1 2018 Department of the Treasury internal revenue Service Instructions for form 1042-S . Foreign Person's Source Income Subject to Withholding Section references are to the internal revenue 2017, the rate of withholding under provisions commonly known as FATCA. Code unless otherwise noted. section 1446 by a publicly traded or Chapter 4 of the internal revenue partnership on a distribution of income Code (chapter 4) in addition to those Future Developments effectively connected to a trade or amounts required to be reported under For the latest information about business has changed to 21% for Chapter 3 of the internal revenue Code developments related to form 1042-S , corporate partners and 37% for all other (chapter 3). form 1042-S requires the and its Instructions , such as legislation partners. reporting of an applicable exemption to enacted after they were published, go to For tax years beginning after the extent withholding under chapter 4. December 31, 2017, the rate of did not apply to a payment of withholding by a Qualified Investment source fixed or determinable annual or General Instructions Entity on a distribution to a nonresident periodical (FDAP) income (including alien or foreign corporation that is deposit interest) that is reportable on What's New treated as gain from the sale or form 1042-S .
2 For payments to exchange of a real property intermediaries, flow-through entities, Boxes 9 and 11 of form 1042-S have interest by the shareholder has changed and recipients, form 1042-S requires been switched and clarifying language to 21%. that the chapter 3 status (or has been added to those boxes on the classification) and, when the payment form . Clarifying language has also been Changes to codes. To reflect changes reported is a withholdable payment, the added to boxes 7b and 10 of the form , made to the chapter 4 regulations chapter 4 status, be reported on the and the Instructions for Boxes 7 regarding branches of foreign form according to the codes provided in Through 11, Federal Tax Withheld. entities that act as intermediaries, these Instructions . For the requirement These Instructions have been revised chapter 4 status codes have been of a withholding agent to file a form to modify and add certain definitions. added for branches treated as 1042-S for chapter 4 purposes, see See Definitions, later.
3 Persons and branches not treated Regulations section (d). as persons that are reporting under New sections Requirement To Regulations section Finally, Interest on deposits. Beginning Withhold and Before Completing form the LOB Treaty Category code for January 1, 2013, deposit interest 1042-S have been added to clarify a individuals (code 01) has been described in section 871(i)(2)(A). withholding agent's obligations under removed. Withholding agents making aggregating $10 or more paid to certain chapters 3 and 4 and provide general payments to an individual who is nonresident alien individuals with steps that should be considered when claiming treaty benefits should leave respect to a deposit maintained at an completing form 1042-S . Box 13j blank. office within the United States and held by a resident of certain countries must The income codes, exemption Qualified derivatives dealers be reported on form 1042-S . For more codes, recipient status codes, and LOB (QDDs).
4 These Instructions provide information, see Interest on deposits codes have been moved to the end of guidance on how to report payments on paid to certain nonresident aliens in the the Instructions (see Appendix A and form 1042-S that are made to and by bullet list under Amounts Subject to Appendix B). QDDs. See Payments by Reporting on form 1042-S , later. Appendix C has been added. It Withholding Agents and Amounts Paid by Qualified Intermediaries, later. For Substitute forms. A substitute form provides an expanded Example 1, more information on the withholding and furnished to a recipient must conform in which explains how to complete form reporting requirements associated with format and size to the official IRS form 1042-S for a payment of source payments made to and by QDDs, see and contain the exact same information FDAP income made directly to a revenue Procedure 2017-15. as the copy filed with the IRS. However, beneficial owner. This expanded the size of the form may be adjusted if Example 1 is comprehensive in that it Foreign taxpayer identification num- the substitute form is presented on a provides information regarding how to ber (FTIN).
5 These Instructions reflect landscape oriented page instead of complete every applicable entry field on updated requirements for 2018 for when portrait. Only one form 1042-S may be form 1042-S , along with explanations a financial institution must report an submitted per page, regardless of for each of the entries. It also explains account holder's FTIN. See Box 13i, orientation. Withholding agents that why the remaining boxes are not Recipient's Foreign Taxpayer Identifying furnish a substitute form 1042-S (Copy required to be completed. Number, later. B, C, or D) to the recipient must furnish Appendix D has been added. It a separate substitute form 1042-S for provides a comprehensive example of Reminders each type of payment of income (as how to complete form 1042-S for Foreign Account Tax Compliance determined by the income code in Box gambling winnings made directly to an Act (FATCA). Beginning in 2014 , the 1). Withholding agents are no longer individual.
6 form 1042-S was modified to permitted to combine all payments of Changes to withholding rates. For accommodate reporting of payments income on a single substitute form tax years beginning after December 31, and amounts withheld under the Mar 07, 2018 Cat. No. 64278A. 1042-S . For more information, see each form 1042-S they file. This Purpose of form Substitute Forms, later. identifying number is used, for example, Use form 1042-S to report income to identify which information return is described under Amounts Subject to Account-by-account reporting by being corrected or amended when Reporting on form 1042-S , later, and to financial institutions. For multiple information returns are filed by report amounts withheld under amounts paid on or after January 1, a withholding agent with respect to the chapter 3 or chapter 4. 2016, a financial institution or a same recipient. The unique identifying branch of a foreign financial Use form 1042-S to report specified number cannot be the recipient's or institution maintaining an account within federal procurement payments paid to foreign TIN.
7 The unique identifying the United States is required to report foreign persons that are subject to number must be numeric. The length of payments of the same type of income withholding under section 5000C. a given identifying number must be (as determined by the income code in exactly 10 digits. The identifying number Use form 1042-S to report payments Box 1) made to multiple financial must be unique to each original form of eligible deferred compensation items accounts held by the same beneficial 1042-S filed for the current year. The or distributions from nongrantor trusts to owner on separate Forms 1042-S for identifying number can be used on a covered expatriates that are subject to each account. See Account-by-Account new original form in a subsequent year. withholding under section 877A. See Reporting by Certain Financial Institutions, later. Amended forms. Beginning in 2017, Box 1, Income Code, later. withholding agents filing an amended Use form 1042-S to report certain Withholding agent's status codes.
8 form must indicate the amendment distributions that are made by publicly Withholding agents must enter both a number (see top of form below title, to traded trusts and qualified investment chapter 3 and chapter 4 status code the right of the Amended checkbox). entities (as defined under section 897(h). regardless of the type of payment being The amendment number must be (4)). See Distributions Attributable to made. Also, status codes under numeric and the length must be exactly Dispositions of Real Property chapter 3 (code 34) and chapter 4 (code one digit. Any amended form must have Interests by Publicly Traded Trusts and 50) apply to a withholding agent that is a the same unique form identifier as the Qualified Investment Entities (QIEs), foreign branch of a financial original form that is being amended. later. institution. See Boxes 12b and 12c, Each time that you amend the same Withholding Agent's Chapter 3 and form (as determined by the unique form Also use form 1042-S to report Chapter 4 Status Code, later.)
9 Identifier), you must provide the distributions of effectively connected Recipient country code. If the amendment number in the box provided income by a publicly traded partnership recipient is unknown, leave Box 13b, on the form (using 1 for the first or nominee. See Publicly Traded Recipient's Country Code, blank and amendment and increasing sequentially Partnerships (Section 1446 Withholding enter Unknown Recipient in Box 13a, for each subsequent amendment). See Tax), later. Recipient's name. Amended Forms, later, for more Every person required to deduct Treaty claims and limitation on ben- information. and withhold any tax under efits articles. Withholding agents that List of foreign country codes. ! CAUTION chapter 3 or chapter 4 is liable are withholding at a reduced rate based Beginning in 2017, form 1042-S filers for such tax. on a treaty claim by an entity must will use the same list of country codes include a limitation on benefits code used on other IRS forms (for example, Do not use form 1042-S to report an (LOB code) in Box 13j for the recipient Forms 926, 1118, 3520, and 8805).
10 This item required to be reported on any of when they receive documentation list of foreign country codes may be the following forms. establishing the applicable limitation on found at form W-2 (wages and other benefits provision of the treaty under compensation made to employees which the entity qualifies. Withholding Note. Although the list of country codes (other than compensation for dependent agents are not, however, required to is maintained by Modernized e-File, personal services for which the obtain new documentation unless they form 1042-S filers who file beneficial owner is claiming treaty are otherwise required to renew such electronically will continue to use the benefits), including wages in the form of documentation. See Box 13j, LOB FIRE System. See Instructions for group-term life insurance). Code, later. Electronic Reporting, later. Also, if form 1099. applicable, the option to file form form 8288-A, Statement of Chapter Indicator.