Glossary term
Form 1042-S - Foreign Person's U.S. Source Income
Form 1042-S reports certain U.S.-source income paid to foreign persons and any related U.S. tax withheld.
Updated
Read time
What Is Form 1042-S?
Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, is an IRS information return used to report certain payments of U.S.-source income made to foreign persons. It can also report U.S. tax withheld on those payments.
The form is usually prepared by a withholding agent, such as a financial institution, university, employer, broker, platform, or other payer. Recipients may receive Form 1042-S when they are foreign persons who received reportable U.S.-source income.
Key Takeaways
- Form 1042-S reports certain U.S.-source income paid to foreign persons.
- It can show income type, withholding rate, exemption codes, and tax withheld.
- The form is separate from Form 1042, which is the withholding agent's annual return.
- Recipients may need it when preparing a U.S. nonresident tax return or claiming withholding credit.
How Form 1042-S Works
A withholding agent uses Form 1042-S to report payments that fall under the relevant withholding and reporting rules. These can include certain dividends, interest, royalties, scholarships, compensation, pensions, or other U.S.-source fixed or determinable annual or periodic income, depending on the facts.
The form includes boxes for income code, gross income, withholding allowance, tax rate, exemption code, federal tax withheld, recipient information, and withholding-agent information. Those details help explain why tax was or was not withheld.
What Recipients Should Review
Item | Why it matters |
|---|---|
Income code | Identifies the type of payment being reported. |
Gross income | Shows the amount subject to reporting. |
Tax withheld | May support a withholding credit on a tax return. |
Exemption or treaty code | Explains why withholding may have been reduced or eliminated. |
Common Confusion
Receiving Form 1042-S does not automatically mean the recipient owes additional U.S. tax. It means a payer reported certain U.S.-source income and any withholding treatment. The recipient's filing obligation depends on residency status for tax purposes, income type, treaty treatment, withholding, and other facts.
The Bottom Line
Form 1042-S is a foreign-person income reporting form. It connects U.S.-source payments, withholding rules, treaty or exemption treatment, and the recipient's tax records, so the details on the form should be reviewed carefully rather than treated as a simple wage statement.