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| e-News for Withholding Agents | February 13, 2023 | |
e-file Resources IRS.gov Qualified Intermediaries (QI) News e-File for Large Business and International (LB&I)
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| Issue Number: 2023-01
The Form 1042-S Filing Deadline is Approaching – Form 1042-S Best Practices With the upcoming deadline for filing Form 1042-S the IRS is sharing some best practices to consider when preparing and filing Form 1042-S. - Refer to the instructions to Form 1042-S early and often when preparing Forms 1042-S.
- If you are an electronic filer, or required to file electronically, refer to Publication 1187, Specifications for Electronic Filing of Forms 1042-S, Foreign Person's U.S. Source Income Subject to Withholding.
- Utilize the Form 1042-S DATA Integrity tool to review the Form 1042-S data prior to filing Forms 1042-S with the IRS and providing copies to the recipients. This can help identify any potential errors and avoid possible penalties for the failure to file correct information returns.
- When reporting to Unknown Recipients, ensure that 30% tax is withheld, remitted to the IRS, and reported on Form 1042-S. In such cases, the recipient's name should be "Unknown Recipient", the chapter status codes should reflect "unknown recipient" status and the recipient country field should be left blank. DO NOT use "UC" to indicate unknown country. Only use country code "UC" when the country is Curacao.
- See the Instructions to Form 1042-S for a list of allowable foreign country codes.
- When reporting to a recipient that claimed treaty benefits, ensure that recipient's treaty country is a country with which the IRS has an income tax treaty in place. Countries with which the United States has a tax treaty are listed at gov/Businesses/International-Businesses/United-States-Income-Tax-Treaties-A-to-Z.
- Ensure that the copy of the Form 1042-S filed with the IRS is the same as the copy furnished to the recipients. A mismatch between the copy of the Form 1042-S filed with the IRS and the copy provided to the recipients will cause processing delays and any associated refund or credit claimed will be denied.
- Withholding agents that file Forms 1042-S for the calendar year must also file Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons with the IRS. Ensure that the information reported on all of the Forms 1042-S filed for the calendar year reconciles with the information reported on Form 1042.
For additional guidance see: Back to Top
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