IRS Form 1042-S

What is Form 1042-S

Non-resident foreign workers and students who stay and work in the US are nevertheless subject to withholding tax. Form 1042-S is the annual information return for any monetary amounts given to a non-resident alien working in a U.S-based institution or business.

The form is somewhat similar to the W-2 form that employees who are American citizens receive from their employers. This forms is filed by the withholding agent, and sends a copy to the payee for information purposes. The difference is that in 1042-S, employment earnings are not the only transaction that the form covers.

Though non-resident aliens have different laws that regulate tax withholdings than resident aliens, they are treated the same as U.S. citizens. With this, it is important that employer, businesses, universities, and anyone who compensate non-resident alien any type of payment to know the resident status of their payees.

For tax purposes, a non-resident alien is defined as as any person who is not a citizen or resident of the United States. But if an alien meets the “green card test” or the “substantial presence test”, they are considered a resident alien; otherwise, they are considered an alien.

What Files Form 1042-S

The IRS requires any withholding agent, who could be the employer, businessman, or university, that pays any amount to a non-resident alien, to submit a 1042-S information return for every payment received.

Payment that has to be reported on Form 1042-S include corporate distributions, interests, rents, royalties, compensation for dependent and independent services, pensions, and other deferred income, and most gambling winnings too.

Usual recipient of Form 1042-S form from a withholding agent are students and postdoctoral fellows at American universities, or those who are considered non-resident aliens, and employees at any business who are non-resident aliens under a tax treaty.

On the other hand, those that are not subject to withholding tax include scholarship for tuition expense, books, and fees for universities. Though not subject to any withholding, any service payment that was performed in the person’s country of origin, are still required to be reported on a 1042-S form.

When is Form 1042-S Due

Form 1042-S, whether filed on paper or electronically, must be filed with the Internal Revenue Service by March 15, 2016.