not withholdable payments because they are payments
related to grandfathered obligations (for example, obligations
outstanding on July 1, 2014). See Regulations section 1.1471-
2(b). The amount reported on this line should generally equal the
aggregate amount reported in box 2 of all of the
If a QI (whether the home office or any branch) was a QDD
during the tax year, check the box, enter the regular EIN (if any)
of the QI (not the QI-EIN) in the field provided, and attach a
Schedule(s) Q (Form 1042) for each QDD. You must complete
and attach Schedule(s) Q (Form 1042) even if the QDD has zero
tax liability.
Note. In addition to filing a separate Schedule Q (Form 1042)
for each QDD, if the QI has a tax year other than the calendar
year, the QI must file separate Schedules Q (Form 1042)—one
for the portion of the calendar year in the first tax year and a
second one for the portion in the second tax year.
Note. A QI that was a QDD or had a branch that was a QDD
during the tax year, including a QI that was a partnership, must
complete Schedule(s) Q (Form 1042) for each QDD.
Third Party Designee
If you want to allow any individual, corporation, firm,
organization, or partnership to discuss your 2023 Form 1042
with the IRS, check the “Yes” box in the Third Party Designee
section of the return. Also, enter the designee's name, phone
number, and any five digits the designee chooses as his or her
personal identification number (PIN). The authorization applies
only to the tax form upon which it appears.
Forms 1042-S you filed for the calendar year for which the
exemption code 13, Grandfathered payment, was included in
box 4a.
Line 2d. Enter the amounts of U.S. source FDAP income that
are not withholdable payments because they are payments of
effectively connected income (ECI). The amount reported on this
If you check the “Yes” box, you are authorizing the IRS to call
the designee to answer any questions relating to the information
reported on your tax return. You are also authorizing the
designee to:
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Instructions for Form 1042 (2023)
Exchange information concerning your tax return with the IRS;
Do not amend Form 1042 to recover taxes overwithheld in the
prior year. For more information, see Adjustment for
Overwithholding, earlier.
•
and
Request and receive written tax return information relating to
•
your tax return, including copies of specific notices,
correspondence, and account transcripts.
Privacy Act and Paperwork Reduction Act Notice. We ask
for the information on this form to carry out the Internal Revenue
laws of the United States. Sections 1441, 1442, 1446 (for PTPs),
and 1471–1474 require withholding agents to report and pay
over to the IRS taxes withheld from certain U.S. source income
of foreign persons. Form 1042 is used to report the amount of
withholding that must be paid over. Form 1042-S is used to
report the amount of income and withholding to the payee.
Section 6109 requires you to provide your identifying number on
the return. Routine uses of this information include giving it to the
Department of Justice for civil and criminal litigation, and to
cities, states, the District of Columbia, and U.S. commonwealths
and territories for use in administering their tax laws. We may
also disclose this information to other countries under a tax
treaty or tax information exchange agreement, to federal and
state agencies to enforce federal nontax criminal laws, or to
federal law enforcement and intelligence agencies to combat
terrorism. If you fail to provide this information in a timely manner,
you may be liable for penalties.
You are not authorizing the designee to receive any refund
check, bind you to anything (including additional tax liability), or
otherwise represent you before the IRS. If you want to expand
the designee’s authorization, see Pub. 947, Practice Before the
The authorization automatically expires 1 year from the due
date (without any extensions) for filing your 2023 Form 1042. If
you or your designee desires to terminate the authorization, a
written statement conveying your wish to revoke the
authorization should be submitted to the IRS service center
where the return was processed.
Paid Preparers
A withholding agent or intermediary may designate a partner,
member, owner, any corporate office authorized to sign, or
fiduciary to sign Form 1042. The paid preparer's space should
remain blank if the form is completed by one of these individuals.
If the form is completed by a paid preparer with a valid
preparer tax identification number (PTIN), the paid preparer
should complete the paid preparer's section. Generally, anyone
who is paid to prepare the return must do the following.
You are not required to provide the information requested on
a form that is subject to the Paperwork Reduction Act unless the
form displays a valid OMB control number. Books or records
relating to a form or its instructions must be retained as long as
their contents may become material in the administration of any
Internal Revenue law. Generally, tax returns and return
Sign the return in the space provided for the preparer's
•
signature.
Fill in the other blanks in the “Paid Preparer Use Only” area of
•
information are confidential, as required by section 6103.
the return. A paid preparer cannot use a social security number
(SSN) in the “Paid Preparer Use Only” box. The paid preparer
must use a PTIN.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated burden
for business taxpayers filing this form is approved under OMB
control number 1545-0123. The estimated burden for all other
taxpayers who file this form is: Recordkeeping, 10 hr., 31 min.;
Learning about the law or the form, 2 hr., 25 min.; Preparing
the form, 4 hr., 34 min.; and Copying, assembling, and
sending the form to the IRS, 32 min.
Give the withholding agent or intermediary a copy of the
•
return in addition to the copy to be filed with the IRS.
A paid preparer may sign original or amended returns by
rubber stamp, mechanical device, or computer software
program.
Amended Return
If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would
be happy to hear from you. You can send us comments from
IRS.gov/FormComments. Or you can write to the Internal
Revenue Service, Tax Forms and Publications, 1111
Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not
File, earlier.
If you have to make changes to your Form 1042 after you submit
it, file an amended Form 1042. Use a Form 1042 for the year you
are amending. Check the “Amended Return” box at the top of the
form. You must complete the entire form, including all filing
information for the calendar year, and sign the return. Attach a
statement explaining why you are filing an amended return (for
example, you are filing because the tax liability for May was
incorrectly reported due to a mathematical error).
If you are also amending Form(s) 1042-S, see Amended
Return in the Form 1042-S instructions.
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Instructions for Form 1042 (2023)
Index
A
I
R
Income Tax Withholding on Wages,
Pensions, Annuities, and Certain
Reporting of Taxes Paid and
Overwithholding discovered at a later
date 9
Interest 5
Overwithholding discovered by March
S
Section 1. Record of Federal Tax
Liability 6
Section 2. Reconciliation of U.S.
Intermediary 2
Section 3. Potential Section 871(m)
Section 4. Dividend Equivalent
Payments by a Qualified
C
Certain distributions subject to
Address 5
Passive non-financial foreign entity
(NFFE) 3
Chapter 3 and 4 status codes of
Employer identification number
(EIN) 5
D
Specified federal procurement
payment 7
Deposits made during subsequent
year 4
Withholding foreign partnership or
T
P
Privacy Act and Paperwork Reduction
E
Total Tax Reported as Withheld or
Paid 8
Election To Withhold Under Section
Publicly traded partnerships (section
3406 4
W
Excise tax on specified federal
Q
Qualified derivatives dealers
(QDDs) 1
F
Withholding after the time of
Qualified intermediaries with no
primary chapters 3 and 4
Foreign partners of U.S. partnerships
and foreign beneficiaries of U.S.
trusts 6
payment 7
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