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).
2 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 .
3 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.
4 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. 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).
5 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 .
6 For more codes, recipient status codes, and LOB (QDDs). 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.
7 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).
8 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.)
9 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. Form 1042-S was modified to permitted to combine all payments of Changes to withholding rates.
10 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.