PDF document

- 1 -

Userid: CPM Schema: instrx Leadpct: 100% Pt. size: 9 Draft Ok to Print
AH XSL/XML Fileid: … -form-1042/2024/a/xml/cycle04/source (Init. & Date) _______

Page 1 of 12 8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

2024

Instructions for Form 1042

Annual Withholding Tax Return for U.S. Source Income of Foreign Persons

Section references are to the Internal Revenue Code unless extended due date for filing a Form 1042 to claim a credit for any
otherwise noted. adjustments made to overwithholding.
Centralized partnership audit regime. Section 1101 of the
Future Developments Bipartisan Budget Act (BBA) of 2015 repealed the TEFRA
For the latest information about developments related to Form partnership procedures and the electing large partnership (ELP)
1042 and its instructions, such as legislation enacted after they provisions and replaced them with a new centralized partnership
were published, go to IRS.gov/Form1042. audit regime effective for partnership tax years beginning on or
after January 1, 2018. The new regime provides for
What's New determination, assessment, and collection of underpayments at
Administrative exemption from electronic filing. the partnership level unless certain elections are made by the
Withholding agents that are foreign persons are exempt from the partnership. Under these rules, a partnership (or a pass-through
requirement to electronically file Form 1042 for tax year 2024 partner) may be required to withhold under chapter 3 or
(filed in 2025). An electronic filing waiver request is not required chapter 4 when there has been an adjustment under the
to utilize this administrative exemption. For more information, see centralized partnership audit regime to an item of income or gain
Notice 2024-26, 2024-12 I.R.B. 713, available at IRS.gov/irb/ allocable to a foreign person (or any other person subject to
2024-12_IRB#NOT-2024-26. withholding). If the adjustment is to an amount subject to
withholding that is reportable on Form 1042, the partnership (or
Credit forward framework. While Notice 2010-46 was pass-through partner) should report the withholding on Form
obsoleted, a withholding agent who was using the credit forward 1042 for the year in which it pays the tax required to be withheld.
framework prior to September 11, 2024, may continue to use it See section 6241(9).
through December 31, 2024. No withholding agent may use the
credit forward framework after December 31, 2024. See FAQ 26 Qualified derivatives dealers (QDDs). A withholding agent
under the General Compliance section of FATCA - FAQs General that is a qualified intermediary (QI) acting as a QDD must
available at IRS.gov/FATCAFAQsGeneral. assume certain withholding and reporting responsibilities with
respect to payments made on potential section 871(m)
Reminders transactions in its QDD capacity. Form 1042 includes Section 4,
which a QI that is a QDD (or has a branch that is a QDD) must
Electronic filing. Beginning for tax year 2023 (Forms 1042 filed complete if it made any payments in its QDD capacity. For more
in 2024) electronic filing requirements apply to Form 1042. For information on the withholding and reporting requirements of a
general information about electronic filing, see Pub. 4163, QDD, see the QI agreement in Rev. Proc 2022-43, 2022-52
Modernized e-file Information for Authorized IRS e-file Providers I.R.B. 570, available at IRS.gov/irb/2022-52_IRB#REV-
for Business Returns. Also see Where and When To File, later, PROC-2022-43. See also Regulations section 1.871-15 and
for more information on the electronic filing requirements for Notice 2022-37, 2022-37 I.R.B. 234, available at IRS.gov/irb/
Form 1042. 2022-37_IRB#NOT-2022-37, as well as Notice 2024-44,
Reliance on proposed regulations reducing burden under 2024-25 I.R.B. 1737 which extends the transition relief in Notice
FATCA and chapter 3. On December 18, 2018, the IRS and 2022-37 for an additional 2 years. You can view Notice 2024-44
the Department of the Treasury issued proposed regulations (83 at IRS.gov/irb/2024-25_IRB#NOT-2024-44.
FR 64757) to reduce the burden on taxpayers of certain These instructions provide guidance to QDDs regarding the
requirements under chapters 3 and 4 of the Internal Revenue proper withholding agent status code to use when filing Form
Code. The proposed regulations provide that, under section 1042 (and Form 1042-S). See Chapter 3 and 4 status codes of
7805(b)(1)(C), taxpayers may generally rely on the proposed withholding agent, later.
regulations until final regulations are issued. Specifically, for Potential 871(m) transactions. Section 3 of Form 1042
purposes of these instructions, a withholding agent may rely on applies to payments made by a withholding agent under any
the following provisions of these proposed regulations in potential section 871(m) transaction (including payments made
connection with completing Form 1042. under notional principal contracts or other derivatives contracts
• Withholding and reporting in a subsequent year. A that reference a U.S. stock or underlying security). Any
partnership or trust that is permitted to withhold in a subsequent withholding agent making such a payment must complete
year with respect to a foreign partner's or beneficiary's share of Section 3.
income for the prior year may designate the deposit of the
withholding as attributable to the preceding year and report the Section 871(m) transition. On September 12, 2022, Notice
associated amounts on Forms 1042 and 1042-S for the 2022-37 was published announcing the Department of the
preceding year. See Foreign partners of U.S. partnerships and Treasury and the IRS intention to amend the section 871(m)
foreign beneficiaries of U.S. trusts, later. regulations to further delay the effective/applicability date of
• Adjustments to overwithholding under the certain rules in those final regulations and certain requirements
reimbursement and set-off procedures. A withholding agent of a QDD, generally through 2024. Notice 2024-44 extends the
may make adjustments to overwithholding using either the transition relief in Notice 2022-37 for an additional 2 years.
reimbursement or set-off procedure until the extended due date Schedule Q (Form 1042). If the taxpayer, or any branch of the
for filing Form 1042-S (unless the Form 1042-S has already been taxpayer, is a QDD, the taxpayer must attach to Form 1042 at
filed or furnished). Additionally, a withholding agent may use the least one Schedule Q (Form 1042), Tax Liability of Qualified

Instructions for Form 1042 (2024) Catalog Number 54843T
Oct 17, 2024 Department of the Treasury Internal Revenue Service www.irs.gov

- 2 -

Enlarge image

Page 2 of 12 Fileid: … -form-1042/2024/a/xml/cycle04/source 8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Derivatives Dealer (QDD), for each QDD. See the Schedule Q which chapter 4 withholding applies) or an amount subject to
(Form 1042) for additional information. withholding, must file an annual return for the preceding calendar
year on Form 1042 unless an exception to filing applies. Also,
Chapter 3 and 4 status codes. The chapter 3 and 4 status
any PTP or nominee making a distribution of ECTI under section
codes of withholding agents are required regardless of the types
1446, or any entity required to report a distribution on Form
of payments reported on this form.
1042-S that is subject to withholding under section 1445, must
file Form 1042 for the preceding calendar year.
General Instructions You must file Form 1042 if any of the following apply.
• You are required to file or otherwise file Form(s) 1042-S for
Purpose of Form purposes of either chapter 3 or 4 (whether or not any tax was
Use Form 1042 to report the following. withheld or was required to be withheld to the extent reporting is
• The tax withheld under chapter 3 (excluding withholding required). File Form 1042 even if you file Form(s) 1042-S
under sections 1445 and 1446 except as indicated below) on electronically.
certain income of foreign persons, including nonresident aliens, • You file Form(s) 1042-S to report to a recipient tax withheld by
foreign partnerships, foreign corporations, foreign estates, and your withholding agent.
foreign trusts. • You pay gross investment income to foreign private
• The tax withheld under chapter 4 on withholdable payments. foundations that are subject to tax under section 4948(a).
For the withholding requirements of chapter 4, see Regulations • You pay any foreign person specified federal procurement
sections 1.1471-2(a), 1.1471-4(b), and 1.1472-1(a). payments that are subject to withholding under section 5000C.
• The tax withheld pursuant to section 5000C on specified • You pay an eligible deferred compensation item to a covered
federal procurement payments. expatriate or you are a trustee making a distribution from a
• The tax withheld under section 877A on payments of eligible nongrantor trust to a covered expatriate under section 877A.
deferred compensation items or distributions from nongrantor • You are a QI, withholding foreign partnership (WP),
trusts to a covered expatriate. withholding foreign trust (WT), participating foreign financial
• Payments that are reported on Form 1042-S under chapter 3 institution (FFI), or reporting Model 1 FFI making a claim for a
or 4. See Regulations section 1.1474-1(d)(2)(i) for the definition collective refund under your respective agreement with the IRS.
of a chapter 4 reportable amount (which are amounts required to See Regulations section 1.1471-1(b)(114) for the definition of a
be reported on Form 1042-S for chapter 4 purposes) and reporting Model 1 FFI.
Regulations section 1.1461-1(c)(2) for amounts subject to
reporting for chapter 3 purposes. Withholding Agent
Certain distributions subject to section 1445 withholding A withholding agent is a U.S. or foreign person that has control,
tax. Publicly traded trusts, real estate investment trusts (REITs), receipt, custody, disposal, or payment of any item of income of a
and regulated investment companies that are qualified foreign person that is subject to withholding. A withholding agent
investment entities (as defined under section 897(h)(4)) must may be an individual, trust, estate, partnership, corporation,
withhold section 1445 tax on certain distributions and report nominee, government agency, association, or tax-exempt
such amounts on Form 1042. For more information, see foundation, whether domestic or foreign. For purposes of
Regulations section 1.1445-8 and the Instructions for Form chapter 4, a withholding agent includes a participating FFI (PFFI)
1042-S. or registered deemed-compliant FFI (RDCFFI) to the extent such
FFI is required to withhold tax. See Regulations section
Publicly traded partnerships (section 1446 withholding 1.1473-1(d) for the definition of a withholding agent for purposes
tax). For purposes of reporting on Form 1042, a publicly traded of chapter 4.
partnership (PTP) must withhold section 1446(a) tax on
distributions of effectively connected taxable income (ECTI) or Liability for tax. As a withholding agent, you are personally
amounts realized on distributions for section 1446(f) purposes liable for any tax required to be withheld as well as interest and
made to its foreign partners. A nominee that receives a any applicable penalties. A withholding agent acting through an
distribution of ECTI from a PTP and is treated as the withholding agent is liable for any failure of the agent to deposit any tax
agent for section 1446 purposes must use Form 1042 to report required to be withheld and deposited even if the agent is also a
the tax withheld. For purposes of section 1446(f), starting for the withholding agent and is itself separately liable for the failure to
2023 year a broker is generally required to withhold on an comply with the provisions of chapter 3 or 4.
amount realized from the sale of a PTP interest that it effects for For purposes of chapter 3, if you fail to withhold and the
a foreign person that is the transferor of the interest. Absent an foreign payee fails to satisfy its U.S. tax liability, then both you
applicable exception to the withholding, a broker is required to and the foreign person are liable for tax, as well as interest and
withhold at a 10% rate on the amount realized and report the any applicable penalties. The applicable tax will be collected
amount realized and withholding on Forms 1042 and 1042-S. only once. If the foreign person satisfies its U.S. tax liability, you
See Regulations section 1.1461-1(c)(2)(i)(Q) and (R) for further are not liable for the tax but remain liable for any interest and
information on this reporting. A broker is also required to penalties for failure to withhold.
withhold under section 1446(f) on an amount realized on a PTP
distribution. For this purpose, a nominee is a person that holds Intermediary
an interest in the PTP on behalf of one or more foreign partners An intermediary is a person who acts as a custodian, broker,
and that is a domestic person, a QI that assumes primary nominee, or otherwise as an agent for another person,
responsibility for the distribution, or a U.S. branch of a foreign regardless of whether that other person is the beneficial owner of
person that agrees to be treated as a U.S. person. For more the amount paid, a flow-through entity, or another intermediary.
information, see Regulations sections 1.1446-4 and 1.1446(f)-4,
the QI agreement in Rev. Proc. 2022-43, and Pub. 515, QI. A QI is a foreign intermediary (or a QDD) that is a party to a
Withholding of Tax on Nonresident Aliens and Foreign Entities. QI agreement with the IRS described in Regulations section
1.1441-1(e)(5)(iii) or (e)(6). For information on the QI agreement,
Who Must File see IRS.gov/Businesses/Corporations/Qualified-Intermediary-
Every withholding agent or intermediary who receives, controls, System.
has custody of, disposes of, or pays a withholdable payment (to

2 Instructions for Form 1042 (2024)

- 3 -

Enlarge image

Page 3 of 12 Fileid: … -form-1042/2024/a/xml/cycle04/source 8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

WP or WT. A WP or WT is a foreign partnership or trust that has Nonparticipating FFI. A nonparticipating FFI is an FFI that is
entered into a withholding agreement with the IRS described in not a PFFI, deemed-compliant FFI, or exempt beneficial owner.
Regulations section 1.1441-5(c)(2) and (e)(5) in which it agrees
Recalcitrant account holder. Generally, a recalcitrant account
to assume primary withholding responsibility under chapters 3
holder is an account holder of a participating or
and 4 for all payments that are made to it for its direct partners,
deemed-compliant FFI that failed to provide the documentation
beneficiaries, or owners.
required under chapter 4 to determine the account holder’s
Nonqualified intermediary (NQI). An NQI is any intermediary status or to enable the FFI to report the account as a U.S.
that is not a U.S. person and that is not a QI. account. See Regulations section 1.1471-5(g).
Nonwithholding foreign partnership (NWP). An NWP is a Passive nonfinancial foreign entity (NFFE). A passive NFFE
foreign partnership that is not a WP. is a nonfinancial foreign entity other than an excepted NFFE,
including a WP, WT, QI, or direct reporting NFFE. See
Nonwithholding foreign trust (NWT). An NWT is a foreign Regulations sections 1.1471-1(b)(80) and 1.1472-1(b).
trust that is not a WT.
For chapter 4 purposes, an intermediary must provide its
QDD. A QDD is a QI that is an eligible entity that agrees to ! chapter 4 status to a withholding agent to determine
assume the requirements of a QDD and the other requirements CAUTION whether withholding applies to the payment. Thus, a
in the QI agreement. Any applicable home office or branch that chapter 4 status must be provided for a withholdable payment
seeks to be a QDD must qualify and be approved for QDD made to a foreign entity.
status. A QDD must document itself to a withholding agent with a
Form W-8 IMY, Certificate of Foreign Intermediary, Foreign Flow-
Through Entity, or Certain U.S. Branches for United States Tax Where and When To File
Withholding and Reporting, indicating that it is acting as a QDD Paper filing. Mail Form 1042 by March 17, 2025, to:
for payments with respect to potential section 871(m)
transactions and underlying securities that it receives in a Internal Revenue Service
principal capacity, separately identify the home office or branch P.O. Box 409101
as the recipient on a withholding statement (if necessary), and Ogden, UT 84409
indicate on the form that it will assume primary chapters 3 and 4
withholding responsibilities and primary Form 1099 reporting
and backup withholding responsibilities for certain payments it Electronic filing. Electronic filing of Form 1042 is required for
makes and receives as a QDD, as well as including any other tax year 2024, for a withholding agent that is a financial
information required by the QI agreement. See Regulations institution. Otherwise, electronic filing of Form 1042 is required
section 1.1441-1(e)(6) and the QI agreement in Rev. Proc. for a withholding agent that is required to file 10 or more
2022-43 for more information. See also Notice 2022-37 and information returns, as described in Regulations section
Notice 2024-44, described in Section 871(m) transition, earlier. 301.6011-2, during the year or that is a partnership with more
than 100 partners. However, see Notice 2024-26, which provides
Qualified securities lender (QSL). A QSL is an FFI that is a withholding agents that are foreign persons (including foreign
bank, custodian, broker-dealer, or clearing organization subject financial institutions) with an administrative exemption from the
to regulatory supervision in its home jurisdiction and that is: requirements to electronically file Forms 1042 required to be filed
1. Regularly engaged in the business of borrowing securities in calendar year 2025 (tax year 2024). For general information
of U.S. corporations and lending such securities to unrelated about electronic filing, see Pub. 4163, Modernized e-file
customers; and Information for Authorized IRS e-file Providers for Business
Returns.
2. Subject to audit by the IRS under section 7602 or, in the
case of a QI, an external auditor. Extension of time to file. If you need more time to file Form
1042, you may submit Form 7004, Application for Automatic
For further information about requirements for QSL status and Extension of Time To File Certain Business Income Tax,
the withholding requirements for substitute dividend payments, Information, and Other Returns.
see Notice 2010-46, 2010-24 I.R.B. 757, available at IRS.gov/irb/
2010-24_IRB#NOT-2010-46. While Notice 2010-46 is obsoleted, Form 7004 does not extend the time for payment of tax.
an entity may claim QSL status and be treated as a recipient for
substitute dividend payments made before January 1, 2027. See Additional Information
Notice 2022-37 and Notice 2024-44. For details on the withholding of tax, see Pub. 515, available at
IRS.gov/Pub515.
FFI. An FFI is a foreign entity described in Regulations section
1.1471-5(d). Need Assistance?
RDCFFI. A RDCFFI (as defined in Regulations section If you need help completing Form 1042, call 267-941-1000 (not a
1.1471-5(f)(1)) is an FFI that is deemed to satisfy the toll-free number) from 6:00 a.m. to 11:00 p.m. Eastern time or
requirements of section 1471(b). This includes a reporting Model write to:
1 FFI or branch of an FFI that is a reporting Model 1 FFI (see
Regulations section 1.1471-1(b)(114) for the definition of a Internal Revenue Service
reporting Model 1 FFI). International Accounts
Philadelphia, PA 19255-0725
PFFI. A PFFI is an FFI that has agreed to satisfy the obligations
of an FFI agreement under chapter 4 with respect to all of its
branches of the FFI, other than a branch that is a reporting
Model 1 FFI or a U.S. branch. This includes a reporting Model 2
FFI (that has entered into an FFI agreement with respect to a
branch) and a QI branch of a U.S. financial institution unless
such branch is a reporting Model 1 FFI.

Instructions for Form 1042 (2024) 3

- 4 -

Enlarge image

Page 4 of 12 Fileid: … -form-1042/2024/a/xml/cycle04/source 8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

under rule 1, earlier, carry over any end-of-the-month balance of
Income Tax Withholding on Wages, less than $2,000 to the next month. If you make a deposit of
Pensions, Annuities, and Certain $2,000 or more during December, any end-of-December
balance of less than $2,000 should be remitted with your Form
Other Deferred Income 1042 by March 17, 2025.
Use Form 941, Employer’s Quarterly Federal Tax Return, to 3. If at the end of a calendar year the total amount of
report income tax withheld and social security and Medicare undeposited taxes is less than $200, you may either pay the
taxes on wages paid to a nonresident alien employee. taxes with your Form 1042 or deposit the entire amount by
Payments of pensions, annuities, and certain other deferred March 17, 2025.
income paid to a foreign person are subject to withholding under
Electronic deposit requirement. You must make electronic
section 1441 (rather than section 3405). Report these payments
deposits of all depository tax liabilities using EFTPS. If you fail to
on Forms 1042 and 1042-S.
use EFTPS, you may be subject to a 10% penalty. To enroll in or
Use Schedule H (Form 1040), Household Employment Taxes, get more information about EFTPS, call 800-555-4477 or go to
to report income tax withheld and social security and Medicare EFTPS.gov. To contact EFTPS using Telecommunications Relay
taxes on wages paid to a nonresident alien household employee. Services (TRS) for people who are deaf, hard of hearing, or have
a speech disability, dial 711 and then provide the TRS assistant
Election To Withhold Under Section the 800-555-4477 number above or 800-733-4829.
Depositing on time. For deposits made by EFTPS to be on
3406 time, you must submit the deposit by 8 p.m. Eastern time the day
If you are a PFFI that has made an election to withhold under before the date the deposit is due. If you use a third party to
section 3406 instead of withholding under chapter 4, use Form make deposits on your behalf, they may have different cutoff
945, Annual Return of Withheld Federal Income Tax, to report times.
tax withheld on a withholdable payment that is also a reportable
payment made to any of your recalcitrant account holders that Same-day wire payment option. If you fail to initiate a deposit
are also U.S. nonexempt recipients subject to backup transaction on EFTPS by 8 p.m. Eastern time the day before the
withholding. Also, use Form 945 to report tax withheld on a date a deposit is due, you can still make your deposit on time by
withholdable payment that is also a reportable payment made to using the Federal Tax Collection Service (FTCS). If you ever
recalcitrant account holders of a PFFI or RDCFFI that is an NQI, need the same-day wire payment method, you will need to make
NWP, or NWT, or a QI that elects to be withheld upon under arrangements with your financial institution ahead of time. Check
section 1471(b)(3), and from whom you received a withholding with your financial institution regarding availability, deadlines,
statement that indicates that such FFI has elected for and costs. Your financial institution may charge you a fee for
withholding under section 3406 to apply instead of withholding payments made this way. To learn more about the information
under chapter 4 with respect to one or more recalcitrant account you will need to provide to your financial institution to make a
holders. See Regulations sections 1.1471-4(b) and 1.1474-1(d) same-day wire payment, go to IRS.gov/SameDayWire to
(4)(i)(B). A withholding QI, WP, or WT that is an FFI should also download the Same-Day Taxpayer Worksheet.
use Form 945 if it elects to withhold under section 3406 on
withholdable payments made to certain recalcitrant account Note. All payments should be made in U.S. dollars.
holders. Escrow procedure. See the instructions for Lines 1 through 60,
later, if you are using the escrow procedure under Regulations
Deposit Requirements section 1.1471-2(a)(5)(ii) or 1.1441-3(d) (and are not depositing
You are required to use the Electronic Federal Tax Payment the amount of tax withheld with the IRS during the year). Under
System (EFTPS), discussed later, to deposit the tax withheld Regulations section 1.1471-2(a)(5)(ii) or 1.1441-3(d), if a
and required to be shown on Form 1042 (regardless of whether withholding agent is not able to determine the portion of a
withholding was applied under chapter 3 or 4 or with respect to a payment subject to withholding (for example, because it is
specified federal procurement payment). unable to determine the source of the income at the time of the
payment), a withholding agent can follow the escrow procedures
To avoid a penalty, do not mail your deposits directly to by withholding 30% on the entire payment and depositing the
! the IRS. amount withheld in an escrow account instead of depositing
CAUTION
such amounts with the IRS. With respect to such payment, the
The amount of tax you are required to withhold determines withholding will be due the earlier of the date a determination is
the frequency of your deposits. The following rules explain how made with respect to the amount subject to withholding or 1 year
often deposits must be made. from the date the amount is placed in escrow. To the extent that
withholding is not required, the escrowed amount must be repaid
Note. If you are requesting an extension of time to file using to the payee. Note that generally an amount placed in escrow
Form 7004, follow these rules to see if you must make a deposit during 1 calendar year will be reported on a Form 1042 the
of any balance due or if you can pay it with Form 7004. See Form following year. See the instructions for Lines 1 through 60, later,
7004 and its instructions for more information. if you are using the escrow procedures and are not depositing
the amount of tax withheld with the IRS during the year.
1. If at the end of any quarter-monthly period the total
amount of undeposited taxes is $2,000 or more, you must Deposits made during subsequent year. If you are making a
deposit the taxes within 3 business days after the end of the deposit of tax withheld in the year following the calendar year in
quarter-monthly period. (A quarter-monthly period ends on the which the related payment was made (to the extent permitted
7th, 15th, 22nd, and last day of the month.) A business day is under an applicable regulation section in chapter 3 or 4), you
any day other than a Saturday, Sunday, or legal holiday in the must designate the deposit at the time that it is made as
District of Columbia. attributable to the calendar year in which the payment was
2. If at the end of any month the total amount of undeposited made. In such a case, you should report the tax paid on line 65b.
taxes is at least $200 but less than $2,000, you must deposit the For example, if a REIT declares a dividend to shareholders of
taxes within 15 days after the end of the month. If you make a record in October, November, or December of 2024, but pays the
deposit of $2,000 or more during any month except December dividend in January of 2025, under section 857(b)(9), the

4 Instructions for Form 1042 (2024)

- 5 -

Enlarge image

Page 5 of 12 Fileid: … -form-1042/2024/a/xml/cycle04/source 8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

dividend is treated as having been paid by the REIT and • The sum of the monthly totals in Section 1 (lines 5, 10, 15, 20,
received by each shareholder on December 31, 2024. If the 25, 30, 35, 40, 45, 50, 55, and 60) must match the amount of
REIT chooses to withhold when it pays the dividend in January total tax liability reported on lines 64b, 64c, and 64d.
of 2025 (pursuant to the procedures for adjusting • Do not include amounts reported as adjustments on line 64a
underwithholding in Regulations section 1.1461-2(b) or in the Record of Federal Tax Liability (lines 1 through 60).
1.1474-2(b)), it should report the liability with respect to the • You must designate the tax liability as either a chapter 3 tax
distribution on its 2024 Form 1042 and should designate the liability or a chapter 4 tax liability. Report the portion of the tax
deposit of such tax as being made for 2024 (if the deposit is liability for the calendar year that is a chapter 3 tax liability on
made by March 17, 2025). line 64b. Report the portion of the tax liability for the calendar
Additionally, under proposed regulations (83 FR 64757), a year that is a chapter 4 tax liability on line 64c.
partnership or trust that is permitted to withhold in a subsequent • You must complete Section 2, Reconciliation of Payments of
year with respect to a foreign partner's or beneficiary's share of U.S. Source FDAP Income. Section 2 must be completed even if
income may designate the deposits of the withholding as you have not withheld any amounts under chapter 4.
attributable to the preceding calendar year. See Foreign partners
of U.S. partnerships and foreign beneficiaries of U.S. trusts, later.
Specific Instructions
Interest and Penalties File only one Form 1042 consolidating all Form 1042-S
If you file Form 1042 late, or fail to pay or deposit the tax when ! recipient information for both chapter 3 and 4 purposes
due, you may be liable for penalties and interest unless you can CAUTION regardless of the number of different clients, branches,
show that the failure to file or pay was due to reasonable cause divisions, or types of income for which you are the withholding
and not willful neglect. agent. However, if you are acting in more than one capacity (for
You do not have to figure the amount of any interest or example, you are acting as a QI for certain designated accounts
TIP penalties you may owe. Because figuring these amounts and as an NQI for other accounts), file a separate Form 1042 for
can be complicated, the IRS will do it for you and send each capacity in which you are acting.
you a bill for any amount due.
A U.S. branch of a PFFI that is required to report amounts
If you include interest or penalties with your payment, identify under chapter 4 must file a separate Form 1042.
and enter the amount in the bottom margin of Form 1042. Do not Rounding off to whole dollars. You must round off cents to
include interest or penalties in the balance due on line 69. whole dollars. To round off amounts to the nearest dollar, drop
Interest. Interest is charged on taxes not paid by the due date, amounts under 50 cents and increase amounts from 50 to 99
even if an extension of time to file is granted. Interest is also cents to the next dollar. For example, $1.39 becomes $1 and
charged on penalties imposed for failure to file, negligence, $2.50 becomes $3. If you have to add two or more amounts to
fraud, and substantial understatements of tax from the due date figure the amount to enter on a line, include cents when adding
(including extensions) to the date of payment. Interest is figured and only round off the total.
at a rate determined under section 6621. Employer identification number (EIN). You are required to
Late filing of Form 1042. The penalty for not filing Form 1042 enter your EIN. If you are filing Form 1042 as a QI, WP, or WT,
when due (including extensions) is 5% of the unpaid tax for each enter your QI-EIN, WP-EIN, or WT-EIN.
month or part of a month the return is late, up to a maximum of If you are a QSL that is also a QI, enter your QI-EIN.
25% of the unpaid tax. Otherwise, enter the EIN you have been assigned.
Late payment of tax. The penalty for not paying tax when due If you are, for chapter 4 purposes, a PFFI or other financial
is usually one-half of 1% of the unpaid tax for each month or part institution that has been issued a global intermediary
of a month the tax is unpaid. The penalty cannot exceed 25% of identification number (GIIN) for chapter 4 reporting purposes,
the unpaid tax. you must nevertheless get an EIN to file Form 1042 (or use your
existing EIN, such as a QI-EIN in the case of a QI if filing in such
Other penalties. Penalties may be imposed for negligence, capacity).
substantial understatement of tax, and fraud. See sections 6662
If you are a PFFI or other financial institution filing this form on
and 6663.
behalf of a branch other than your U.S. branch, you cannot use
Avoid Common Errors the EIN of the U.S. branch to file this form and you must get a
separate EIN to file this form on behalf of all your branches other
To ensure that your Form 1042 can be correctly processed, be than your U.S. branch.
sure that you do the following.
• Carefully read the information provided in Pub. 515 and these If you do not have an EIN go to IRS.gov/Businesses/Small-
instructions. Businesses-Self-Employed/How-to-Apply-for-an-EIN for
• Complete all required information for the withholding agent information on how to apply. File amended Forms 1042-S when
including the withholding agent’s name, address, chapter 3 and you receive your EIN.
chapter 4 status codes, and the EIN, QI-EIN, WP-EIN, or To get a QI-EIN, WP-EIN, or WT-EIN, submit Form SS-4,
WT-EIN. Note that you must include the withholding Application for Employer Identification Number with your
agent’s chapter 3 and chapter 4 status codes regardless of application for that status. Do not send an application for a
the types of payments being reported on Form 1042. QI-EIN, WP-EIN, or WT-EIN to the addresses listed in the
• Ensure that the correct EIN is provided. If you are filing Form Instructions for Form SS-4. Send the application along with Form
1042 as a QI, WP, or WT, enter your QI-EIN, WP-EIN, or WT- SS-4 to:
EIN.
• Lines 1 through 60, Record of Federal Tax Liability, must show Internal Revenue Service
the federal tax liability for payments made during the applicable LB&I: International: QI Group 1031
quarter-monthly period. This section reports the tax liability, not 290 Broadway, 12th floor
the tax deposited by the withholding agent. New York, NY 10007-1867 USA

Instructions for Form 1042 (2024) 5

- 6 -

Enlarge image

Page 6 of 12 Fileid: … -form-1042/2024/a/xml/cycle04/source 8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Address. Include the suite, room, or other unit number after the Withholding and depositing of tax is not required under
street address. If your post office does not deliver mail to the ! both chapters 3 and 4 for the same payment. In the case
street address and you have a P.O. box, show the box number CAUTION of a payment for which withholding is required under
instead of the street address. chapters 3 and 4, a withholding agent may credit the withholding
applied under chapter 4 against its liability for any tax due under
Chapter 3 and 4 status codes of withholding agent. Enter section 1441, 1442, or 1443. For a payment subject to
your chapter 3 and chapter 4 status codes from the list of “Type withholding under section 1445 or 1446, withholding under
of Recipient, Withholding Agent, Payer, or Intermediary Code” on chapter 4 does not apply.
Form 1042-S. You must enter both a chapter 3 and a chapter 4
withholding agent status code regardless of the type of payment Foreign partners of U.S. partnerships and foreign benefi-
being made. See pages 2 and 3 of these Form 1042 instructions ciaries of U.S. trusts. To the extent that a domestic partnership
for definitions of intermediary qualified intermediary (QI), , has not distributed a foreign partner's distributive share of
withholding foreign partnership (WP) withholding foreign trust , income subject to withholding under section 1441, 1442, or
(WT) nonqualified intermediary (NQI) qualified securities lender , , 1443, or under chapter 4, it should not include any tax liability on
(QSL) participating FFI (PFFI), , and registered lines 1 through 60 for tax relating to the partner's distributive
deemed-compliant FFI (RDCFFI). See the Form 1042-S share in the year the partnership earns the income, subject to
instructions for definitions of U.S. branch of a PFFI or RDCFFI Regulations section 1.1441-2(e)(7) for certain amounts with
treated as a U.S. person, territory financial institution (FI) treated respect to section 871(m) transactions and the rule for QDDs in
as a U.S. person, and flow-through entity. the QI agreement. For distributive shares not actually distributed,
Withholding agents should use the applicable code that the partnership must include any tax liability on lines 1 through
60 of the Form 1042 for the following year. Include the tax liability
! is most specific to your status (for example, chapter 3 on the line that represents the earlier of the following dates.
CAUTION status code 12 (qualified intermediary)).
• The date on which the Schedule K-1 (Form 1065), Partner's
Withholding agents are to use specified chapter 4 status Share of Income, Deductions, Credits, etc., is sent or otherwise
codes on Forms 1042-S for payments made. See the 2024 furnished to the foreign partner.
Instructions for Form 1042-S. A U.S. financial institution should • The due date for furnishing Schedule K-1 (Form 1065) to the
continue to use its own withholding agent chapter 4 status code partner.
(code 01) for purposes of completing Form 1042 if there are any Include such tax liability for the period that includes the date
payments made by the U.S. home office reflected on the form. the tax was required to be withheld. See Regulations section
Otherwise, use chapter 4 status code 50 (U.S. withholding 1.1441-5(b)(2)(i)(A).
agent—foreign branch of FI) unless a more specific status code A domestic trust should report on lines 1 through 60 in the
applies (for example, chapter 4 status code 07 (registered same manner as a U.S. partnership to the extent that it is
deemed-compliant FFI—reporting Model 1 FFI)). required to distribute, but has not actually distributed, a foreign
A QI that is a QDD should use the withholding agent chapter 3 beneficiary's share of distributable net income subject to
status code for a QI (code 12) for purposes of filing its Form withholding under section 1441, 1442, or 1443, or under
1042, regardless of the types of payments it made for the chapter 4, before the date (without extensions) on which the
calendar year. However, a QI that is a QDD should use the income is required to be reported on Form 1042-S. See
withholding agent chapter 3 status code for a QDD (code 35) for Regulations section 1.1441-5(b)(2)(ii).
purposes of reporting on Form 1042-S a payment that it made in Example. In 2024, USP, a U.S. partnership, has foreign
its capacity as a QDD. partners that are individuals and for which it has obtained valid
documentation to establish their foreign status. The withholding
Section 1. Record of Federal Tax tax under section 1441 relating to the distributive shares of the
foreign partners was $120. USP made no distributions in 2024.
Liability On the 2024 Form 1042, USP did not enter any amount as tax
Lines 1 through 60. Except as otherwise provided in these liability on lines 1 through 60 because it did not distribute any
instructions, include the tax liability for the period in which the amounts.
income was paid or distributed regardless of whether the liability USP made a distribution on February 11, 2025, that related to
is under chapter 3 or chapter 4 and regardless of whether the the 2024 distributive shares of the foreign partners. USP
liability was satisfied through withholding or was paid by the withheld $100 at the time of the distribution. USP sent the 2024
withholding agent (see the instructions for box 11 of Form Schedules K-1 (Form 1065) to its partners on April 2, 2025.
1042-S). Do not enter any negative amounts on these lines. If On the 2025 Form 1042, USP entered $100 on line 7. This is
you are required to report a reduction to liability on line 59 the tax liability for the period (February 8 through 15) during
(because you made a repayment under the reimbursement or which it made a distribution. USP entered $20 on line 16. This is
set-off procedure), and this results in a negative amount of tax the tax liability for the period (April 1 through 7) during which it
liability for the period corresponding to line 59, you should furnished the Schedules K-1 (Form 1065) to the partners.
instead report any negative amount for the next earlier period(s)
so that you are not reporting any negative amounts on lines 1 For other than a PTP, use Form 8804, Annual Return for
through 60. See Adjustment for Overwithholding, later. TIP Partnership Withholding Tax (Section 1446), to report
withholding tax liability on the partnership's income
Lines 1 through 60 must show the withholding agent’s effectively connected with a U.S. trade or business.
! record of federal tax liability for payments made during
CAUTION the applicable quarter-monthly period. Withholding
agents should report the tax liability for each period, rather than Note. For rules that apply to withholding on section 871(m)
the amount of tax actually deposited with the IRS. As such, the transactions, see Regulations section 1.1441-2(e). For rules that
sum of lines 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, and 60 apply to withholding by QDDs, see the QI agreement.
should be reported on lines 64b through 64d, as applicable Withholding and reporting in a subsequent year.
(see the instructions for lines 64b through 64d, later). Proposed regulations issued on December 18, 2018 (83 FR
64757) would allow partnerships or trusts that are permitted to
withhold in a subsequent year with respect to a foreign partner's

6 Instructions for Form 1042 (2024)

- 7 -

Enlarge image

Page 7 of 12 Fileid: … -form-1042/2024/a/xml/cycle04/source 8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

or beneficiary's share of income for the prior year to designate Report all other amounts on the line that corresponds with the
the deposit of the withholding as attributable to the preceding date the liability was incurred.
year. In such a case, the partnership or trust will be required to
report the associated amount and tax withheld on Forms 1042 Note. Reporting on line 59 as described above also applies to
and 1042-S for the preceding year. If a partnership withholds on any other entity that reports on Form 1042 to the extent such
a foreign partner's share of income after March 15 of the entity claims a credit on line 67 for amounts withheld by another
subsequent year, the due date for filing the applicable Form(s) withholding agent (whether under chapter 3 or 4).
1042-S is September 15 of the subsequent year. For example, if Adjustments to withholding. If you used procedures for
a partnership withholds on April 1, 2025, with respect to a foreign adjusting overwithholding or underwithholding, see Adjustment
partner's share of undistributed income for the 2024 calendar for Overwithholding and Adjustment for Underwithholding, later,
year, the partnership may designate the deposit as made for for instructions on reporting on lines 1 through 60.
2024 and report the liability and tax withheld on the 2024 Form
1042 and the 2024 Form 1042-S for the partner. The partnership Escrow procedure. A withholding agent that withheld tax
or trust must also ensure that its chapter 3 status code properly during calendar year 2024 and that was not required to deposit
reflects its status as a partnership or trust (including as a WP or with the IRS the amount of tax withheld during calendar year
WT). The associated liability should be reported on line 59, with 2024 pursuant to the escrow procedure under Regulations
the share of income to the partner or beneficiary reported on section 1.1471-2(a)(5)(ii) or 1.1441-3(d) should not report such
line 62, and the amount withheld reported on line 65b. amount as a liability on lines 1 through 60 or lines 64a through
64d and should not report such amount as withheld on lines 63a
Note. Reporting in the preceding year is also permitted when a through 63d. An amount held in escrow is required to be
partnership or trust allocates a share of income allocable to a reported on the future calendar year return for the year in which
partner or beneficiary attributable to the preceding year that was the withholding agent is required to deposit the amount of tax
not distributed during that year, provided that the partnership with the IRS.
meets the previously referenced due date of September 15, Withholding after the time of payment. In limited cases, the
2025, for the applicable Form(s) 1042-S. regulations under chapters 3 and 4 allow you to withhold after
Note. A U.S. partnership or trust may rely on the proposed the time that a payment has been made. In such a case, you
regulations for 2024 in lieu of the reporting described earlier. See should include the tax liability for the period in which you actually
Foreign partners of U.S. partnerships and foreign beneficiaries of withheld with respect to the payment. If you withheld in the year
U.S. trusts, earlier. The proposed regulations may also be following the calendar year in which the payment was made,
applied by a foreign partnership or trust that itself withholds as include the tax liability relating to the payment on line 59 for the
described above. year you made the payment. For example, if a deemed
distribution under section 305(c) is made on August 15, 2024,
Note. For rules that apply for WPs and WTs, see Rev. Proc. but you are not required to withhold with respect to the deemed
2017-21, 2017-6 I.R.B. 791, available at IRS.gov/irb/ distribution until a subsequent payment of interest is made on
2017-06_IRB#RP-2017-21. February 15, 2025 (see Proposed Regulations section
1.1441-2(d)(4)), report the tax liability related to the deemed
Corporate distributions. Do not include on lines 1 through 60 distribution on line 59.
any tax liability caused by adjustments of underwithheld tax on
corporate distributions made in calendar year 2024 if the You should report on line 63c(2) the amounts you withheld in
the following calendar year in which the payment was made. You
following apply.
should also report deposits of amounts withheld in the year
• The distributing corporation made a reasonable estimate of
following the calendar year in which the payment was made on
accumulated and current earnings and profits under Regulations
line 65b.
section 1.1441-3(c)(2)(ii)(A) or 1.1474-6(c)(2)(ii).
• The distributing corporation or intermediary immediately paid Line 61. Enter the number of Forms 1042-S filed on paper and
over the underwithheld tax by March 17, 2025. electronically.
Instead, include these payments of underwithheld tax on
line 64a. Total Gross Amounts Reported
Excise tax on specified federal procurement payments. Lines 62a through 62c. Enter the amounts reported on all
Section 5000C imposes a 2% tax on any foreign person that Forms 1042-S for the calendar year (regardless of whether the
receives a specified federal procurement payment. Include on form was filed electronically or on paper) and for all Forms 1000,
lines 1 through 60 any withholding obligation under section Ownership Certificate.
5000C with respect to specified federal procurement payments. Be sure to reconcile amounts on Form 1042 with
Report the amount on the line that corresponds with the date the ! amounts on Forms 1042-S (including Forms 1042-S filed
deposit was due. CAUTION electronically) to avoid unnecessary correspondence
Specified federal procurement payment. A specified with the IRS.
federal procurement payment means any payment made
pursuant to a contract with the U.S. Government entered into Line 62a. The amount on line 62a should equal the sum of all
after January 1, 2011, for the provision of goods, if such goods amounts shown in box 2 of Form 1042-S that are payments of
are manufactured or produced in any country which is not a U.S. source Fixed, Determinable, Annual, or Periodical (FDAP)
party to an international procurement agreement with the United income, less the sum of all amounts that are U.S. source
States, or the provision of services, if such services are provided substitute payments reported on line 62b.
in any country which is not a party to an international Line 62b. The amount on:
procurement agreement with the United States. • Line 62b(1) should equal the sum of all amounts shown in
box 2 of Form 1042-S that are U.S. source substitute dividend
QIs with no primary chapters 3 and 4 withholding respon- payments; and
sibility. If you are a QI that did not assume primary withholding • The amount shown on line 62b(2) should equal all amounts
responsibility under both chapters 3 (including sections 1446(a) shown in box 2 of Form 1042-S that are U.S. source substitute
and (f)) and 4, enter the total amount of the tax liability of U.S. payments other than substitute dividend payments.
withholding agent(s) under both chapters 3 and 4 on line 59.

Instructions for Form 1042 (2024) 7

- 8 -

Enlarge image

Page 8 of 12 Fileid: … -form-1042/2024/a/xml/cycle04/source 8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

See Regulations section 1.1441-2(b)(4) regarding substitute • A distributing corporation made a reasonable estimate of
payments. accumulated and current earnings and profits under Regulations
Line 62c. The amount on line 62c should equal the sum of all section 1.1441-3(c)(2)(ii)(A) or 1.1474-6(c)(2)(ii); and
amounts of U.S. source FDAP income shown in box 2 of Form • A distributing corporation or intermediary paid over any
1042-S and all amounts shown as gross interest paid on Forms underwithheld tax with respect to the distribution by March 17,
1000. 2025.
Line 62d. Enter gross amounts of U.S. source FDAP income Note. The amount reported on line 64a must not be included in
reportable on Forms 1000 and Forms 1042-S if different from the the Record of Federal Tax Liability (lines 1 through 60).
total gross amounts actually reported on Forms 1000 and Forms
1042-S (as shown on line 62c). Lines 64b and 64c. Enter the sum of the amounts reported on
the Record of Federal Tax Liability (that is, the sum of lines 5, 10,
Total Tax Reported as Withheld or Paid 15, 20, 25, 30, 35, 40, 45, 50, 55, and 60) that are attributable to
liability under chapter 3 (on line 64b) and chapter 4 (on line 64c).
Lines 63a through 63e. Except as noted directly below, enter The amounts shown on lines 64b and 64c should not include any
for each line the amounts reported for all Forms 1042-S amounts shown on lines 64a and 64d. Do not make any other
(regardless of whether the form was filed electronically or on adjustments to this line.
paper) and for all Forms 1000.
Line 63a. The amounts reported on line 63a should be the Line 64d. Enter on line 64d amounts reported on the Record of
amounts actually withheld by the withholding agent before any Federal Tax Liability that are attributable to liability for specified
applicable adjustments reported on lines 63c(1) and 63c(2). federal procurement payments under section 5000C.
Line 63c(1). The amounts reported on line 63c(1) should be Line 64e. The amount on line 64e should equal the sum of
amounts you repaid to the beneficial owner or payee in the year lines 64a through 64d.
following the calendar year of overwithholding pursuant to either
the reimbursement or set-off procedures (and should also be Reporting of Taxes Paid and Overpayment or
reported as a reduction in tax liability on line 59). See Balance Due
Adjustment for Overwithholding, later. The total of the amounts
reported on line 63c(1) should equal the sum of all amounts Line 65. Enter the total tax deposits you made for the year
reported in box 9 of the corresponding Forms 1042-S. (including amounts paid with an extension of time to file). Enter
Line 63c(2). The amounts reported on line 63c(2) should be deposits of tax withheld during the calendar year in which the
amounts that you withheld in the year following the calendar year related payment was made on line 65a. Enter deposits of tax
of underwithholding from future payments made to a beneficial withheld during the year following the calendar year in which the
owner or from other property or additional contributions of a related payment was made (to the extent permitted under an
beneficial owner that you hold in custody or otherwise control. applicable regulation section in chapter 3 or 4) on line 65b. See
See Adjustment for Underwithholding, later. Also report on Withholding and reporting in a subsequent year, earlier.
line 63c(2) any other amounts that you withheld in the year Line 66. Enter any overpayment reported on the 2023 Form
following the calendar year in which the related payments were 1042 that you are applying as a credit on the 2024 Form 1042.
made (to the extent permitted under an applicable regulation See line 71, later.
section in chapter 3 or 4). See Withholding after the time of
payment, earlier, for how to report the tax liability related to such Line 67. You are permitted to take a credit for amounts withheld
payments. by other withholding agents that relate to the total net tax liability
reported on lines 64b and 64c. For example, you are a QI and
Note. The total of the amounts reported on lines 63a and 63c(2) the amount you entered on line 64b includes amounts withheld
should equal the sum of all amounts withheld by the withholding by a U.S. withholding agent under chapter 3 with respect to
agent and reported in box 7a of the corresponding Forms payments made to you as an intermediary on behalf of your
1042-S. account holders. You may take a credit on line 67 for the
amounts that were withheld by the U.S. withholding agent. The
Note. The total of the amounts reported on lines 63b(1) and amount on line 67 should equal the sum of all Forms 1042-S,
63b(2) should equal the sum of all amounts reported in box 8 of box 8, that you file for the year.
all Forms 1042-S sent to recipients.
Line 63d. The amounts reported on line 63d should be the Note. All withholding agents (including QIs, WPs, WTs, NQIs,
amounts paid by the withholding agent from its own funds rather NWPs, and NWTs) must substantiate entries on lines 67a and
than through withholding from the payment to the recipient. The 67b by attaching a supporting Form(s) 1042-S or 1099 to verify
amount on line 63d should equal the sum of all amounts the credit amounts claimed for withholding by other withholding
reported in box 11 of all Forms 1042-S sent to recipients. agents. Failure to do so will result in the denial of the refund or
credit being claimed. If you are a PTP or a nominee withholding
Note. Amounts withheld and held in escrow (and not deposited under section 1446, the tax paid for a payee may only be
with the IRS) pursuant to the escrow procedures under claimed as a credit by the payee.
Regulations section 1.1471-2(a)(5)(ii) or 1.1441-3(d) are not QSL claiming a credit forward. If you are a QSL or other
reported on lines 63a through 63d until the year they are withholding agent claiming a credit forward of prior withholding
deposited with the IRS. See the instructions for Lines 1 through on substitute dividends on line 67b as determined under Notice
60, earlier. Therefore, amounts that are reported as held in 2010-46, you should attach Form(s) 1042-S issued to you to
escrow (see box 7b of Form 1042-S) are not taken into account support such credits. If a credit is claimed with respect to any
for purposes of reconciling lines 63a through 63d with the U.S. source substitute dividends paid to you from a withholding
corresponding Forms 1042-S. agent that has not issued a Form 1042-S to you for such
payments, attach a supporting statement to Form 1042
Total Net Tax Liability indicating the following to support your credit.
Line 64a. Include on line 64a any adjustments to total net tax • The withholding agent's name, address, and EIN (if known).
liability. For example, report any adjustment to liability when: • The amount of U.S. source substitute dividends received from
the withholding agent.

8 Instructions for Form 1042 (2024)

- 9 -

Enlarge image

Page 9 of 12 Fileid: … -form-1042/2024/a/xml/cycle04/source 8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• The amount of credit forward you included on line 67b in applicable. Amounts reported on line 63c(1) should be limited to
connection with these substitute dividends. amounts repaid to the beneficial owner or payee in the
While Notice 2010-46 was obsoleted, a withholding agent subsequent calendar year (before the earlier of the filing of the
who was using the credit forward framework prior to September associated Form 1042-S or the due date for such form). On
11, 2024, may continue to use it through December 31, 2024. No line 71, indicate that you are claiming a credit to be applied in the
withholding agent may use the credit forward framework after 2025 calendar year for amounts you repay the beneficial owner
December 31, 2024. See FAQ 26 under the General Compliance or payee in the subsequent calendar year (note that you may not
section of FATCA - FAQs General. claim a refund for such an amount).
For example, if you overwithhold tax in 2024, you must repay
Lines 70a and 70b. Enter on line 70a any overpayment
the beneficial owner by March 17, 2025 (or the date on which
attributable to payments subject to withholding under chapters 3
you filed the associated Form 1042-S with the IRS, if earlier). You
and 4. Enter on line 70b any overpayment attributable to
must keep a receipt showing the date and amount of the
payments subject to the excise tax on specified federal
repayment and provide a copy of the receipt to the beneficial
procurement payments. Do not include on these lines any
owner if you repaid the beneficial owner. If you repaid the
overpayment attributable to amounts that were actually withheld
beneficial owner after year-end 2024, you must report the
from the beneficial owner (unless such amounts were repaid
repayment on line 63c(1). You must reduce your federal tax
pursuant to the reimbursement or set-off procedures).
liability on line 59 of your 2024 Form 1042 by the amount of the
Line 71. You may claim an overpayment (the sum of lines 70a repayment and claim a credit on line 71 for the difference
and 70b) as a refund or a credit. Check the applicable box on between your tax liability and your deposits with the IRS. You
line 71 to show which one you are claiming. If you claim a credit, may reimburse yourself by reducing any subsequent deposits
it can reduce your required deposits of withheld tax for 2025. you make before the end of calendar year 2025 (the year after
Note that if you repaid the recipient overwithheld amounts after the calendar year in which the amount was overwithheld).
year-end 2024 using the reimbursement or set-off procedures, Set-off procedure. Under the set-off procedure, you repay
you are not able to claim a refund for such an amount on the the beneficial owner or payee the amount overwithheld by
2024 Form 1042. Instead, you must indicate on line 71 that you reducing the amount you would have been required to withhold
are claiming a credit to be applied to the 2025 calendar year. on later payments you make to that person but only if made
See Adjustment for Overwithholding, later. before the earlier of:
• The date you actually file Form 1042-S for the calendar year in
Adjustment for Overwithholding which the amount was overwithheld; or
What to do if you overwithheld tax depends on when you • The due date for filing Form 1042-S for the calendar year
discover the overwithholding. (generally, March 15 of the year after the calendar year in which
the amount is overwithheld).
Overwithholding discovered by March 15 of the following
calendar year. If you discover that you overwithheld tax by The reductions that you applied pursuant to the set-off
March 15 of the following calendar year, you may use any procedure during the calendar year must be reflected on the line
undeposited amount of tax to make any necessary adjustments for the period you reduced your liability. The amount reported on
between you and the recipient of the income before you make a line 59 for the calendar year for which you overwithheld tax must
deposit. Repay the recipient and reduce the amount of your total reflect reductions that you applied pursuant to the set-off
deposit. Report the reduced tax liability on lines 1 through 60 for procedure during the subsequent calendar year, if applicable.
the period(s) for which you repaid the overwithheld tax. Amounts reported on line 63c(1) should be limited to amounts
repaid to the beneficial owner or payee (by reducing the
If the undeposited amount is not enough to make any withholding on a later payment) in the subsequent calendar year
adjustments, or if you discover the overwithholding after the (before the earlier of the filing of the associated Form 1042-S or
entire amount of tax has been deposited, you can use either the the due date for such form). On line 71, indicate that you are
reimbursement or the set-off procedure to adjust the claiming a credit to be applied to the 2025 calendar year for
overwithholding. amounts you set off in the subsequent calendar year (note that
If March 15 is a Saturday, Sunday, or legal holiday, the you may not claim a refund for such an amount).
TIP next business day is the final date for these actions. For 2024, a withholding agent may rely on proposed
regulations (83 FR 64757), which allow adjustments to
Reimbursement procedure. Under the reimbursement overwithholding using the reimbursement or set-off procedure
procedure, you repay the beneficial owner or payee the amount until the extended due date for filing Form 1042-S (unless a
overwithheld. You use your own funds for this repayment and Form 1042-S has already been filed with the IRS or furnished to
may reimburse yourself for an amount repaid by reducing the the recipient). A withholding agent may also use the extended
amount of any subsequent deposit of tax made during the due date for filing Form 1042 to claim a credit for any
calendar year or the subsequent calendar year. You must make adjustments to overwithholding.
the repayment by the earlier of:
Overwithholding discovered at a later date. If you discover
• The date you actually file Form 1042-S for the calendar year in
which the amount was overwithheld; or after March 15 of the following calendar year that you
overwithheld tax for the prior year, do not adjust the amount of
• The due date for filing Form 1042-S for the calendar year
(generally, March 15 of the year after the calendar year in which tax liability reported on Form 1042 or on any deposit or payment
for that prior year. Do not repay the beneficial owner or payee the
the amount is overwithheld).
amount overwithheld unless you are a QI, WP, WT, PFFI, or
The reimbursement amount may not be more than the reporting Model 1 FFI making a claim for a collective refund
amount you actually repaid. The amount of the reduced tax under your respective agreement with the IRS. See Regulations
liability for amounts repaid to the beneficial owner or payee section 1.1471-1(b)(114) for the definition of a reporting Model 1
during the calendar year must be reflected on the line for the FFI.
period you reduced your liability. The amount reported on line 59
for the calendar year for which you overwithheld tax must reflect In this situation, the recipient will have to file a U.S. income
the amount of the reduced tax liability for amounts you repaid the tax return (Form 1040-NR or Form 1120-F) or, if a tax return has
beneficial owner or payee in the subsequent calendar year, if already been filed, a claim for refund (Form 1040-X or amended
Form 1120-F) to recover the amount overwithheld.

Instructions for Form 1042 (2024) 9

- 10 -

Enlarge image

Page 10 of 12 Fileid: … -form-1042/2024/a/xml/cycle04/source 8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Adjustment for Underwithholding type payments (for example, royalties, services, rents). The
Under the procedures for adjusting underwithholding (see amount reported on this line should generally equal the
Regulations sections 1.1461-2(b) and 1.1474-2(b)), you may aggregate amount reported in box 2 of all of the Forms 1042-S
withhold from future payments made to a beneficial owner the you filed for the calendar year for which the exemption code 16
tax that should have been withheld, or satisfy the tax from (excluded nonfinancial payment) was included in box 4a.
property or additional contributions of the beneficial owner that Line 2c. Enter the amounts of U.S. source FDAP income that
you hold in custody or otherwise control, before the date (without are not withholdable payments because they are payments
extensions) that the Form 1042 is required to be filed. You should related to grandfathered obligations (for example, obligations
report the liability related to such withholding on lines 1 through outstanding on July 1, 2014). See Regulations section 1.1471-
60 for the period during the year in which you adjusted 2(b). The amount reported on this line should generally equal the
underwithholding by withholding additional tax. If you adjust aggregate amount reported in box 2 of all of the Forms 1042-S
underwithholding by withholding in the year following the you filed for the calendar year for which the exemption code 13
calendar year of underwithholding, you should report the (grandfathered payment) was included in box 4a.
increased liability on line 59 for the year in which the Line 2d. Enter the amounts of U.S. source FDAP income that
underwithholding occurred. Amounts reported on line 63c(2) are not withholdable payments because they are payments of
should be limited to amounts withheld in the year following the effectively connected income (ECI). The amount reported on this
calendar year of underwithholding (before the date that the Form line should generally equal the aggregate amount reported in
1042 is required to be filed without extensions). You should box 2 of all of the Forms 1042-S you filed for the calendar year
report deposits of amounts withheld in the year following the for which the exemption code 14 (effectively connected income)
calendar year of underwithholding pursuant to these procedures was included in box 4a.
on line 65b. See Deposits made during subsequent year, earlier, Line 2e. Enter the sum of all amounts of U.S. source FDAP
for how to designate such deposits as attributable to the year of income required to be reported on Form 1042 but that are not
underwithholding. required to be withheld upon under chapter 4 (sum of lines 2a
through 2d).
Section 2. Reconciliation of U.S. Line 4. Enter the sum of all amounts shown in box 2 of Form
Source FDAP Income 1042-S that are payments of U.S. source FDAP income
(including amounts reported under both chapter 3 and
This section is used by the withholding agent to reconcile the
chapter 4). The amount on line 4 should equal the total gross
amount of U.S. source FDAP income reportable under chapter 4
amounts of U.S. source FDAP income reported on line 62c.
and paid by the withholding agent during the calendar year with
the total amount of U.S. source FDAP income reported on all Line 5. The amount on line 5 should be the total reported on
Forms 1042-S filed by the withholding agent for the calendar line 4 (total amount of U.S. source FDAP income reported on all
year (including amounts reported under both chapter 3 and Forms 1042-S) less the total reported on line 3 (total U.S. source
chapter 4). You must complete this section even if you did not FDAP income reportable under chapter 4).
make any payments subject to chapter 4 withholding during the Line 6. If the amount reported on line 5 is other than zero, use
calendar year. This section also allows reporting of the amounts this line to provide an explanation for the variance. If additional
of U.S. source FDAP income for which chapter 4 withholding is space is needed, attach a sheet to Form 1042 explaining the
required and reporting of the amounts for which withholding is difference noted on line 5.
not required according to the exemption from chapter 4
withholding applicable to each such amount. Section 3. Potential Section 871(m)
Note. The amounts of U.S. source FDAP income reportable for Transactions
chapter 4 are: Check the box if you are a withholding agent that makes any
• Payments of U.S. source FDAP income for which withholding payment under a potential section 871(m) transaction during the
under chapter 4 was applied to the payment, plus year, including a notional principal contract or other derivative
• Payments of U.S. source FDAP income for which withholding contract that references, in whole or in part, a U.S. stock or
under chapter 4 was not required but that are subject to reporting underlying security. See Regulations section 1.871-15(a)(12) for
for chapter 3 purposes on Forms 1042-S. the definition of a potential section 871(m) transaction and
Line 1. Enter the amounts of U.S. source FDAP income Regulations section 1.871-15(i) for the meaning of certain
required to be withheld upon under chapter 4, including amounts payments with respect to a section 871(m) transaction.
withheld upon but for which no deposit has been made under an
escrow procedure. Section 4. Payments by a Qualified
Line 2. Enter amounts of U.S. source FDAP income not Derivatives Dealer (QDD)
required to be withheld upon under chapter 4 on lines 2a through If a QI (whether the home office or any branch) was a QDD
2d according to the exception to withholding that applied to each during the tax year, check the box, enter the regular EIN (if any)
payment reportable on Form 1042-S. The amount on line 2e of the QI (not the QI-EIN) in the field provided, and attach
should equal the sum of lines 2a through 2d. Schedule(s) Q (Form 1042) for each QDD. You must complete
Line 2a. Enter the amounts of U.S. source FDAP income that and attach Schedule(s) Q (Form 1042) even if the QDD has zero
are withholdable payments, but for which the withholding agent tax liability.
has obtained documentation that establishes a chapter 4 status
that does not require withholding under chapter 4 (for example, Note. If the QI has a tax year other than the calendar year, the
PFFI). The amount reported on this line should generally equal QI must file two Schedules Q (Form 1042) for each QDD—one
the aggregate amount reported in box 2 of all of the Forms 1042- for the portion of the calendar year in the first tax year and a
S you filed for the calendar year for which exemption code 15 second one for the portion in the second tax year. See the
(payee not subject to chapter 4 withholding) was included in Schedule Q (Form 1042) for additional information.
box 4a.
Line 2b. Enter the amounts of U.S. source FDAP income that
are not withholdable payments because they are nonfinancial

10 Instructions for Form 1042 (2024)

- 11 -

Enlarge image

Page 11 of 12     Fileid: … -form-1042/2024/a/xml/cycle04/source                                      8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                                                                     If you are a QI, WP, or WT revising the amounts originally 
Third Party Designee                                                 reported to a withholding rate pool and reporting to a specific 
If you want to allow any individual, corporation, firm,              recipient in accordance with the provisions of the QI agreement 
organization, or partnership to discuss your 2024 Form 1042          (Rev. Proc. 2022-43) or the WP/WT agreement (Rev. Proc. 
with the IRS, check the “Yes” box in the Third Party Designee        2017-21) after a Form 1042 has been filed, you must amend 
section of the return. Also, enter the designee's name, phone        Form 1042 to reflect the revised number of Forms 1042-S filed 
number, and any five digits the designee chooses as their            for the calendar year on Lines 61a or 61b.
personal identification number (PIN). The authorization applies 
only to the tax form upon which it appears.                          If you are also amending Form(s) 1042-S, see Amended 
  If you check the “Yes” box, you are authorizing the IRS to call    Return in the Form 1042-S instructions.
the designee to answer any questions relating to the information 
reported on your tax return. You are also authorizing the            Do not amend Form 1042 to recover taxes overwithheld in the 
designee to:                                                         prior year. For more information, see Adjustment for 
• Exchange information concerning your tax return with the IRS;      Overwithholding, earlier.
and
• Request and receive written tax return information relating to     Privacy Act and Paperwork Reduction Act Notice.         We ask 
your tax return, including copies of specific notices,               for the information on this form to carry out the Internal Revenue 
correspondence, and account transcripts.                             laws of the United States. Sections 1441, 1442, 1446 (for PTPs), 
                                                                     and 1471–1474 require withholding agents to report and pay 
  You are not authorizing the designee to receive any refund         over to the IRS taxes withheld from certain U.S. source income 
check, bind you to anything (including additional tax liability), or of foreign persons. Form 1042 is used to report the amount of 
otherwise represent you before the IRS. If you want to expand        withholding that must be paid over. Form 1042-S is used to 
the designee’s authorization, see Pub. 947, Practice Before the      report the amount of income and withholding to the payee. 
IRS and Power of Attorney.                                           Section 6109 requires you to provide your identifying number on 
  The authorization automatically expires 1 year from the due        the return. Routine uses of this information include giving it to the 
date (without any extensions) for filing your 2024 Form 1042. If     Department of Justice for civil and criminal litigation, and to 
you or your designee desires to terminate the authorization, a       cities, states, the District of Columbia, and U.S. commonwealths 
written statement conveying your wish to revoke the                  and territories for use in administering their tax laws. We may 
authorization should be submitted to the IRS service center          also disclose this information to other countries under a tax 
where the return was processed.                                      treaty or tax information exchange agreement, to federal and 
                                                                     state agencies to enforce federal nontax criminal laws, or to 
Paid Preparers                                                       federal law enforcement and intelligence agencies to combat 
A withholding agent or intermediary may designate a partner,         terrorism. If you fail to provide this information in a timely manner, 
member, owner, any corporate office authorized to sign, or           you may be liable for penalties.
fiduciary to sign Form 1042. The paid preparer's space should 
remain blank if the form is completed by one of these individuals.   You are not required to provide the information requested on 
  If the form is completed by a paid preparer with a valid           a form that is subject to the Paperwork Reduction Act unless the 
preparer tax identification number (PTIN), the paid preparer         form displays a valid OMB control number. Books or records 
should complete the paid preparer's section. Generally, anyone       relating to a form or its instructions must be retained as long as 
who is paid to prepare the return must do the following.             their contents may become material in the administration of any 
• Sign the return in the space provided for the preparer's           Internal Revenue law. Generally, tax returns and return 
signature.                                                           information are confidential, as required by section 6103.
• Fill in the other blanks in the “Paid Preparer Use Only” area of   The time needed to complete and file this form will vary 
the return. A paid preparer cannot use a social security number      depending on individual circumstances. The estimated burden 
(SSN) in the “Paid Preparer Use Only” box. The paid preparer         for business taxpayers filing this form is approved under OMB 
must use a PTIN.                                                     control number 1545-0123. The estimated burden for all other 
• Give the withholding agent or intermediary a copy of the           taxpayers who file this form is: Recordkeeping, 10 hr., 31 min.; 
return in addition to the copy to be filed with the IRS.             Learning about the law or the form, 2 hr., 25 min.; Preparing 
  A paid preparer may sign original or amended returns by            the form, 4 hr., 34 min.; and Copying, assembling, and 
rubber stamp, mechanical device, or computer software                sending the form to the IRS, 32 min.
program.
                                                                     If you have comments concerning the accuracy of these time 
Amended Return                                                       estimates or suggestions for making this form simpler, we would 
If you have to make changes to your Form 1042 after you submit       be happy to hear from you. You can send us comments from 
it, file an amended Form 1042. Use a Form 1042 for the year you      IRS.gov/FormComments. Or you can write to the Internal 
are amending. Check the “Amended Return” box at the top of the       Revenue Service, Tax Forms and Publications, 1111 
form. You must complete the entire form, including all filing        Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not 
information for the calendar year, and sign the return. Attach a     send the form to this address. Instead, see Where and When To 
statement explaining why you are filing an amended return (for       File, earlier.
example, you are filing because the tax liability for May was 
incorrectly reported due to a mathematical error).

Instructions for Form 1042 (2024)                                                                                                    11

- 12 -

Enlarge image

Page 12 of 12          Fileid: … -form-1042/2024/a/xml/cycle04/source                    8:43 - 27-Nov-2024

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Index
 
A                                       I                                         R
Adjustment for Overwithholding   9      Income Tax Withholding on Wages,          Reporting of Taxes Paid and 
  Overwithholding discovered at a later   Pensions, Annuities, and Certain         Overpayment or Balance Due              8
  date   9                                Other Deferred Income    4               QSL claiming a credit forward         8
  Overwithholding discovered by March   Interest and Penalties 5
  15 of the following calendar year 9     Interest 5                              S
  Reimbursement procedure  9              Late filing of Form 1042 5              Section 1. Record of Federal Tax 
  Set-off procedure 9                     Late payment of tax 5                    Liability 6
Adjustment for Underwithholding    10     Other penalties 5                       Section 2. Reconciliation of U.S. 
Adjustments to withholding 7            Intermediary 2                             Source FDAP Income        10
Amended Return 11                         Foreign financial institution (FFI) 3   Section 3. Potential Section 871(m) 
Avoid Common Errors    5                  Nonparticipating FFI 3                   Transactions      10
                                          Nonqualified intermediary (NQI)     3   Section 4. Payments by a Qualified 
C                                         Nonwithholding foreign partnership       Derivatives Dealer (QDD)              10
Certain distributions subject to          (NWP)      3                            Specific Instructions 5
  section 1445 withholding tax   2        Nonwithholding foreign trust (NWT)    3  Address   6
Chapter 3 and 4 status codes 2            Participating FFI (PFFI) 3               Chapter 3 and 4 status codes of 
Corporate distributions 7                 Passive non-financial foreign entity     withholding agent      6
                                          (NFFE)     3                             Employer identification number 
D                                         Qualified derivatives dealer (QDD)    3  (EIN)   5
                                          Qualified intermediary (QI) 2            Rounding off to whole dollars         5
Deposit Requirements   4                  Qualified securities lender (QSL)   3   Specified federal procurement 
  Depositing on time 4                    Recalcitrant account holder 3            payment   7
  Deposits made during subsequent         Registered deemed-compliant FFI 
  year   4                                (RDCFFI)     3                          T
  Electronic deposit requirement 4        Withholding foreign partnership (WP)    Third Party Designee    11
  Escrow procedure   4                    or withholding foreign trust (WT)     3 Total Gross Amounts Reported             7
  Same-day wire payment option   4                                                Total Net Tax Liability 8
                                        P                                         Total Tax Reported as Withheld or 
E                                                                                  Paid 8
                                        Paid Preparers 11
Election To Withhold Under Section      Potential 871(m) transactions   1
  3406 4                                Privacy Act and Paperwork Reduction       W
Escrow procedure    7                     Act Notice 11                           Where and When To File     3
Excise tax on specified federal         Publicly traded partnerships (section      Electronic filing 3
  procurement payments    7               1446 withholding tax)    2               Extension of time to file 3
                                                                                   Paper filing 3
F                                       Q                                         Who Must File  2
Foreign partners of U.S. partnerships   QIs with no primary chapters 3 and 4      Withholding after the time of 
  and foreign beneficiaries of U.S.       withholding responsibility  7            payment   7
  trusts 6                              Qualified derivatives dealers             Withholding Agent    2
  Withholding and reporting in a          (QDDs)   1                               Liability for tax 2
  subsequent year     6

         12

PDF file checksum: 192826474

(Plugin #1/10.13/13.0)