Amounts subject to chapter 3 withholding Fixed or determinable, annual or periodical (FDAP) income; or Certain gains from the disposition of timber, coal, and iron ore, or from the sale or exchange of patents, copyrights, and similar intangible property. Amounts subject to chapter 4 withholding Beginning on July 1, 2014, a withholding agent must withhold on a payment of U.S. source FDAP income that is a withholdable payment to which an exception does not apply under chapter 4. Withholdable payment generally means a payment of U.S. source FDAP income. U.S. source FDAP income means: U.S. source FDAP income under chapter 3, as modified by chapter 4, and Certain gains from the disposition of timber, coal, and iron ore, or from the sale or exchange of patents, copyrights, and similar intangible property. Update: 2018 Proposed Regulations eliminated broker proceeds from the definition of FDAP Income in determining a withholdable payment under Chapter 4. These proposed regulations were not finalized as of January 2021. For details on the types of income that are subject to withholding and reporting, refer to the “Income Subject to Withholding” section of Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. Related Income Subject to NRA Withholding Penalties Information Reporting for Forms 1042-S and 1042-T Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax code, regulations, and official guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.
