More Changes to Form 1042-S

Wendy Walker
February 16, 2021

Another January – arguably the busiest month of the tax season – has ended. Tax reporting professionals were consumed with issuing (and filing, in some cases) Forms W-2, 1099, and other information returns for U.S. taxpayers throughout the month of January. Now, we turn our attention to preparing for another busy month of tax processing. March brings the obligation of businesses to issue Form 1042-S to non-U.S. taxpayers that received U.S. income from them during the year. The information is required to be filed with the IRS by March 15, although time extensions can be requested.

Complex Form 1042-S Reporting Requirements

There are over 30 different information returns that the IRS requires businesses to issue and file every year related to transactions involving U.S. income and U.S. taxpayers. These transactions include payments of wages, gross proceeds, interest, dividends, rents, services, royalty payments, and so much more. But when these same payments are paid to non-U.S. taxpayers, they are reportable on a single form – Form 1042-S. To make reporting even more complex, the IRS combines reporting rules from different parts of the code onto this single form. As a result, Form 1042-S reporting requires a web of interrelated coding to delineate those details. 

The form and/or distinct reporting requirements always seem to be changing. From 2013 to 2020, the IRS doubled the number of boxes of information that could be reported on Form 1042-S. And in 2021, there are new things to note including extended filing due dates for some types of payments, changes to status codes and tax withholding rates, and updates to country codes.

Check out the recording of our latest webinar “Form 1042-S: Updates & Best Practices for Tax Year 2020”. In this webinar, we covered just what your team needs to know to complete & file this complex form, such as:

  • Overview of Form 1042-S including when to report the form, who to report it to, and what to report
  • Detailed review of Income Codes, Exemption Codes, and Status Codes required to be reflected on the form.
  • Updates to Form 1042-S for the 2020 reporting season.
  • Tips and best practices for avoiding common reporting mistakes.

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Download this webinar today. You’ll receive the webinar video recording & slide deck with the download.

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Author

Wendy Walker

Wendy Walker is the principal of Tax Information Reporting solutions at Sovos. She has more than 15 years of tax operations management and tax compliance experience with emphasis in large financial institutions, having held positions with CTI Technologies (a division of IHS Markit), Zions Bancorporation and JP Morgan Chase. Wendy has served as a member of several prominent industry advisory boards. She graduated with a BS in Process Engineering from Franklin University and earned her MBA from Ohio Dominican University, in Columbus, Ohio.
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