Are you looking to file Form 1042-S for U.S.-source income paid to foreign persons, without the runaround? Bulk import your data, eFile with the IRS, re-file rejected returns free of charge, and deliver recipient copies, all in one place with 1099Online.
Form 1042-S is an IRS information return that is used to report U.S.-source income paid to foreign recipients along with the federal taxes withheld. Sometimes filing is required even when no tax was withheld. For example, if the income was exempt under a treaty or the Internal Revenue Code.
Form 1042-S is similar to a Form 1099 in that it reports income paid to a recipient, but it is specifically designed for foreign persons and international withholding rules.
Who receives Form 1042-S: Nonresident individuals, foreign entities, intermediaries, and certain other foreign beneficial owners.
U.S. withholding agents that make reportable payments to foreign persons during the calendar year must file Form 1042-S.
Withholding agents could be individuals, corporations, partnerships, trusts or estates, government agencies, financial institutions, universities, foreign intermediaries, and anyone else who controls, receives, has custody of, disposes of, or pays an amount subject to withholding.
An individual withholding agent generally isn't required to report a payment when both of the following are true:
That said, the individual must file Form 1042-S if tax was actually withheld or if withholding was required, even when the individual failed to withhold it.
Form 1042-S generally reports U.S.-source income paid to foreign persons, including persons presumed to be foreign, when the amount is reportable under Chapter 3 or Chapter 4.
Reportable income may include:
Payments may still be reportable when:
There are some payment types that fall outside the reporting requirement of 1042-S.
Certain short-term obligation interest: If an obligation is payable within 183 days or less from its original issue date, the interest and OID on it generally don't need to be reported. There are exceptions, though, certain reportable deposit interest being one of them.
Certain foreign-targeted obligations: Interest on registered obligations targeted to foreign markets can be exempt too, but only in very few situations, generally involving financial institutions or clearing organizations, and only with proper documentation in place.
Certain notional principal contract payments: These generally don’t need reporting as long as they're not effectively connected with a U.S. trade or business, and they're not treated as dividend equivalents.
Accrued interest and OID: When an obligation is sold between payment dates, the accrued interest that gets paid, along with certain OID folded into the purchase price, usually isn't reportable. The catch is if the transaction is part of a tax-avoidance plan, this exception doesn't apply.
Certain Chapter 4 payments: If a payment already isn't reportable under Chapter 3, it may be excluded from Chapter 4 reporting too, but only when Chapter 4 withholding wasn't applied and wasn't required in the first place.
Certain amounts realized: Some amounts realized from partnership interest transfers can be exempt, provided the applicable regulatory exception applies.
Here are some of the most important fields on the form:
Box 1: Income code
Enter the correct IRS income code that best identifies the type of income paid, such as interest, dividends, royalties, compensation, or scholarship income.
Box 2: Gross income
Report the total amount paid to the recipient before withholding or other deductions. This box generally can't be zero, the one exception being an amended form used to reverse a previously reported amount.
Boxes 3a and 3b: Chapter 3 treatment
Enter the applicable Chapter 3 exemption code and tax rate. Starting with the 2026 form, you're required to enter a Chapter 3 exemption code any time the withheld tax comes in under 30%.
Boxes 4a and 4b: Chapter 4 treatment
Here you'll report the Chapter 4 exemption code and withholding rate. Even when Chapter 3 indicator applies, these boxes usually still need to be filled in.
Boxes 7a through 11: Withholding
This section covers tax withheld by the withholding agent, tax withheld by another agent, any over withheld tax that's been repaid to the recipient, and the total withholding credit.
Boxes 12 and 13: Agent and recipient information
Enter the withholding agent’s and recipient’s names, addresses, identification numbers, country codes, status codes, GIINs, and other required details.
The IRS is officially retiring FIRE, the Filing Information Returns Electronically system, starting with tax year 2026. That means Forms 1042-S covering 2026 payments, due in 2027, have to go through IRIS instead if electronic filing is required. IRIS handles corrections too, and you can request an automatic filing extension through it as well.
The 2026 form breaks address information out into its individual boxes. Instead of one combined field, filers now enter street, city, state or province, country, and postal code separately, so double check you're not bunching these together.
If the Chapter 3 withholding rate you're reporting is under 30%, a Chapter 3 exemption code is now required. That covers payments getting a reduced statutory rate or a treaty rate.
Withholding agents may no longer use the former credit-forward framework for substitute dividends paid in a series of securities loans or stock repurchase agreements.
Income codes 59, 60, and 61, covering consent fees, loan syndication fees, and settlement payments, remain optional for the 2026 tax year.
Filing accurately starts by collecting all the required information beforehand. You need the withholding agent, recipient, payment, and tax details.
Note: A separate Form 1042-S is generally needed for each recipient, each type of income paid to that recipient, and each separate withholding rate applied to the same income type. Different income types cannot usually be combined on one form.
Along with Form 1042-S, the withholding agent is also generally required to file Form 1042 (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons). Form 1042 covers the total annual tax liability of the withholding agent.
eFiling is mandatory when the filer meets the IRS 10-return aggregate rule during the calendar year. Meanwhile, partnerships with more than 100 partners must eFile, and financial institutions (U.S. or foreign) should eFile irrespective of volume.
Step 1: Enter Withholding Agent Information
Start by entering the withholding agent's name, EIN, and address. You'll also need Chapter 3 and Chapter 4 status codes, the GIIN, and any other identifying details.
Step 2: Add Recipient Information
Next, add the recipient's details. This includes their name, foreign address, and country code, plus TINs, FATCA status, account number, and other details that applies to that recipient.
Step 3: Enter Income and Withholding Details & Validate
Now select the correct income code and enter the gross income amount. Exemption codes, tax rates, federal tax withheld, and any adjustments go here too. Before moving on, double check everything because even a small error can delay processing of your returns.
Step 4: Submit and Furnish Recipient Copies
Once everything checks out, transmit the return electronically. Don't forget to furnish recipient copies too, and get it done by March 15, 2027.
For payments made in 2026, the 1042-S forms must be filed by this deadline:
If the due date is on a weekend or a public holiday, the deadline shifts to the next business day.
The following are the penalties for filing Form 1042-S late, which increase the more you delay:
Separate penalties can also apply for failing to furnish a correct recipient copy, or for failing to eFile when it's required.
Form 1042-S is used to report certain U.S.-source income paid to foreign persons and federal taxes withheld, plus reporting exemption information applied under chapters 3 and 4 of the Internal Revenue Code.
Generally, a withholding agent (financial institutions, partnerships, nonprofits, etc.) must file 1042-S to report amounts paid to a foreign person or another recipient covered by the Chapter 3 (NRA withholding) or Chapter 4 (FATCA withholding) rules.
Different threshold applies to different payment types on this form. The reporting trigger depends on the income category, recipient status, withholding rules, and any specific threshold, like the $10 rule that applies to certain deposit interest paid to qualifying nonresident aliens.
Yes. You might need to file 1042-S even when the payment was not subject to any withholding because of a tax treaty, an Internal Revenue Code exemption, or some other applicable rule.
No. Form 1042-S reports each recipient's income and withholding, filed separately per recipient and income type. On the other hand, Form 1042 is the annual summary return that totals all withholding across every 1042-S filed.
That's not allowed. You must generally file a separate 1042-S for each recipient, income type, and withholding rate.
For tax year 2026 returns, the deadline is March 15, 2027, for paper filing and eFiling with the IRS, as well as for sending recipient copies. Remember that if the due date is a weekend or a public holiday, the deadline moves to the next business day.
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