Electronic filing requirement.

See Electronic Reporting , later, for information on who is required to file Form 1042-S electronically.

Extension of time to file.

To request an extension of time to file Forms 1042-S, file Form 8809, Application for Extension of Time To File Information Returns. See the instructions for Form 8809 at IRS.gov/Form8809 for where to file that form. You should 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. By filing Form 8809, you will get an automatic 30-day extension to file Form 1042-S. If you need more time, you may submit a second Form 8809 before the end of the initial extended due date. See Form 8809 for more information.

Withholding agent.

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. The withholding agent may be an individual, corporation, partnership, trust, association, or any other entity. The term “withholding agent” also includes, but is not limited to, a qualified intermediary (QI), a nonqualified intermediary (NQI), a withholding foreign partnership (WP), a withholding foreign trust (WT), a flow-through entity, a U.S. branch that is treated as a U.S. person under Regulations section 1.1441-1(b)(2)(iv)(A), a territory FI, a nominee under section 1446, and an authorized agent. A person may be a withholding agent even if there is no requirement to withhold from a payment or if another person has already withheld the required amount from a payment.

In most cases, the U.S. person who pays (or causes to be paid) the item of U.S. source income to a foreign person (or to its agent) must withhold. However, other persons may be required to withhold. For example, if a payment is made by a QI (whether or not it assumes primary withholding responsibility) and the QI knows that withholding was not done by the person from which it received the payment, then that QI is required to do the appropriate withholding. In addition, withholding must be done by any QI that assumes primary withholding responsibility under chapters 3 and 4, a WP, a WT, a U.S. branch that agrees to be treated as a U.S. person under Regulations section 1.1441-1(b)(2)(iv)(A), or an authorized agent. Finally, if a payment is made by an NQI or a flow-through entity that knows, or has reason to know, that withholding was not done, that NQI or flow-through entity is required to withhold since it also falls within the definition of a withholding agent.

Account holder.

Generally, the account holder is the person that holds the account. See Regulations section 1.1471-5(a).

Amount realized.

An amount realized on the transfer of a PTP interest is the amount of gross proceeds (as defined in Regulations section 1.6045-1(d)(5)) paid or credited to a partner or broker (as applicable) that is a transferor of the interest. The amount realized on a PTP distribution is the amount of the distribution reduced by the portion of the distribution that is attributable to the cumulative net income of the partnership (as determined under Regulations section 1.1446(f)-4(c)(2)(iii)).

Amount subject to chapter 3 withholding.

Generally, an amount subject to chapter 3 withholding is an amount from sources within the United States that is FDAP income. FDAP income is all income included in gross income, including interest (as well as original issue discount (OID)), dividends, rents, royalties, and compensation. Amounts subject to chapter 3 withholding do not include amounts that are not FDAP, such as most gains from the sale of property (including market discount and option premiums), as well as other specific items of income (such as interest on bank deposits and short-term OID). See Regulations section 1.1441-2.

Authorized agent.

An agent is an authorized agent for purposes of filing Form 1042 or making tax deposits and payments on behalf of its principal (payer) only if all five of the following conditions apply.

A sponsoring entity is a reporting agent with respect to withholdable payments and must fulfill the above conditions to be an authorized agent.

For more information on these conditions, see Regulations sections 1.1441-7(c) and 1.1474-1(a)(3)(ii).

Beneficial owner.

For payments other than those for which a reduced rate of withholding is claimed under an income tax treaty, the beneficial owner of income in most cases is the person who is required under U.S. tax principles to include the income in gross income on a tax return. A person is not a beneficial owner of income, however, to the extent that person is receiving the income as a nominee, agent, or custodian, or to the extent the person is a conduit whose participation in a transaction is disregarded. In the case of amounts paid that do not constitute income, beneficial ownership is determined as if the payment were income.

Foreign partnerships, foreign simple trusts, and foreign grantor trusts are not the beneficial owners of income paid to the partnership or trust for chapter 3 purposes. The beneficial owners of income paid to a foreign partnership in most cases are the partners in the partnership, provided that the partner is not itself a partnership, foreign simple or grantor trust, nominee, or other agent. The beneficial owner of income paid to a foreign simple trust (a foreign trust that is described in section 651(a)) in most cases is the beneficiary of the trust, if the beneficiary is not a foreign partnership, foreign simple or grantor trust, nominee, or other agent. The beneficial owner of a foreign grantor trust (a foreign trust to the extent that all or a part of the income of the trust is treated as owned by the grantor or another person under sections 671 through 679) is the person treated as the owner of the trust. The beneficial owner of income paid to a foreign complex trust (a foreign trust that is not a foreign simple trust or foreign grantor trust) is the trust itself.

The beneficial owner of income paid to a foreign estate is the estate itself.

A payment to a U.S. partnership, U.S. trust, or U.S. estate is not subject to withholding under chapter 3 or 4. A U.S. partnership, trust, or estate should provide the withholding agent with a Form W-9, Request for Taxpayer Identification Number and Certification. In most cases, these beneficial owner rules apply for purposes of section 1446; however, there are exceptions.

Broker.

A broker is a person described in Regulations section 1.1446(f)-1(b)(1) when referenced in connection with a transfer of a PTP interest.

Chapter 3.

Chapter 3 (Withholding of Tax on Nonresident Aliens and Foreign Corporations), excluding sections 1445 and 1446.

Disregarded entity.

A business entity that has a single owner and is not a corporation under Regulations section 301.7701-2(b) is disregarded as an entity separate from its owner.

Disclosing QI.

For purposes of section 1446(a) or (f), a QI that provides with its withholding statement the specific payee documentation referenced in Regulations section 1.1446(f)-4(a)(7)(iii) (for an amount realized) or Regulations section 1.1446-4(e)(4) (for withholding on a PTP distribution under section 1446(a)) instead of the chapter 3 withholding rate pool information otherwise permitted to be included on the withholding statement. A QI that acts as a disclosing QI for a payment must act as a disclosing QI for the entire payment. See the 2023 QI agreement in Rev. Proc. 2022-43 for further information.

Dividend equivalent.

To the extent specified in section 871(m) and the regulations thereunder, a dividend equivalent is a payment (within the meaning of Regulations section 1.871-15(i)) that, directly or indirectly, is contingent on, or determined by reference to, the payment of a dividend from U.S. sources, including pursuant to a securities lending, sale-repurchase transaction, a specified notional principal contract, or a specified equity-linked instrument.

Certain other payments made by the withholding agent to satisfy a tax liability with respect to a dividend equivalent by the party receiving the dividend equivalent are dividend equivalents. See Regulations section 1.871-15(c) for additional information, including the definitions of specified notional principal contract and specified equity-linked instrument.

Any section 871(m) amount of a QDD is treated as a dividend equivalent. See Rev. Proc. 2022-43 for additional information, including the definition of a section 871(m) amount.

Exempt beneficial owner.

An exempt beneficial owner means a person that is described in Regulations section 1.1471-6 and includes a foreign government, a political subdivision of a foreign government, a wholly owned instrumentality or agency of a foreign government or governments, an international organization, a wholly owned agency or instrumentality of an international organization, a foreign central bank of issue, a government of a U.S. territory, certain retirement funds, and certain entities wholly owned by one or more exempt beneficial owners. In addition, an exempt beneficial owner includes any person treated as an exempt beneficial owner under an applicable Model 1 IGA or Model 2 IGA.

Exempt recipient.

An exempt recipient is any payee that is exempt from the Form 1099 reporting requirements.

Exempt recipients are not exempt from withholding under chapter 3 unless they are U.S. persons or foreign persons entitled to an exemption from withholding under chapter 3.

Expatriate.

A person is considered an expatriate if he or she relinquishes U.S. citizenship or, in the case of a long-term resident of the United States, ceases to be a lawful permanent resident as defined in section 7701(b)(6).

Fiscally transparent entity.

An entity is treated as fiscally transparent with respect to an item of income for which treaty benefits are claimed to the extent that the interest holders in the entity must, on a current basis, take into account separately their shares of an item of income paid to the entity, whether or not distributed, and must determine the character of the items of income as if they were realized directly from the sources from which realized by the entity. For example, partnerships, common trust funds, and simple trusts or grantor trusts in most cases are considered to be fiscally transparent with respect to items of income received by them.

Flow-through entity.

For chapter 3 purposes, a flow-through entity is a foreign partnership (other than a WP), a foreign simple or grantor trust (other than a WT), or, for any payments for which a reduced rate of withholding under an income tax treaty is claimed, any entity to the extent the entity is considered to be fiscally transparent under section 894 with respect to the payment by an interest holder's jurisdiction.

Financial institution.

A financial institution generally means an entity that is a depository institution, custodial institution, investment entity, or an insurance company (or holding company of an insurance company) that issues cash value insurance or annuity contracts. See Regulations section 1.1471-5(e).

Foreign financial institution (FFI).

An FFI is an entity described in Regulations section 1.1471-5(d) or an entity treated as a financial institution under an Intergovernmental Agreement (IGA).

Foreign person.

A foreign person includes a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign trust, a foreign estate, and any other person that is not a U.S. person. The term also includes a foreign branch or office of a U.S. financial institution or U.S. clearing organization if the foreign branch is a QI. A payment to a U.S. branch of a foreign person is treated as a payment to a foreign person for purposes of Form 1042-S.

Global intermediary identification number (GIIN).

The GIIN is the identification number that is assigned to a participating FFI (including a reporting Model 2 FFI), registered deemed-compliant FFI (including a reporting Model 1 FFI), or other entity for chapter 4 reporting purposes.

Intermediary.

An intermediary is a person that acts as a custodian, broker, or nominee, or otherwise as an agent for another person, regardless of whether that other person is the beneficial owner of the amount paid, a flow-through entity, or another intermediary.

Nonfinancial foreign entity (NFFE).

An NFFE is a foreign entity or an entity incorporated or organized under the laws of any U.S. territory that is not a financial institution.

Nominee.

See Regulations section 1.1446-4(b)(3) and Publicly Traded Partnerships (Sections 1446(a) and (f) Withholding Tax), later, for persons that may act as a nominee for a PTP distribution.

Nonexempt recipient.

A nonexempt recipient is any person who is not an exempt recipient under chapter 61.

Nonresident alien individual.

Any individual who is not a citizen or resident of the United States is a nonresident alien individual. An alien individual meeting either the green card test or the substantial presence test for the calendar year is a resident alien. Any person not meeting either test is a nonresident alien individual. Additionally, an alien individual who is treated as a nonresident alien pursuant to Regulations section 301.7701(b)-(7) for purposes of figuring out the individual’s U.S. tax liability, or an alien individual who is a bona fide resident of Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, or American Samoa is a nonresident alien individual. An individual will not be treated as a U.S. person for a tax year or any portion of a tax year that the individual is a dual-resident taxpayer who is treated as a nonresident alien for purposes of figuring his or her U.S. tax liability. See Pub. 519, U.S. Tax Guide for Aliens, for more information on resident and nonresident alien status.

Even though a nonresident alien individual married to a U.S. citizen or resident alien may choose to be treated as a resident alien for certain purposes (for example, filing a joint income tax return), such individual is still treated as a nonresident alien for withholding tax purposes.

Payee.

Except as otherwise provided, the payee is the person to whom a payment is made, regardless of whether such person is the beneficial owner of the amount or treated as the recipient of the payment for purposes of reporting on Form 1042-S. See Regulations section 1.1471-3(a).

Presumption rules.

For withholdable payments and for amounts subject to withholding under chapter 3, the presumption rules are those rules that a withholding agent must follow to determine the status of a beneficial owner or payee (for example, as a U.S. person or a foreign person) when it cannot reliably associate a payment with valid documentation. See, for example, Regulations sections 1.1441-1(b)(3), 1.1441-4(a), 1.1441-5(d) and (e), 1.1441-9(b)(3), 1.1446-1(c)(3), and 1.6049-5(d). Also see Pub. 515. See Regulations section 1.1446(f)-4(a)(2) and (b)(2) for a broker's requirement to treat a transferor of a PTP interest (or broker acting for the transferor) as a foreign person for section 1446(f) purposes absent the broker's receipt of a certification of non-foreign status. For a withholdable payment (defined in Regulations section 1.1473-1(a)), the withholding agent must also follow the presumption rules under Regulations sections 1.1471-3(f) and, for an FFI, 1.1471-4(c)(4)(i) to determine the chapter 4 status of the payee when it cannot reliably associate a payment with valid documentation.

Publicly traded partnership (PTP).

A PTP is an entity that has the same meaning as in section7704 and Regulations sections 1.7704-1 through 1.7704-4 but does not include a PTP treated as a corporation under that section.

PTP distribution.

A PTP distribution is a distribution made by a PTP.

PTP interest.

A PTP interest is an interest in a PTP if the interest is publicly traded on an established securities market or is readily tradable on a secondary market (or the substantial equivalent thereof).

Qualified derivatives dealer (QDD).

A QDD is a QI that is an eligible entity that agrees to meet the requirements of Regulations section 1.1441-1(e)(6)(i) and the QI agreement. An eligible entity is defined in Regulations section 1.1441-1(e)(6)(ii).

To act as a QDD, the home office or branch, as applicable, must qualify and be approved for QDD status and must represent itself as a QDD on its Form W-8IMY and separately identify the home office or branch as the recipient on a withholding statement (if required). Each home office or branch that obtains QDD status is treated as a separate QDD. See Regulations section 1.1441-1(e)(6) and Rev. Proc. 2022-43 for more information.

Qualified securities lender (QSL).

A QSL is an FFI that satisfies all of the following.

Recalcitrant account holder.

Generally, a recalcitrant account holder is an account holder of a participating or registered deemed-compliant FFI that failed to provide the documentation required under chapter 4 to determine the account holder's status or to report the account as a U.S. account. See Regulations section 1.1471-5(g).

Recipient.

For chapter 3 purposes (including sections 1445 and 1446), a recipient includes any of the following.

For chapter 3 purposes (including section 1445 and 1446), a recipient does not include any of the following.

For chapter 4 purposes, a recipient also includes any of the following.

In the case of a PTP distribution subject to withholding under section 1446(a), if another partnership or a trust (other than a grantor trust) receives the distribution, the partnership or trust is the recipient for chapter 3 purposes.

For chapter 4 purposes, a recipient is generally the same person that is a recipient for chapter 3 purposes.

Specified notional principal contract (SNPC).

An SNPC is any specified notional principal contract within the meaning of Regulations section 1.871-15(d).

Specified U.S. person.

A specified U.S. person is any U.S. person other than a person identified in Regulations section 1.1473-1(c).

Substantial U.S. owner.

A substantial U.S. owner is a specified U.S. person described in Regulations section 1.1473-1(b). For purposes of filing this form, a reporting Model 2 FFI reporting an account held by a passive NFFE should substitute the term “controlling person that is a specified U.S. person” for “substantial U.S. owner” and refer to the applicable Model 2 IGA for the definition of controlling person. A territory NFFE that is not an excepted NFFE determines its substantial U.S. owners by applying the 10% threshold in Regulations section 1.1473-1(b)(1).

Territory FI.

A territory FI is a financial institution that is incorporated or organized under the laws of any U.S. territory and is not an investment entity. See Regulations section 1.1471-5(e)(1)(iii) for the definition of investment entity.

U.S. branch treated as a U.S. person.

A U.S. branch may agree to be treated as a U.S. person if it meets the requirements described in the regulations under chapter 3. See Regulations section 1.1441-1(b)(2)(iv)(A). A U.S. branch may also agree to be treated as a U.S. person for purposes of a sale subject to section 1446(f) or for a PTP distribution. Additionally, a territory FI may agree to be treated as a U.S. person for any of these purposes.

The U.S. branch or territory FI must provide a Form W-8IMY evidencing that it is agreeing to be treated as a U.S. person.

A U.S. branch that is treated as a U.S. person is treated as such solely for purposes of determining whether a payment is subject to withholding by the branch. The branch is, for purposes of information reporting, a foreign person, and payments to such a branch must be reported on Form 1042-S.

Withholdable payment.

A withholdable payment is generally any payment of U.S. source FDAP income, subject to certain exceptions. For exceptions and additional information, see Pub. 515 and Regulations section 1.1473-1(a).

Withholding certificate.

The term “withholding certificate” refers to Form W-8 or Form W-9 in most cases.

Withholding foreign partnership (WP) or withholding foreign trust (WT).

A WP or WT is a foreign partnership or trust that has entered into a withholding agreement with the IRS in which it agrees to assume primary withholding responsibility for all payments that are made to it for its partners, beneficiaries, or owners under chapter 3 (except for sections 1445 and 1446(a) or (f)) and under chapter 4. For information on these withholding agreements, see Rev. Proc. 2017-21 at IRS.gov/irb/2017-06_IRB#RP-2017-21 and Regulations section 1.1441-5.

Interest and OID from short-term obligations.

Interest and OID from any obligation payable 183 days or less from the date of original issue are generally not required to be reported on Form 1042-S. See, however, the reporting requirements for deposit interest described in Interest on deposits paid to certain nonresident aliens in the bullet list under Amounts Subject to Reporting on Form 1042-S, earlier.

Registered obligations targeted to foreign markets.

Interest on a registered obligation that is targeted to foreign markets and that qualifies as portfolio interest is not subject to reporting if it is paid to a registered owner that is a financial institution or member of a clearing organization and you have received the required certifications.

Bearer obligations targeted to foreign markets.

Do not file Form 1042-S to report interest not subject to withholding on bearer obligations if a Form W-8 is not required.

Notional principal contract payments that are not ECI or dividend equivalents.

Do not report on Form 1042-S amounts paid on a notional principal contract, other than an SNPC, if the amounts are not effectively connected with the conduct of a trade or business in the United States. All amounts paid on an SNPC that are treated as dividend equivalents should be reported as such on Form 1042-S.

Accrued interest and OID.

Interest paid on obligations sold between interest payment dates and the part of the purchase price of an OID obligation that is sold or exchanged in a transaction other than a redemption is not subject to reporting unless the sale or exchange is part of a plan, the principal purpose of which is to avoid tax, and the withholding agent has actual knowledge or reason to know of such plan.

Certain withholdable payments.

Withholdable payments not subject to reporting for chapter 3 purposes (other than bank deposit interest paid to certain nonresident aliens) are not required to be reported if withholding is not applied (or required to be applied) under chapter 4.

Certain amounts realized.

An amount realized that is excepted from withholding under Regulations section 1.1446(f)-4(b)(3) (less than 10% effectively connected gain by partnership).

Publicly traded trusts.

In general, when a publicly traded trust makes a distribution to a foreign person attributable to the disposition of a U.S. real property interest, it must withhold tax under section 1445. However, this withholding liability is shifted to the person who pays the distribution to a foreign person (or to the account of the foreign person) if the special notice requirement of Regulations section 1.1445-8(f) and other requirements of Regulations section 1.1445-8(b)(1) are satisfied.

The amount subject to withholding for a distribution by a publicly traded trust is determined under the rules of Regulations section 1.1445-5(c)(3).

Qualified investment entities (QIEs).

Special rules apply to QIEs. A QIE is one of the following.

Look‐through rule for QIEs.

In most cases, any distribution from a QIE to a nonresident alien, foreign corporation, or other QIE that is attributable to the QIE’s gain from the sale or exchange of a U.S. real property interest is treated as gain recognized by the nonresident alien, foreign corporation, or other QIE from the sale or exchange of a U.S. real property interest.

A distribution by a QIE to a nonresident alien or foreign corporation that is treated as gain from the sale or exchange of a U.S. real property interest by the shareholder is subject to withholding at 21%.

Certain exceptions apply to the look‐through rule for distributions by QIEs. Any distribution by a QIE with respect to stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U.S. real property interest if the shareholder did not own more than 5% of that stock (or 10% of that stock in the case of REITs) at any time during the 1‐year period ending on the date of the distribution. A distribution by a REIT is generally not treated as gain from the sale or exchange of a U.S. real property interest if the shareholder is a qualified shareholder (as described in section 897(k)(3)). These distributions may be included in the shareholder's gross income as a dividend (income code 06) from the QIE, not as long‐term capital gain.

In addition, a qualified foreign pension fund or an entity all of the interests of which are held by a qualified foreign pension fund is generally not subject to the look‐through rule for distributions by QIEs for purposes of section 897(h).

Use Forms 1042‐S and 1042 to report and pay over the withheld amounts. All other withholding required under section 1445 is reported and paid over using Form 8288, U.S. Withholding Tax Return for Certain Dispositions by Foreign Persons, and Form 8288‐A.

For more information on reporting income from real property interests, see U.S. Real Property Interest in Pub. 515.

Chapter 3 withholding.

For purposes of sections 1441 and 1442, a withholding agent must withhold 30% of any payment of an amount subject to withholding under chapter 3 (defined above) 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. For more information, see Chapter 3 Responsibilities under Responsibilities of a Withholding Agent To Obtain Form W-8 in the Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY. Also see Pub. 515.

Chapter 4 withholding.

For purposes of chapter 4, 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). It also applies to withholdable payments made to certain NFFEs that fail to identify their substantial U.S. owners (or to certify that they have none) under Regulations section 1.1472-1(b). For more information, see Chapter 4 Responsibilities under Responsibilities of a Withholding Agent To Obtain Form W-8 in the Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY. Also see Pub. 515.

A payment will be subject to withholding under either chapter 3 or chapter 4 but not both. If the payment is of an amount subject to both chapter 3 and chapter 4 withholding, chapter 4 withholding takes precedence.

Step 1.

Determine if you have a Form 1042-S filing obligation. If you make a payment described under Amounts Subject to Reporting on Form 1042-S , earlier, you are required to file Form 1042-S for that payment. Note that you may have a Form 1042-S reporting obligation even if withholding is not required.

Step 2.

Determine whether the payment is:

Step 3.

Determine the chapter indicator to be entered in box 3. The chapter indicator is generally based on whether amounts were withheld (or paid by the withholding agent) under chapter 3 or chapter 4. For example, if the payment is a withholdable payment and it is subject to chapter 4 withholding (see Requirement To Withhold , earlier), enter “4” in box 3. If no withholding was required on the payment, enter “3” in box 3. For additional information, see the instructions for box 3, later.

Be sure to complete a separate Form 1042-S for:

In general.

U.S. withholding agents making payments described under Amounts Subject to Reporting on Form 1042-S , earlier, must file a separate Form 1042-S for each recipient who receives the income. Furthermore, withholding agents are not permitted to report multiple types of income on a single Form 1042-S (or substitute Form 1042-S) furnished to a recipient or on Copy A filed with the IRS. These filers must use a separate Form 1042-S (or substitute form) for information reportable on a single type of income.

See Payments Made to Persons Who Are Not Recipients, later, if the payment is made to a foreign person that is not a recipient.

In general.

For purposes of chapter 4, a QI must complete a Form 1042-S for payments withheld under chapter 4 determined in accordance with the income codes used to file Form 1042-S. A QI that is a participating FFI or registered deemed-compliant FFI may use the chapter 4 pooled reporting codes 42 through 48 to allocate payments made to its recalcitrant account holders, payees that are nonparticipating FFIs, and payees that are U.S. persons. A QI should not use chapter 4 reporting pool 49 (QI‐ Recalcitrant Pool‐General) to report its accounts but may use it to report accounts maintained by another QI. A QI that is an NFFE or an FFI treated as deemed-compliant under an applicable IGA (as described in Regulations section 1.1441-1(e)(5)(ii)(A)) may use chapter 4 reporting pool code 47 to report payments allocable to a pool of nonparticipating FFIs. A QI may also use the chapter 4 pooled reporting codes to report payments allocable to account holders, payees, or owners of another participating FFI or registered deemed-compliant FFI that is an NQI, NWP, or NWT, and it must provide its chapter 4 withholding rate pools on its withholding statement. In such case, the QI must include the NQI, NWP, or NWT as the recipient in box 13a and the applicable recipient code for such entity as the chapter 3 status code. For payments subject to chapter 3 withholding that are exempt from chapter 4 withholding and made by the QI directly to foreign beneficial owners (or that are treated as paid directly to beneficial owners), the QI may report on the basis of chapter 3 reporting pools, in most cases. A QI may not report on the basis of reporting pools in the circumstances described in Recipient-by-Recipient Reporting by QIs , later. For payments not subject to chapter 4 withholding, a QI may use a single chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) and a single chapter 3 reporting pool code 27 (withholding rate pool – general) as the chapter 3 status code for all reporting pools, except for amounts paid to foreign tax-exempt recipients for which chapter 3 reporting pool code 28 should be used. Note, however, that a QI should use recipient code 28 only for pooled account holders that have claimed an exemption based on their tax-exempt status and not some other exemption (tax treaty or other Internal Revenue Code section). If a QI uses a chapter 3 pooled reporting code (because chapter 4 withholding does not apply and the QI is not allocating the payment to a U.S. pool of payees), it should leave blank the recipient code for the chapter 4 status code.

Under the terms of its QI agreement with the IRS, a QI that is an FFI may be required to report the amounts paid to U.S. nonexempt recipients on Form 1099 or Form 8966 using the name, address, and TIN of the payee to the extent those items of information are known. These amounts must be reported on Form 1042-S if allocated to a chapter 4 withholding rate pool of U.S. payees.

A QI acting as a QDD must separately report on Forms 1042-S payments that it makes in its QDD capacity. The QI should report the name of the QDD that makes the payment as the withholding agent in box 12d (following the naming protocol used for applying to be a QDD) and should use withholding agent code 35 as the chapter 3 status code.

Similarly, if the QDD is a partnership or branch of a partnership, that QDD must separately report allocations to its partners of QDD items on Forms 1042-S, entering the name of the QDD as the withholding agent in box 12d (following the naming protocol).

A QI acting as a QDD with respect to a payment may only use chapter 3 pooled reporting codes 27 and 28.

Late filing of correct Form 1042-S.

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 penalty, based on when you file a correct Form 1042-S, is the following.

If you intentionally disregard the requirement to report correct information, the penalty per Form 1042-S is increased to the greater of $660 or 10% of the total amount of items required to be reported, with no maximum penalty.

Failure to furnish correct Form 1042-S to recipient.

If you fail to provide Forms 1042-S to recipients and cannot show reasonable cause, a penalty of up to $330 may be imposed for each failure to furnish Form 1042-S to the recipient when due. The penalty may also be imposed for failure to include all required information or for furnishing incorrect information on Form 1042-S. The maximum penalty is $3,987,000 for all failures to furnish correct recipient statements during a calendar year. If you provide the correct statement on or before August 1, reduced penalties similar to those for failing to file a correct Form 1042-S with the IRS may be imposed. See Late filing of correct Form 1042-S , earlier. If you intentionally disregard the requirement to report correct information, each $330 penalty is increased to the greater of $660 or 10% of the total amount of items required to be reported, with no maximum penalty.

Failure to file electronically.

If you are required to file electronically but fail to do so, and you do not have an approved waiver on record, penalties may apply unless you establish reasonable cause for your failure.

Chapter indicator.

If you are reporting amounts in boxes 7 through 9, enter either a “3” or “4” to indicate whether the amounts were withheld (or paid by the withholding agent) pursuant to chapter 3 or chapter 4. If you are reporting tax withheld under section 5000C, or backup withholding was applied under the presumption rules, enter “3” as if the tax were a chapter 3 tax.

Special instructions for use of chapter 3 exemption codes.

If an amount was withheld under chapter 4, you may also include a chapter 3 exemption code and tax rate in boxes 3a and 3b to show the rate that would otherwise apply as if the payment had been later determined to be exempt from withholding under chapter 4. This may be done, for example, to assist the beneficial owner in pursuing a claim for refund. In such a case, enter “4” as the chapter indicator in box 3 to show that withholding was applied under chapter 4.

Box 7a.

Enter the total amount of U.S. federal tax you actually withheld in box 7a under chapter 3 or 4. If you did not withhold any tax, enter “-0-.”

Box 7a must be completed in all cases, even if no tax has been deposited.

Box 7b.

A withholding agent that withheld tax during the calendar year and that was not required to deposit with the IRS the tax withheld during the calendar year pursuant to the escrow procedure under Regulations sections 1.1471-2(a)(5)(ii) and/or 1.1441-3(d) must check box 7b (federal tax withheld was not deposited with the IRS because escrow procedures were applied). A withholding agent reporting payments pursuant to the escrow procedure must report such payments on separate Forms 1042-S. Box 7b must only be checked when using the escrow procedures as specified above.

If you are a participating FFI or registered deemed-compliant FFI that, for chapter 4 purposes, applied the escrow procedure for dormant accounts, if the payment is also an amount subject to chapter 3 withholding and tax is withheld and deposited under chapter 3, do not check box 7b. Instead, enter “3” in box 3 and complete box 3b to report the tax withheld under chapter 3.

Box 7c.

Check box 7c if you are a partnership that received an amount subject to withholding during the 2024 calendar year (preceding year) and you are withholding on the amount includible in a foreign partner’s share after March 15 of the subsequent year (2025). Only check this box if you designated the deposit as attributable to the preceding year (2024). In such a case, the partnership will be required to report the associated income and tax withheld on Forms 1042 and 1042-S for the preceding year. If a partnership withholds on a foreign partner’s share of income after March 15 of the subsequent year, the due date for filing and furnishing the applicable Form(s) 1042-S is September 15 of the subsequent year (2025). For example, if a partnership withholds on April 1, 2025, with respect to a foreign partner’s share of undistributed income for the 2024 calendar year, the partnership may designate the deposit as made for 2024 and report the liability and tax withheld on the 2024 Form 1042 and the 2024 Form 1042-S for the partner. The partnership must also ensure that its chapter 3 status code on such forms properly reflects its status as a partnership (including as a WP). The extended deadline of September 15, 2024, is also applicable when a partnership is reporting on Form 1042-S an allocation of income made after March 15 of the subsequent year to a foreign partner for the prior year, but no withholding is required on the income. In such a case, box 7c must also be checked even if there is no withholding. For more information, see proposed regulations issued on December 18, 2018 (REG-132881-17).

Box 8.

If you are a withholding agent filing a Form 1042-S to report income that has already been subject to withholding by another withholding agent, enter the amount actually withheld by the other agent(s) in box 8.

Box 9, Overwithheld tax repaid to recipient pursuant to adjustment procedures.

This box should be completed only if you repaid a recipient under the reimbursement or set-off procedure during the 2025 calendar year in accordance with the requirements of Regulations section 1.1461-2(a)(2) or (3) (for withholding under chapter 3), or Regulations section 1.1474-2(a)(3) or (4) (for withholding under chapter 4).

If you repaid the recipient under the reimbursement or set-off procedure during the 2024 calendar year, do not complete box 9. Instead, reduce the amount of withholding reported in box 7a.

In most cases, an intermediary or flow-through entity should not enter an amount in box 9 unless it is a QI that represented on its Form W-8IMY that it is assuming primary withholding responsibility or is a WP or WT.

Box 10.

Enter in box 10 the combined amounts reported in box 7a (federal tax withheld), box 8 (tax withheld by other agents), and box 9 (overwithheld tax repaid to recipient pursuant to adjustment procedures).

Box 10 must be completed in all cases, even if no tax has been deposited.

Box 11, Tax paid by withholding agent (amounts not withheld).

Enter the total amount of tax paid by you and not withheld from the payment to the recipient. The amounts reported in box 11 should be the amounts paid by the withholding agent from its own funds rather than through withholding from the payment to the recipient. Any amount reported in this box must not be included in box 10.

Box 12e, Withholding agent's GIIN.

The GIIN provided, if any, should be the GIIN issued to the branch of, or disregarded entity owned by, the participating FFI or registered deemed-compliant FFI that is making the payment.

Box 12f, Country code.

You must enter the code (from the list at IRS.gov/CountryCodes) for the country for which you are resident under that country's tax laws. Enter “OC” (other country) only when the country of residence does not appear on the list.

Box 13a, Recipient's name.

Enter the complete name of the recipient in box 13a.

Box 13b, Recipient's country code.

You must enter the code (from the list at IRS.gov/CountryCodes) for the country of which the recipient claims residency under that country's tax laws. Enter “OC” (other country) only when the country of residence does not appear on the list or the payment is made to an international organization (for example, the United Nations). If the recipient is unknown, leave box 13b blank and enter "Unknown Recipient" in box 13a, Recipient's name. If you are making a payment to a QI, QSL, WP, or WT, or if you are a QI, QSL, WP, or WT and are making a payment to a QI, WP, or WT withholding rate pool, enter the country code of the QI, QSL, WP, or WT. Also, if you are making a payment to a participating FFI or registered deemed-compliant FFI's chapter 4 reporting pool, enter the country code of the participating FFI or registered deemed-compliant FFI or branch of or disregarded entity owned by such FFI receiving the withholdable payment and that was listed on Part II of either the Form W-8BEN-E or W-8IMY.

If exemption code 04 (exempt under tax treaty) appears in box 3a or if a reduced rate of withholding based on a tax treaty is entered in box 3b, the country code entered in box 13b must be a country with which the United States has entered into an income tax treaty.

Boxes 13c and 13d, Recipient's address.

In most cases, you must enter a foreign address in boxes 13c and 13d. However, there are limited exceptions. For example, you may enter a U.S. address when reporting payments of scholarship or fellowship grants (income code 16).

For addresses outside the United States or its commonwealths and territories, follow the foreign country's practice for entering the postal code.

For addresses within the United States, use the U.S. Postal Service two-letter abbreviation for the state name. Do not enter “United States” or “U.S.”

If you want to enter the recipient's account number, use box 13k.

Box 15f, Country code.

You must enter the country code (from the list at IRS.gov/CountryCodes) for the country where the intermediary or flow-through entity is located.

Box 15g, Intermediary or flow-through entity's foreign tax identification number.

Use box 15g to enter the intermediary or flow-through entity's identifying number used in the country of residence for tax purposes. Box 15g is optional.

Step 1.

Prepare a paper Form 1042-S.

Amended checkbox.

Enter an “X” in the “Amended” checkbox of Copies A, B, C, D, and E only if you are amending a Form 1042-S you previously filed with the IRS. You must provide statements to recipients showing the corrections as soon as possible regardless of the change to the Form 1042-S.

Step 2.

File the amended paper Form 1042-S with a Form 1042-T. See the Form 1042-T instructions for information on filing these forms.

If you fail to correct Form(s) 1042-S, you may be subject to a penalty. See Penalties, earlier.