Select language

Form 1042 Instructions

Instructions for Form 1042 , Annual Withholding Tax Return for U.S. Source Income of Foreign Persons

Rev. 2023

Related Forms

  • Form 1042 - Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
  • Form 1042 Schedule Q - Tax Liability of Qualified Derivatives Dealer (QDD)
Details
File Format PDF
Size 254.1 KB
Download
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Bipartisan Budget Act (BBA) of 2015 repealed the TEFRA  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  
were published, go to IRS.gov/Form1042.  
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  
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  
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  
Section 871(m) transition. On September 12, 2022, Notice  
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  
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  
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  
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  
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  
your withholding agent.  
You pay gross investment income to foreign private  
The tax withheld under chapter 4 on withholdable payments.  
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  
The tax withheld pursuant to section 5000C on specified  
payments that are subject to withholding under section 5000C.  
federal procurement payments.  
You pay an eligible deferred compensation item to a covered  
The tax withheld under section 877A on payments of eligible  
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),  
Payments that are reported on Form 1042-S under chapter 3  
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  
1042-S.  
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,  
the QI Agreement in Rev. Proc. 2022-43, and Pub. 515,  
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  
-2-  
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  
!
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  
QI Agreement in Rev. Proc. 2022-43 for more information. See  
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  
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/  
2010-24_IRB#NOT-2010-46. An entity may claim QSL status  
and be treated as a recipient for substitute dividend payments  
made before January 1, 2025. See Notice 2022-37.  
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  
-3-  
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 wire payment, visit EFTPS.gov to download the  
Same-Day Payment Worksheet.  
Note. All payments should be made in U.S. dollars.  
Escrow procedure. See the instructions for Lines 1 through 60,  
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  
following year. See the instructions for Lines 1 through 60, later,  
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.  
!
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  
EFTPS.gov. To contact EFTPS using Telecommunications Relay  
Services (TRS) for people who are deaf, hard of hearing, or have  
-4-  
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  
!
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  
IRS.gov/EIN. You can apply for an EIN by telephone at  
800-829-4933. You can also file Form SS-4, Application for  
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  
instructions.  
Complete all required information for the withholding agent  
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.  
-5-  
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  
!
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  
through 60. See Adjustment for Overwithholding, later.  
For other than a PTP, use Form 8804, Annual Return for  
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  
!
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  
!
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  
-6-  
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.  
See Adjustment for Underwithholding, later. Also report on  
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.  
See line 71, later.  
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  
-8-  
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  
-9-  
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  
on line 65b. See Deposits made during subsequent year, earlier,  
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:  
-10-  
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  
send the form to this address. Instead, see Where and When To  
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.  
-11-  
Instructions for Form 1042 (2023)  
   
Index  
A
I
R
Adjustment for Overwithholding 9  
Income Tax Withholding on Wages,  
Pensions, Annuities, and Certain  
Other Deferred Income 3  
Reporting of Taxes Paid and  
Overpayment or Balance Due 8  
Overwithholding discovered at a later  
date 9  
QSL claiming a credit forward 8  
Interest and Penalties 5  
Interest 5  
Overwithholding discovered by March  
15 of the following calendar year 9  
S
Reimbursement procedure 9  
Set-off procedure 9  
Late filing of Form 1042 5  
Late payment of tax 5  
Other penalties 5  
Section 1. Record of Federal Tax  
Liability 6  
Adjustment for Underwithholding 9  
Adjustments to withholding 7  
Amended Return 11  
Section 2. Reconciliation of U.S.  
Intermediary 2  
Source FDAP Income 10  
Foreign financial institution 3  
Nonparticipating FFI 3  
Nonqualified intermediary 3  
Nonwithholding foreign partnership 3  
Nonwithholding foreign trust 3  
Participating FFI 3  
Section 3. Potential Section 871(m)  
Transactions 10  
Avoid Common Errors 5  
Section 4. Dividend Equivalent  
Payments by a Qualified  
C
Derivatives Dealer (QDD) 10  
Certain distributions subject to  
Specific Instructions 5  
section 1445 withholding tax 2  
Address 5  
Passive non-financial foreign entity  
(NFFE) 3  
Chapter 3 and 4 status codes 1  
Corporate distributions 7  
Chapter 3 and 4 status codes of  
withholding agent 5  
Qualified derivatives dealer (QDD) 3  
Qualified intermediary 2  
Employer identification number  
(EIN) 5  
D
Qualified securities lender 3  
Recalcitrant account holder 3  
Registered deemed-compliant FFI 3  
Deposit Requirements 4  
Rounding off to whole dollars 5  
Depositing on time 4  
Specified federal procurement  
payment 7  
Deposits made during subsequent  
year 4  
Withholding foreign partnership or  
withholding foreign trust 2  
Electronic deposit requirement 4  
Escrow procedure 4  
T
Third Party Designee 10  
P
Same-day wire payment option 4  
Total Gross Amounts Reported 7  
Total Net Tax Liability 8  
Potential 871(m) transactions 1  
Privacy Act and Paperwork Reduction  
E
Total Tax Reported as Withheld or  
Act Notice 11  
Paid 8  
Election To Withhold Under Section  
Publicly traded partnerships (section  
3406 4  
1446 withholding tax) 2  
Escrow procedure 4, 7  
W
Excise tax on specified federal  
Where and When To File 3  
Extension of time to file 3  
Who Must File 2  
Q
procurement payments 7  
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  
Withholding Agent 2  
withholding responsibility 7  
Liability for tax 2  
-12-