Updated October 16, 2026. Quick answer: Form 1042-S is the “Foreign Person’s U.S. Source Income Subject to Withholding” form. “Use Form 1042-S to report income described under Amounts Subject to Reporting on Form 1042-S, later, and to report amounts withheld under chapter 3 or chapter 4.” The filer is the payer: “Every withholding agent (defined in Definitions, later) must file an information return on Form 1042-S to report amounts paid during the preceding calendar year”. The decision that matters first is whether you are the withholding agent or the foreign recipient.
More IRS forms and schedules, read line by line: Form 1040-NR nonresident return.
Partnership return (Form 1065) for 2025, read line by line: Form 1065 Schedule B questions 13 to 24.
More IRS forms and schedules, read line by line: Form W-7 instructions.
Who must file and furnish
“Every withholding agent (defined in Definitions, later) must file an information return on Form 1042-S to report amounts paid during the preceding calendar year” that fall within the amounts the instructions describe. The definition of the filer is broad: “A withholding agent is any person, U.S. or foreign, that has control, receipt, or custody of an amount subject to withholding under chapter 3 who can disburse or make payments of an amount subject to withholding, or who makes a withholdable payment under chapter 4.”
A small carve-out exists for individuals: “withholding agents who are individuals are not required to report a payment on Form 1042-S if they are not making the payment as part of their trade or business and no withholding is required to be made on the payment.”
Zero tax withheld is not zero reporting: “You must file a Form 1042-S even if you did not withhold tax under chapter 3 because the income was exempt from tax under a U.S. tax treaty or the Internal Revenue Code, including the exemption for income that is effectively connected with the conduct of a trade or business in the United States,”
The filer also owes a companion return: “If you file Form 1042-S, you must also file Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.” And liability follows the duty: “Every person required to deduct and withhold any tax under chapter 3 or chapter 4 is liable for such tax.”
The instructions list items that belong on other forms instead, including “Form 8966, FATCA Report.” U.S. residents who receive dividends or interest on ordinary brokerage accounts see their own reports at the Form 1099-DIV boxes page.
Key numbers at a glance
The due date, the chapter 3 rate and the intent penalty are collected here.
| Item | As printed |
|---|---|
| Due date | “by March 15 of the following calendar year” |
| Chapter 3 rate | “a withholding agent must withhold 30% of any payment of an amount subject to withholding under chapter 3” |
| Intentional disregard | “the greater of $690 or 10% of the total amount of items required to be reported, with no maximum penalty” |
Due dates, copies and electronic filing
“must be filed with the IRS and be furnished to the recipient of the income by March 15 of the following calendar year.” “If the 15th falls on a Saturday, Sunday, or legal holiday in the District of Columbia or where the return is to be filed, the due date is the next business day.”
The copies have different destinations: “Copy A is filed with the IRS.” “Provide Copies B, C, and D to the recipient of the income.” “All copies must match the copy filed with the IRS.” The form itself labels the recipient copy “(keep for your records)”.
Paper filers use a transmittal: “Send all paper Forms 1042-S with Form 1042-T, Annual Summary and Transmittal of Forms 1042-S, to the address in the Form 1042-T instructions.”
Electronic filing is mandatory in three cases:
| Electronic filing required if | As printed |
|---|---|
| Volume | “You are a person (including a corporation, partnership, individual, trust, or estate) that is required to file 10 or more information returns during the year” |
| Large partnership | “You are a partnership with more than 100 partners; or” |
| Financial institution | “You are a financial institution (whether U.S. or foreign) regardless of the number of returns required to be filed.” |
The channel is changing: “IRIS will be available beginning January 1, 2026, and must be used to e-file 2026 Forms 1042-S (due March 15, 2027).” “FIRE is set to retire for tax year 2026”
More time can be requested: “request an extension as soon as you are aware that an extension is necessary, but no later than the due date for filing Form 1042-S.” The request is made on Form 8809.
Reading the boxes: codes, rates and amounts
Each form carries one type of income. “The income code you report in box 1 must correctly reflect the type of income you pay to the recipient.” A sample of the codes printed on the form:
| Box 1 code | Type of income as printed on the form |
|---|---|
| 02 | “Interest paid on real property mortgages” |
| 04 | “Interest paid by foreign corporations” |
| 08 | “Dividends paid by foreign corporations” |
| 09 | “Capital gains” |
| 10 | “Industrial royalties” |
| 15 | “Pensions, annuities, alimony, and/or insurance premiums” |
| 16 | “Scholarship or fellowship grants” |
| 17 | “Compensation for independent personal services” |
| 28 | “Gambling winnings” |
The form adds a footnote for compensation codes: “If compensation that would otherwise be covered under Income Codes 17 through 20 is directly attributable to the recipient’s occupation as an artist or athlete, use Income Code 42 or 43 instead.”
Box 2 is gross income: “The gross income you report in box 2 cannot be zero (unless amending Form 1042-S to zero out gross income previously reported).”
Boxes 3a and 3b record the chapter 3 exemption and rate. The instructions changed the rule: “A chapter 3 exemption code is now required in all cases where the tax withheld is less than 30%.” A sample of the exemption codes:
| Box 3a code | Authority for exemption or reduced rate, as printed |
|---|---|
| 01 | “Effectively connected income” |
| 03 | “Income is not from U.S. sources” |
| 04 | “Exempt or reduced withholding under tax treaty” |
| 05 | “Portfolio interest exempt under IRC” |
Box 7a records what was actually withheld: “Enter the total amount of U.S. federal tax you actually withheld in box 7a under chapter 3 or 4.” “Box 7a must be completed in all cases, even if no tax has been deposited.” Box 10 on the form is the “Total withholding credit (combine boxes 7a, 8, and 9)”.
A minimum set of fields is required: “At a minimum, you must provide your unique form identifier at the top of the form as well as the information requested in boxes 1, 2, 3, 7a, 12a through 12m, and 13a through 13h.”
Joint owners need care: “In the case of joint owners, Form 1042-S can only list one of the owners as the recipient in box 13a.”
Withholding rates as printed
The general rule under chapter 3: “a withholding agent must withhold 30% of any payment of an amount subject to withholding under chapter 3 (defined earlier) made to a payee that is a foreign person (or is presumed to be a foreign person) unless it can associate the payment with documentation to treat the payment as made to a foreign person entitled to a reduced rate of or exemption from withholding.”
Chapter 4 has a parallel rule: “a withholding agent must withhold 30% of a withholdable payment (defined earlier) made to an FFI that is or is presumed to be a nonparticipating FFI (defined earlier).” The two do not stack: “A payment will be subject to withholding under either chapter 3 or chapter 4 but not both.”
The rate box has a format rule: “Enter the correct rate of withholding that applies to the income in box 2 (gross income) or box 6 (net income), as appropriate.” “In the case of a payment subject to chapter 4 withholding, the correct rate of withholding is “30.00.””
Other rates the instructions print include federal procurement payments, where “the correct rate of withholding is 2% or “02.00.””, and publicly traded partnerships: “The rate of withholding under section 1446(a) by a publicly traded partnership (PTP) on a distribution of income effectively connected to a U.S. trade or business is 21% for corporate partners and 37% for all other partners.”
Rates are not blended: “Do not attempt to “blend” rates.” “If you withheld at more than one tax rate for a specific type of income that you paid to the same recipient, you must file a separate Form 1042-S for each amount to which a separate rate was applied.”
Penalties
“A penalty may be imposed for failure to file each correct and complete Form 1042-S when due (including extensions), unless you can show that the failure was due to reasonable cause and not willful neglect.” The amounts, as printed:
| Timing | Penalty as printed |
|---|---|
| Within 30 days | “$60 per Form 1042-S if you correctly file within 30 days after the required filing date; the maximum penalty is $698,500 per year ($244,500 for a small business).” |
| By August 1 | “$130 per Form 1042-S if you correctly file more than 30 days after the due date but by August 1; the maximum penalty is $2,095,500 per year ($698,500 for a small business).” |
| After August 1 | “$340 per Form 1042-S if you file after August 1 or you do not file correct Forms 1042-S; the maximum penalty is $4,191,500 per year ($1,397,000 for a small business).” |
The small business test: “A small business, for this purpose, is defined as having average annual gross receipts of $5 million or less for the 3 most recent tax years”
As a computed illustration, not an IRS example, 50 correct forms filed within 30 days late at $60 each and the computed amount is $3,000 which is below the printed maximum.
Intent changes the math: “If you intentionally disregard the requirement to report correct information, the penalty per Form 1042-S is increased to the greater of $690 or 10% of the total amount of items required to be reported, with no maximum penalty.”
Recipients are covered too: “a penalty of up to $340 may be imposed for each failure to furnish Form 1042-S to the recipient when due.”
For the foreign recipient, and record keeping
The form carries a notice for the person receiving it: “Generally, every nonresident alien individual, nonresident alien fiduciary, and foreign corporation with U.S. income, including income that is effectively connected with the conduct of a trade or business in the United States, must file a U.S. income tax return.”
The same notice describes when a return is not needed: “a return is generally not required to be filed by a nonresident alien individual, nonresident alien fiduciary, or foreign corporation if such person was not engaged in a trade or business in the United States at any time during the tax year and if the tax liability of such person was fully satisfied by the withholding of U.S. tax at the source.” “Corporations file Form 1120-F; all others file Form 1040-NR.”
Filers have housekeeping duties. On truncation: “only the last four digits of a TIN must be displayed and the remaining digits must be replaced with either asterisks (*) or Xs.” “The recipient’s TIN and FTIN must not be truncated on Copy A filed with the IRS.”
On retention: “Withholding agents should retain a copy of the information returns filed with the IRS, or have the ability to reconstruct the data, for at least 3 years after the reporting due date.” Getting an employer identification number is covered on the how to get an EIN page.
Which revision applies
The edition read for this page is Form 1042-S (2026) and the Instructions for Form 1042-S (2026), which are the revisions irs.gov served when they were read on 2026-10-16. Check the tax year printed on the form you are filing or receiving, because the codes, the filing channel and the penalty amounts can change from one year to the next.
Common mistakes
- Skipping the form because nothing was withheld. The instructions say a Form 1042-S must be filed even when no chapter 3 tax was withheld because a treaty or the Internal Revenue Code exempted the income.
- Blending two withholding rates on one form. The instructions say to file a separate Form 1042-S for each amount to which a separate rate was applied.
- Leaving box 7a blank when no tax was deposited. The instructions say box 7a must be completed in all cases, even if no tax has been deposited.
Related: how to get an EIN, Form 1116 foreign tax credit, 1099-DIV Box 4 and Box 7, Schedule B interest and dividends, and tax return prepared overseas.
Sources
- Form 1042-S (2026), Foreign Person’s U.S. Source Income Subject to Withholding: https://www.irs.gov/pub/irs-pdf/f1042s.pdf
- Instructions for Form 1042-S (2026): https://www.irs.gov/pub/irs-pdf/i1042s.pdf
Read from the IRS documents linked above on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.