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Department of the Treasury
Internal Revenue Service
2023

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 Centralized partnership audit regime. Section 1101 of the
otherwise noted. Bipartisan Budget Act (BBA) of 2015 repealed the TEFRA
partnership procedures and the electing large partnership (ELP)
Future Developments provisions and replaced them with a new centralized partnership
For the latest information about developments related to Form audit regime effective for partnership tax years beginning on or
1042 and its instructions, such as legislation enacted after they after January 1, 2018. The new regime provides for
were published, go to IRS.gov/Form1042. determination, assessment, and collection of underpayments at
the partnership level unless certain elections are made by the
What’s New partnership. Under these rules, a partnership (or a pass-through
partner) may be required to withhold under chapter 3 or
Section 1446(f) withholding. Starting for tax year 2023, a
chapter 4 when there has been an adjustment under the
withholding agent that is a broker for the transfer of a publicly
centralized partnership audit regime to an item of income or gain
traded partnership interest is required to withhold tax under
allocable to a foreign person (or any other person subject to
section 1446(f) and report the withholding on Form 1042.
withholding). If the adjustment is to an amount subject to
Electronic filing. New electronic filing requirements apply to withholding that is reportable on Form 1042, the partnership (or
Form 1042 beginning for tax year 2023 (Forms 1042 filed in pass-through partner) should report the withholding on Form
2024). For general information about electronic filing, see Pub. 1042 for the year in which it pays the tax required to be withheld.
4163, Modernized e-file Information for Authorized IRS e-file See section 6241(9).
Providers for Business Returns. Also see Where and When To
Qualified derivatives dealers (QDDs). A withholding agent
File, later, for more information on the electronic filing
that is a QI acting as a QDD must assume certain withholding
requirements for Form 1042.
and reporting responsibilities with respect to payments made on
Revised QI Agreement and QDD reporting. The qualified potential section 871(m) transactions in its QDD capacity. Form
intermediary (QI) agreement in Rev. Proc. 2017-15, 2017-3 1042 includes Section 4, which a QI that is a QDD (or has a
I.R.B. 437, expired December 31, 2022, and the QI Agreement in branch that is a QDD) must complete if it made any payments in
Rev. Proc. 2022-43, 2022-52 I.R.B. 570, applies beginning its QDD capacity that are reportable on this form. For more
January 1, 2023. Under the QI Agreement, any QI that was a information on the withholding and reporting requirements of a
QDD (as defined later) or had a QDD branch during the tax year, QDD, see the QI Agreement in Rev. Proc 2022-43, 2022-52
including a QI that was a partnership, must complete I.R.B. 570, available at IRS.gov/irb/2022-52_IRB#REV-
Schedule(s) Q (Form 1042). PROC-2022-43. See also section 871(m) and Notice 2022-37,
2022-37 I.R.B. 234, available at IRS.gov/irb/
Reminders 2022-37_IRB#NOT-2022-37.
Reliance on proposed regulations reducing burden under These instructions provide guidance to QDDs regarding the
FATCA and chapter 3. On December 18, 2018, the IRS and proper withholding agent status code to use when filing Form
the Department of the Treasury issued proposed regulations (83 1042 (and Form 1042-S). See Chapter 3 and 4 status codes of
FR 64757) to reduce the burden on taxpayers of certain withholding agent, later.
requirements under chapters 3 and 4 of the Internal Revenue Potential 871(m) transactions. Section 3 of Form 1042
Code. The proposed regulations provide that, under section applies to payments made by a withholding agent under any
7805(b)(1)(C), taxpayers may generally rely on the proposed potential section 871(m) transaction (rather than just payments
regulations until final regulations are issued. Specifically, for made under notional principal contracts or other derivatives
purposes of these instructions, a withholding agent may rely on contracts that reference a U.S. stock or underlying security). Any
the following provisions of these proposed regulations in withholding agent making such a payment must complete
connection with completing Form 1042. Section 3.
• Withholding and reporting in a subsequent year. A
partnership or trust that is permitted to withhold in a subsequent Section 871(m) transition. On September 12, 2022, Notice
year with respect to a foreign partner's or beneficiary's share of 2022-37 was published announcing the Department of the
income for the prior year may designate the deposit of the Treasury and the IRS intention to amend the section 871(m)
withholding as attributable to the preceding year and report the regulations to further delay the effective/applicability date of
associated amounts on Forms 1042 and 1042-S for the certain rules in those final regulations and certain requirements
preceding year. See Foreign partners of U.S. partnerships and of a QDD.
foreign beneficiaries of U.S. trusts, later. Schedule Q (Form 1042). If the taxpayer, or any branch of the
• Adjustments to overwithholding under the taxpayer, is a QDD, the taxpayer must attach to Form 1042 a
reimbursement and set-off procedures. A withholding agent Schedule Q (Form 1042), Tax Liability of Qualified Derivatives
may make adjustments to overwithholding using either the Dealer (QDD), for each QDD. Schedule Q (Form 1042) replaces
reimbursement or set-off procedure until the extended due date the previous requirement to attach a statement to the Form 1042
for filing Form 1042-S (unless the Form 1042-S has already been to provide information regarding a QDD's tax liability.
filed or furnished). Additionally, a withholding agent may use the
extended due date for filing a Form 1042 to claim a credit for any Chapter 3 and 4 status codes. The chapter 3 and 4 status
adjustments made to overwithholding. codes of withholding agents are required regardless of the types
of payments reported on this form.

Oct 27, 2023 Cat. No. 54843T

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

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under chapters 3 and 4 for all payments that are made to it for its required under chapter 4 to determine the account holder’s
direct partners, beneficiaries, or owners. status or to enable the FFI to report the account as a U.S.
account. See Regulations section 1.1471-5(g).
Nonqualified intermediary (NQI). An NQI is any intermediary
that is not a U.S. person and that is not a QI. Passive nonfinancial foreign entity (NFFE). A passive NFFE
is a nonfinancial foreign entity other than an excepted NFFE,
Nonwithholding foreign partnership (NWP). An NWP is a including a WP, WT, QI, or direct reporting NFFE. See
foreign partnership that is not a WP. Regulations sections 1.1471-1(b)(80) and 1.1472-1(b).
Nonwithholding foreign trust (NWT). An NWT is a foreign For chapter 4 purposes, an intermediary must provide its
trust that is not a WT. ! chapter 4 status to a withholding agent to determine
Qualified derivatives dealer (QDD). A QDD is a QI that is an CAUTION whether withholding applies to the payment. Thus, a
eligible entity that agrees to assume the requirements of a QDD chapter 4 status must be provided for a withholdable payment
and the other requirements in the QI Agreement. Any applicable made to a foreign entity.
home office or branch that seeks to be a QDD must qualify and
be approved for QDD status. A QDD must document itself to a Where and When To File
withholding agent with a Form W-8 IMY, Certificate of Foreign
Intermediary, Foreign Flow-Through Entity, or Certain U.S. Paper filing. Mail Form 1042 by March 15, 2024, to:
Branches for United States Tax Withholding and Reporting,
indicating that it is acting as a QDD for payments with respect to Internal Revenue Service
potential section 871(m) transactions and underlying securities P.O. Box 409101
that it receives in a principal capacity, separately identify the Ogden, UT 84409
home office or branch as the recipient on a withholding
statement (if necessary), and indicate on the form that it will Electronic filing. Electronic filing of Form 1042 is required for
assume primary chapters 3 and 4 withholding responsibilities tax year 2023, for a withholding agent that is a financial
and primary Form 1099 reporting and backup withholding institution. Otherwise, electronic filing of Form 1042 is required
responsibilities for certain payments it makes and receives as a for a withholding agent that is required to file 10 or more
QDD, as well as including any other information required by the information returns, as described in Regulations section
QI Agreement. See Regulations section 1.1441-1(e)(6) and the 301.6011-2, during the year or that is a partnership with more
QI Agreement in Rev. Proc. 2022-43 for more information. See than 100 partners. For general information about electronic filing,
also Notice 2022-37, described in Section 871(m) transition, see Pub. 4163, Modernized e-file Information for Authorized IRS
earlier. e-file Providers for Business Returns.
Qualified securities lender (QSL). A QSL is an FFI that is a Extension of time to file. If you need more time to file Form
bank, custodian, broker-dealer, or clearing organization subject 1042, you may submit Form 7004, Application for Automatic
to regulatory supervision in its home jurisdiction and that is: Extension of Time To File Certain Business Income Tax,
1. Regularly engaged in the business of borrowing securities Information, and Other Returns.
of U.S. corporations and lending such securities to unrelated Form 7004 does not extend the time for payment of tax.
customers; and
2. Subject to audit by the IRS under section 7602 or, in the Additional Information
case of a QI, an external auditor. For details on the withholding of tax, see Pub. 515, available at
IRS.gov/Pub515.
For further information about requirements for QSL status and
the withholding requirements for substitute dividend payments, Need Assistance?
see Notice 2010-46, 2010-24 I.R.B. 757, available at IRS.gov/irb/
If you need help completing Form 1042, call 267-941-1000 (not a
2010-24_IRB#NOT-2010-46. An entity may claim QSL status
toll-free number) from 6:00 a.m. to 11:00 p.m. Eastern time or
and be treated as a recipient for substitute dividend payments
write to:
made before January 1, 2025. See Notice 2022-37.
Foreign financial institution (FFI). An FFI is a foreign entity Internal Revenue Service
described in Regulations section 1.1471-5(d). International Section
Philadelphia, PA 19255-0725
Registered deemed-compliant FFI (RDCFFI). A RDCFFI (as
defined in Regulations section 1.1471-5(f)(1)) is an FFI that is
deemed to satisfy the requirements of section 1471(b). This Income Tax Withholding on Wages,
includes a reporting Model 1 FFI or branch of an FFI that is a
reporting Model 1 FFI (see Regulations section 1.1471-1(b)(114) Pensions, Annuities, and Certain
for the definition of a reporting Model 1 FFI). Other Deferred Income
Participating FFI (PFFI). A PFFI is an FFI that has agreed to Use Form 941, Employer’s Quarterly Federal Tax Return, to
satisfy the obligations of an FFI agreement under chapter 4 with report income tax withheld and social security and Medicare
respect to all of its branches of the FFI, other than a branch that taxes on wages paid to a nonresident alien employee.
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 Payments of pensions, annuities, and certain other deferred
with respect to a branch) and a QI branch of a U.S. financial income paid to a foreign person are subject to withholding under
institution unless such branch is a reporting Model 1 FFI. section 1441 (rather than section 3405). Report these payments
on Forms 1042 and 1042-S.
Nonparticipating FFI. A nonparticipating FFI is an FFI that is
not a PFFI, deemed-compliant FFI, or exempt beneficial owner. Use Schedule H (Form 1040), Household Employment Taxes,
to report income tax withheld and social security and Medicare
Recalcitrant account holder. Generally, a recalcitrant account taxes on wages paid to a nonresident alien household employee.
holder is an account holder of a participating or
deemed-compliant FFI that failed to provide the documentation

Instructions for Form 1042 (2023) -3-

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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.
3406 Depositing on time. For deposits made by EFTPS to be on
If you are a PFFI that has made an election to withhold under time, you must submit the deposit by 8 p.m. Eastern time the day
section 3406 instead of withholding under chapter 4, use Form before the date the deposit is due. If you use a third party to
945, Annual Return of Withheld Federal Income Tax, to report make deposits on your behalf, they may have different cutoff
tax withheld on a withholdable payment that is also a reportable times.
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, visit EFTPS.gov to download the
(4)(i)(B). A withholding QI, WP, or WT that is an FFI should also Same-Day Payment 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,
Deposit Requirements later, if you are using the escrow procedure under Regulations
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
To avoid a penalty, do not mail your deposits directly to payment), a withholding agent can follow the escrow procedures
by withholding 30% on the entire payment and depositing the
CAUTION
! the IRS. amount withheld in an escrow account instead of depositing
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 2023, but pays the
deposit of $2,000 or more during any month except December dividend in January of 2024, under section 857(b)(9), the
under rule 1, earlier, carry over any end-of-the-month balance of dividend is treated as having been paid by the REIT and
less than $2,000 to the next month. If you make a deposit of received by each shareholder on December 31, 2023. If the
$2,000 or more during December, any end-of-December REIT chooses to withhold when it pays the dividend in January
balance of less than $2,000 should be remitted with your Form of 2024 (pursuant to the procedures for adjusting
1042 by March 15, 2024. underwithholding in Regulations section 1.1461-2(b) or
3. If at the end of a calendar year the total amount of 1.1474-2(b)), it should report the liability with respect to the
undeposited taxes is less than $200, you may either pay the distribution on its 2023 Form 1042 and should designate the
taxes with your Form 1042 or deposit the entire amount by deposit of such tax as being made for 2023 (if the deposit is
March 15, 2024. made by March 15, 2024).
Additionally, under proposed regulations (83 FR 64757), a
Electronic deposit requirement. You must make electronic partnership or trust that is permitted to withhold in a subsequent
deposits of all depository tax liabilities using EFTPS. If you fail to year with respect to a foreign partner's or beneficiary's share of
use EFTPS, you may be subject to a 10% penalty. To enroll in or income may designate the deposits of the withholding as
get more information about EFTPS, call 800-555-4477 or visit attributable to the preceding calendar year. See Foreign partners
EFTPS.gov. To contact EFTPS using Telecommunications Relay of U.S. partnerships and foreign beneficiaries of U.S. trusts, later.
Services (TRS) for people who are deaf, hard of hearing, or have

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Interest and Penalties
If you file Form 1042 late, or fail to pay or deposit the tax when Specific Instructions
due, you may be liable for penalties and interest unless you can File only one Form 1042 consolidating all Form 1042-S
show that the failure to file or pay was due to reasonable cause ! recipient information for both chapter 3 and 4 purposes
and not willful neglect. CAUTION regardless of the number of different clients, branches,
You do not have to figure the amount of any interest or divisions, or types of income for which you are the withholding
TIP penalties you may owe. Because figuring these amounts agent. However, if you are acting in more than one capacity (for
can be complicated, the IRS will do it for you and send example, you are acting as a QI for certain designated accounts
you a bill for any amount due. and as an NQI for other accounts), file a separate Form 1042 for
each capacity in which you are acting.
If you include interest or penalties with your payment, identify
and enter the amount in the bottom margin of Form 1042. Do not A U.S. branch of a PFFI that is required to report amounts
include interest or penalties in the balance due on line 69. under chapter 4 must file a separate Form 1042.
Interest. Interest is charged on taxes not paid by the due date, Rounding off to whole dollars. You must round off cents to
even if an extension of time to file is granted. Interest is also whole dollars. To round off amounts to the nearest dollar, drop
charged on penalties imposed for failure to file, negligence, amounts under 50 cents and increase amounts from 50 to 99
fraud, and substantial understatements of tax from the due date cents to the next dollar. For example, $1.39 becomes $1 and
(including extensions) to the date of payment. Interest is figured $2.50 becomes $3. If you have to add two or more amounts to
at a rate determined under section 6621. figure the amount to enter on a line, include cents when adding
and only round off the total.
Late filing of Form 1042. The penalty for not filing Form 1042
when due (including extensions) is 5% of the unpaid tax for each Employer identification number (EIN). You are required to
month or part of a month the return is late, up to a maximum of enter your EIN. If you are filing Form 1042 as a QI, WP, or WT,
25% of the unpaid tax. enter your QI-EIN, WP-EIN, or WT-EIN.
If you are a QSL that is also a QI, enter your QI-EIN.
Late payment of tax. The penalty for not paying tax when due Otherwise, enter the EIN you have been assigned.
is usually one-half of 1% of the unpaid tax for each month or part
of a month the tax is unpaid. The penalty cannot exceed 25% of If you are, for chapter 4 purposes, a PFFI or other financial
the unpaid tax. institution that has been issued a global intermediary
identification number (GIIN) for chapter 4 reporting purposes,
Other penalties. Penalties may be imposed for negligence, you must nevertheless get an EIN to file Form 1042 (or use your
substantial understatement of tax, and fraud. See sections 6662 existing EIN, such as a QI-EIN in the case of a QI if filing in such
and 6663. capacity).
If you are a PFFI or other financial institution filing this form on
Avoid Common Errors behalf of a branch other than your U.S. branch, you cannot use
To ensure that your Form 1042 can be correctly processed, be the EIN of the U.S. branch to file this form and you must get a
sure that you do the following. separate EIN to file this form on behalf of all your branches other
• Carefully read the information provided in Pub. 515 and these than your U.S. branch.
instructions.
• Complete all required information for the withholding agent If you do not have an EIN, you can apply for one online at
including the withholding agent’s name, address, chapter 3 and IRS.gov/EIN. You can apply for an EIN by telephone at
chapter 4 status codes, and the EIN, QI-EIN, WP-EIN, or 800-829-4933. You can also file Form SS-4, Application for
WT-EIN. Note that you must include the withholding Employer Identification Number, by fax or mail. File amended
agent’s chapter 3 and chapter 4 status codes regardless of Forms 1042-S when you receive your EIN.
the types of payments being reported on Form 1042. To get a QI-EIN, WP-EIN, or WT-EIN, submit Form SS-4 with
• Ensure that the correct EIN is provided. If you are filing Form your application for that status. Do not send an application for a
1042 as a QI, WP, or WT, enter your QI-EIN, WP-EIN, or WT- QI-EIN, WP-EIN, or WT-EIN to the addresses listed in the
EIN. Instructions for Form SS-4. Send the application along with Form
• Lines 1 through 60, Record of Federal Tax Liability, must show SS-4 to:
the federal tax liability for payments made during the applicable
quarter-monthly period. This section reports the tax liability, not Internal Revenue Service
the tax deposited by the withholding agent. LB&I: International: QI Group 1031
• The sum of the monthly totals in Section 1 (lines 5, 10, 15, 20, 290 Broadway, 12th floor
25, 30, 35, 40, 45, 50, 55, and 60) must match the amount of New York, NY 10007-1867 USA
total tax liability reported on lines 64b, 64c, and 64d.
• Do not include amounts reported as adjustments on line 64a Address. Include the suite, room, or other unit number after the
in the Record of Federal Tax Liability (lines 1 through 60). street address. If your post office does not deliver mail to the
• You must designate the tax liability as either a chapter 3 tax street address and you have a P.O. box, show the box number
liability or a chapter 4 tax liability. Report the portion of the tax instead of the street address.
liability for the calendar year that is a chapter 3 tax liability on
line 64b. Report the portion of the tax liability for the calendar Chapter 3 and 4 status codes of withholding agent. Enter
year that is a chapter 4 tax liability on line 64c. your chapter 3 and chapter 4 status codes from the list of “Type
• You must complete Section 2, Reconciliation of Payments of of Recipient, Withholding Agent, Payer, or Intermediary Code” on
U.S. Source FDAP Income. Section 2 must be completed even if Form 1042-S. You must enter both a chapter 3 and a chapter 4
you have not withheld any amounts under chapter 4. withholding agent status code regardless of the type of payment
being made. See pages 2 and 3 of these Form 1042 instructions
for definitions of intermediary qualified intermediary (QI), ,
withholding foreign partnership (WP) withholding foreign trust ,
(WT) nonqualified intermediary (NQI) qualified securities lender , ,
(QSL) participating FFI (PFFI), , and registered
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deemed-compliant FFI (RDCFFI). See the Form 1042-S Regulations section 1.1441-2(e)(7) for certain amounts with
instructions for definitions of U.S. branch of a PFFI or RDCFFI respect to section 871(m) transactions and the rule for QDDs in
treated as a U.S. person, territory financial institution (FI) treated the QI Agreement. For distributive shares not actually
as a U.S. person, and flow-through entity. distributed, the partnership must include any tax liability on lines
1 through 60 of the Form 1042 for the following year. Include the
Withholding agents should use the applicable code that
tax liability on the line that represents the earlier of the following
! is most specific to your status (for example, chapter 3 dates.
CAUTION status code 12 (Qualified Intermediary)).
• The date on which the Schedule K-1 (Form 1065), Partner's
Share of Income, Deductions, Credits, etc., is sent or otherwise
Withholding agents are to use specified chapter 4 status furnished to the foreign partner.
codes on Forms 1042-S for payments made. See the 2023 • The due date for furnishing Schedule K-1 (Form 1065) to the
Instructions for Form 1042-S. A U.S. financial institution should partner.
continue to use its own withholding agent chapter 4 status code
(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
beneficiary's share of distributable net income subject to
A QI that is a QDD should use the withholding agent chapter 3 withholding under section 1441, 1442, or 1443, or under
status code for a QI (code 12) for purposes of filing its Form chapter 4, before the date (without extensions) on which the
1042, regardless of the types of payments it made for the income is required to be reported on Form 1042-S. See
calendar year. However, a QI that is a QDD should use the Regulations section 1.1441-5(b)(2)(ii).
withholding agent chapter 3 status code for a QDD (code 35) for Example. In 2023, USP, a U.S. partnership, has foreign
purposes of reporting on Form 1042-S a payment that it made in partners that are individuals and for which it has obtained valid
its capacity as a QDD. documentation to establish their foreign status. The withholding
tax under section 1441 relating to the distributive shares of the
Section 1. Record of Federal Tax foreign partners was $120. USP made no distributions in 2023.
Liability On the 2023 Form 1042, USP did not enter any amount as tax
liability on lines 1 through 60 because it did not distribute any
Lines 1 through 60. Except as otherwise provided in these amounts.
instructions, include the tax liability for the period in which the
income was paid or distributed regardless of whether the liability USP made a distribution on February 11, 2024, that related to
is under chapter 3 or chapter 4 and regardless of whether the the 2023 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 2023
withholding agent (see the instructions for box 11 of Form Schedules K-1 (Form 1065) to its partners on April 2, 2024.
1042-S). Do not enter any negative amounts on these lines. If On the 2024 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) For other than a PTP, use Form 8804, Annual Return for
so that you are not reporting any negative amounts on lines 1 TIP Partnership Withholding Tax (Section 1446), to report
through 60. See Adjustment for Overwithholding, later. 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 Note. For rules that apply to withholding on section 871(m)
agents should report the tax liability for each period, rather than transactions, see Regulations section 1.441-2(e). For rules that
the amount of tax actually deposited with the IRS. As such, the apply to withholding by QDDs, see the QI Agreement.
sum of lines 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, and 60 Withholding and reporting in a subsequent year.
should be reported on lines 64b through 64d, as applicable Proposed regulations issued on December 18, 2018 (83 FR
(see the instructions for lines 64b through 64d, later). 64757) would allow partnerships or trusts that are permitted to
withhold in a subsequent year with respect to a foreign partner's
Withholding and depositing of tax is not required under or beneficiary's share of income for the prior year to designate
! both chapters 3 and 4 for the same payment. In the case the deposit of the withholding as attributable to the preceding
CAUTION of a payment for which withholding is required under
year. In such a case, the partnership or trust will be required to
chapters 3 and 4, a withholding agent may credit the withholding report the associated amount and tax withheld on Forms 1042
applied under chapter 4 against its liability for any tax due under and 1042-S for the preceding year. If a partnership withholds on
section 1441, 1442, or 1443. For a payment subject to a foreign partner's share of income after March 15 of the
withholding under section 1445 or 1446, withholding under subsequent year, the due date for filing the applicable Form(s)
chapter 4 does not apply. 1042-S is September 15 of the subsequent year. For example, if
a partnership withholds on April 1, 2024, with respect to a foreign
Foreign partners of U.S. partnerships and foreign benefi- partner's share of undistributed income for the 2023 calendar
ciaries of U.S. trusts. To the extent that a domestic partnership year, the partnership may designate the deposit as made for
has not distributed a foreign partner's distributive share of 2023 and report the liability and tax withheld on the 2023 Form
income subject to withholding under section 1441, 1442, or 1042 and the 2023 Form 1042-S for the partner. The partnership
1443, or under chapter 4, it should not include any tax liability on or trust must also ensure that its chapter 3 status code properly
lines 1 through 60 for tax relating to the partner's distributive reflects its status as a partnership or trust (including as a WP or
share in the year the partnership earns the income, subject to

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WT). The associated liability should be reported on line 59, with 2023 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,
2024, for the applicable Form(s) 1042-S. Withholding after the time of payment. In limited cases, the
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 2023 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, 2023,
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, 2024 (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 2023 if the You should report on line 63c(2) the amounts you withheld in
following apply. the following calendar year in which the payment was made. You
• The distributing corporation made a reasonable estimate of should also report deposits of amounts withheld in the year
accumulated and current earnings and profits under Regulations following the calendar year in which the payment was made on
section 1.1441-3(c)(2)(ii)(A) or 1.1474-6(c)(2)(ii). line 65b.
• 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 15, 2024. 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, 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
procurement agreement with the United States. Line 62b. The amount on:
• Line 62b(1) should equal the sum of all amounts shown in
QIs with no primary chapters 3 and 4 withholding respon- box 2 of Form 1042-S that are U.S. source substitute dividend
sibility. If you are a QI that did not assume primary withholding payments; and
responsibility under both chapters 3 (including sections 1446(a) • The amount shown on line 62b(2) should equal all amounts
and (f)) and 4, enter the total amount of the tax liability of U.S. shown in box 2 of Form 1042-S that are U.S. source substitute
withholding agent(s) under both chapters 3 and 4 on line 59. payments other than substitute dividend payments.
Report all other amounts on the line that corresponds with the
date the liability was incurred. See Regulations section 1.1441-2(b)(4) regarding substitute
payments.
Note. Reporting on line 59 as described above also applies to Line 62c. The amount on line 62c should equal the sum of all
any other entity that reports on Form 1042 to the extent such amounts of U.S. source FDAP income shown in box 2 of Form
entity claims a credit on line 67 for amounts withheld by another 1042-S and all amounts shown as gross interest paid on Forms
withholding agent (whether under chapter 3 or 4). 1000.
Adjustments to withholding. If you used procedures for Line 62d. Enter gross amounts of U.S. source FDAP income
adjusting overwithholding or underwithholding, see Adjustment reportable on Forms 1000 and Forms 1042-S if different from the
for Overwithholding and Adjustment for Underwithholding, later, total gross amounts actually reported on Forms 1000 and Forms
for instructions on reporting on lines 1 through 60. 1042-S (as shown on line 62c).
Escrow procedure. A withholding agent that withheld tax
during calendar year 2023 and that was not required to deposit
with the IRS the amount of tax withheld during calendar year

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Total Tax Reported as Withheld or Paid liability under chapter 3 (on line 64b) and chapter 4 (on line 64c).
The amounts shown on lines 64b and 64c should not include any
Lines 63a through 63e. Except as noted directly below, enter amounts shown on lines 64a and 64d. Do not make any other
for each line the amounts reported for all Forms 1042-S adjustments to this line.
(regardless of whether the form was filed electronically or on
paper) and for all Forms 1000. Line 64d. Enter on line 64d amounts reported on the Record of
Line 63a. The amounts reported on line 63a should be the Federal Tax Liability that are attributable to liability for specified
amounts actually withheld by the withholding agent before any federal procurement payments under section 5000C.
applicable adjustments reported on lines 63c(1) and 63c(2). Line 64e. The amount on line 64e should equal the sum of
Line 63c(1). The amounts reported on line 63c(1) should be lines 64a through 64d.
amounts you repaid to the beneficial owner or payee in the year
following the calendar year of overwithholding pursuant to either Reporting of Taxes Paid and Overpayment or
the reimbursement or set-off procedures (and should also be Balance Due
reported as a reduction in tax liability on line 59). See
Adjustment for Overwithholding, later. The total of the amounts Line 65. Enter the total tax deposits you made for the year
reported on line 63c(1) should equal the sum of all amounts (including amounts paid with an extension of time to file). Enter
reported in box 9 of the corresponding Forms 1042-S. deposits of tax withheld during the calendar year in which the
Line 63c(2). The amounts reported on line 63c(2) should be related payment was made on line 65a. Enter deposits of tax
amounts that you withheld in the year following the calendar year withheld during the year following the calendar year in which the
of underwithholding from future payments made to a beneficial related payment was made (to the extent permitted under an
owner or from other property or additional contributions of a applicable regulation section in chapter 3 or 4) on line 65b. See
beneficial owner that you hold in custody or otherwise control. Withholding and reporting in a subsequent year, earlier.
See Adjustment for Underwithholding, later. Also report on Line 66. Enter any overpayment reported on the 2022 Form
line 63c(2) any other amounts that you withheld in the year 1042 that you are applying as a credit on the 2023 Form 1042.
following the calendar year in which the related payments were See line 71, later.
made (to the extent permitted under an applicable regulation
section in chapter 3 or 4). See Withholding after the time of Line 67. You are permitted to take a credit for amounts withheld
payment, earlier, for how to report the tax liability related to such by other withholding agents that relate to the total net tax liability
payments. reported on lines 64b and 64c. For example, you are a QI and
the amount you entered on line 64b includes amounts withheld
Note. The total of the amounts reported on lines 63a and 63c(2) by a U.S. withholding agent under chapter 3 with respect to
should equal the sum of all amounts withheld by the withholding payments made to you as an intermediary on behalf of your
agent and reported in box 7a of the corresponding Forms account holders. You may take a credit on line 67 for the
1042-S. amounts that were withheld by the U.S. withholding agent. The
amount on line 67 should equal the sum of all Forms 1042-S,
Note. The total of the amounts reported on lines 63b(1) and box 8, that you file for the year.
63b(2) should equal the sum of all amounts reported in box 8 of
all Forms 1042-S sent to recipients. Note. All withholding agents (including QIs, WPs, WTs, NQIs,
NWPs, and NWTs) must substantiate entries on lines 67a and
Line 63d. The amounts reported on line 63d should be the 67b by attaching a supporting Form(s) 1042-S or 1099 to verify
amounts paid by the withholding agent from its own funds rather the credit amounts claimed for withholding by other withholding
than through withholding from the payment to the recipient. The agents. Failure to do so will result in the denial of the refund or
amount on line 63d should equal the sum of all amounts credit being claimed. If you are a PTP or a nominee withholding
reported in box 11 of all Forms 1042-S sent to recipients. under section 1446, the tax paid for a payee may only be
Note. Amounts withheld and held in escrow (and not deposited claimed as a credit by the payee.
with the IRS) pursuant to the escrow procedures under QSL claiming a credit forward. If you are a QSL or other
Regulations section 1.1471-2(a)(5)(ii) or 1.1441-3(d) are not withholding agent claiming a credit forward of prior withholding
reported on lines 63a through 63d until the year they are on substitute dividends on line 67b as determined under Notice
deposited with the IRS. See the instructions for Lines 1 through 2010-46, you should attach Form(s) 1042-S issued to you to
60, earlier. Therefore, amounts that are reported as held in support such credits. If a credit is claimed with respect to any
escrow (see box 7b of Form 1042-S) are not taken into account U.S. source substitute dividends paid to you from a withholding
for purposes of reconciling lines 63a through 63d with the agent that has not issued a Form 1042-S to you for such
corresponding Forms 1042-S. payments, attach a supporting statement to Form 1042
indicating the following to support your credit.
Total Net Tax Liability • The withholding agent's name, address, and EIN (if known).
Line 64a. Include on line 64a any adjustments to total net tax • The amount of U.S. source substitute dividends received from
liability. For example, report any adjustment to liability when: the withholding agent.
• A distributing corporation made a reasonable estimate of • The amount of credit forward you included on line 67b in
accumulated and current earnings and profits under Regulations connection with these substitute dividends.
section 1.1441-3(c)(2)(ii)(A) or 1.1474-6(c)(2)(ii); and Lines 70a and 70b. Enter on line 70a any overpayment
• A distributing corporation or intermediary paid over any attributable to payments subject to withholding under chapters 3
underwithheld tax with respect to the distribution by March 15, and 4. Enter on line 70b any overpayment attributable to
2024. payments subject to the excise tax on specified federal
procurement payments. Do not include on these lines any
Note. The amount reported on line 64a must not be included in overpayment attributable to amounts that were actually withheld
the Record of Federal Tax Liability (lines 1 through 60). from the beneficial owner (unless such amounts were repaid
Lines 64b and 64c. Enter the sum of the amounts reported on pursuant to the reimbursement or set-off procedures).
the Record of Federal Tax Liability (that is, the sum of lines 5, 10,
15, 20, 25, 30, 35, 40, 45, 50, 55, and 60) that are attributable to

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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 2024. you make before the end of calendar year 2024 (the year after
Note that if you repaid the recipient overwithheld amounts after the calendar year in which the amount was overwithheld).
year-end 2023 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
2023 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 2024 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 The reductions that you applied pursuant to the set-off
calendar year. If you discover that you overwithheld tax by procedure during the calendar year must be reflected on the line
March 15 of the following calendar year, you may use any for the period you reduced your liability. The amount reported on
undeposited amount of tax to make any necessary adjustments line 59 for the calendar year for which you overwithheld tax must
between you and the recipient of the income before you make a reflect reductions that you applied pursuant to the set-off
deposit. Repay the recipient and reduce the amount of your total procedure during the subsequent calendar year, if applicable.
deposit. Report the reduced tax liability on lines 1 through 60 for Amounts reported on line 63c(1) should be limited to amounts
the period(s) for which you repaid the overwithheld tax. 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 2024 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 2023, 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 after March 15 of the following calendar year that you
which the amount was overwithheld; or overwithheld tax for the prior year, do not adjust the amount of
• The due date for filing Form 1042-S for the calendar year tax liability reported on Form 1042 or on any deposit or payment
(generally, March 15 of the year after the calendar year in which 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 In this situation, the recipient will have to file a U.S. income
for the calendar year for which you overwithheld tax must reflect tax return (Form 1040-NR or Form 1120-F) or, if a tax return has
the amount of the reduced tax liability for amounts you repaid the already been filed, a claim for refund (Form 1040-X or amended
beneficial owner or payee in the subsequent calendar year, if Form 1120-F) to recover the amount overwithheld.
applicable. Amounts reported on line 63c(1) should be limited to
amounts repaid to the beneficial owner or payee in the Adjustment for Underwithholding
subsequent calendar year (before the earlier of the filing of the Under the procedures for adjusting underwithholding (see
associated Form 1042-S or the due date for such form). On Regulations sections 1.1461-2(b) and 1.1474-2(b)), you may
line 71, indicate that you are claiming a credit to be applied in the withhold from future payments made to a beneficial owner the
2024 calendar year for amounts you repay the beneficial owner tax that should have been withheld, or satisfy the tax from
or payee in the subsequent calendar year (note that you may not property or additional contributions of the beneficial owner that
claim a refund for such an amount). you hold in custody or otherwise control, before the date (without
For example, if you overwithhold tax in 2023, you must repay extensions) that the Form 1042 is required to be filed. You should
the beneficial owner by March 15, 2024 (or the date on which report the liability related to such withholding on lines 1 through
you filed the associated Form 1042-S with the IRS, if earlier). You 60 for the period during the year in which you adjusted
must keep a receipt showing the date and amount of the underwithholding by withholding additional tax. If you adjust
repayment and provide a copy of the receipt to the beneficial underwithholding by withholding in the year following the
owner if you repaid the beneficial owner. If you repaid the calendar year of underwithholding, you should report the
beneficial owner after year-end 2023, you must report the increased liability on line 59 for the year in which the
repayment on line 63c(1). You must reduce your federal tax underwithholding occurred. Amounts reported on line 63c(2)
liability on line 59 of your 2023 Form 1042 by the amount of the should be limited to amounts withheld in the year following the

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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
This section is used by the withholding agent to reconcile the (including amounts reported under both chapter 3 and
amount of U.S. source FDAP income reportable under chapter 4 chapter 4). The amount on line 4 should equal the total gross
and paid by the withholding agent during the calendar year with amounts of U.S. source FDAP income reported on line 62c.
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
calendar year. This section also allows reporting of the amounts Line 6. If the amount reported on line 5 is other than zero, use
of U.S. source FDAP income for which chapter 4 withholding is this line to provide an explanation for the variance. If additional
required and reporting of the amounts for which withholding is space is needed, attach a sheet to Form 1042 explaining the
not required according to the exemption from chapter 4 difference noted on line 5.
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:
• Payments of U.S. source FDAP income for which withholding Check the box if you are a withholding agent that makes any
under chapter 4 was applied to the payment, plus payment under a potential section 871(m) transaction during the
• Payments of U.S. source FDAP income for which withholding year, including a notional principal contract or other derivative
under chapter 4 was not required but that are subject to reporting contract that references, in whole or in part, a U.S. stock or
for chapter 3 purposes on Forms 1042-S. underlying security. See Regulations section 1.871-15(a)(12) for
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. Dividend Equivalent
Line 2. Enter amounts of U.S. source FDAP income not Payments by a Qualified Derivatives
required to be withheld upon under chapter 4 on lines 2a through
2d according to the exception to withholding that applied to each Dealer (QDD)
payment reportable on Form 1042-S. The amount on line 2e If a QI (whether the home office or any branch) was a QDD
should equal the sum of lines 2a through 2d. during the tax year, check the box, enter the regular EIN (if any)
Line 2a. Enter the amounts of U.S. source FDAP income that of the QI (not the QI-EIN) in the field provided, and attach a
are withholdable payments, but for which the withholding agent Schedule(s) Q (Form 1042) for each QDD. You must complete
has obtained documentation that establishes a chapter 4 status and attach Schedule(s) Q (Form 1042) even if the QDD has zero
that does not require withholding under chapter 4 (for example, tax liability.
PFFI). The amount reported on this line should generally equal
the aggregate amount reported in box 2 of all of the Forms 1042- Note. In addition to filing a separate Schedule Q (Form 1042)
S you filed for the calendar year for which exemption code 15, for each QDD, if the QI has a tax year other than the calendar
Payee not subject to chapter 4 withholding, was included in year, the QI must file separate Schedules Q (Form 1042)—one
box 4a. for the portion of the calendar year in the first tax year and a
Line 2b. Enter the amounts of U.S. source FDAP income that second one for the portion in the second tax year.
are not withholdable payments because they are nonfinancial
type payments (for example, royalties, services, rents). The Note. A QI that was a QDD or had a branch that was a QDD
amount reported on this line should generally equal the during the tax year, including a QI that was a partnership, must
aggregate amount reported in box 2 of all of the Forms 1042-S complete Schedule(s) Q (Form 1042) for each QDD.
you filed for the calendar year for which the exemption code 16,
Excluded nonfinancial payment, was included in box 4a. Third Party Designee
Line 2c. Enter the amounts of U.S. source FDAP income that If you want to allow any individual, corporation, firm,
are not withholdable payments because they are payments organization, or partnership to discuss your 2023 Form 1042
related to grandfathered obligations (for example, obligations with the IRS, check the “Yes” box in the Third Party Designee
outstanding on July 1, 2014). See Regulations section 1.1471- section of the return. Also, enter the designee's name, phone
2(b). The amount reported on this line should generally equal the number, and any five digits the designee chooses as his or her
aggregate amount reported in box 2 of all of the personal identification number (PIN). The authorization applies
Forms 1042-S you filed for the calendar year for which the only to the tax form upon which it appears.
exemption code 13, Grandfathered payment, was included in If you check the “Yes” box, you are authorizing the IRS to call
box 4a. the designee to answer any questions relating to the information
Line 2d. Enter the amounts of U.S. source FDAP income that reported on your tax return. You are also authorizing the
are not withholdable payments because they are payments of designee to:
effectively connected income (ECI). The amount reported on this

-10- Instructions for Form 1042 (2023)

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• Exchange information concerning your tax return with the IRS;          Do not amend Form 1042 to recover taxes overwithheld in the 
and                                                                      prior year. For more information, see Adjustment for 
• Request and receive written tax return information relating to         Overwithholding, earlier.
your tax return, including copies of specific notices, 
correspondence, and account transcripts.                                 Privacy Act and Paperwork Reduction Act Notice.         We ask 
  You are not authorizing the designee to receive any refund             for the information on this form to carry out the Internal Revenue 
check, bind you to anything (including additional tax liability), or     laws of the United States. Sections 1441, 1442, 1446 (for PTPs), 
otherwise represent you before the IRS. If you want to expand            and 1471–1474 require withholding agents to report and pay 
the designee’s authorization, see Pub. 947, Practice Before the          over to the IRS taxes withheld from certain U.S. source income 
IRS and Power of Attorney.                                               of foreign persons. Form 1042 is used to report the amount of 
                                                                         withholding that must be paid over. Form 1042-S is used to 
  The authorization automatically expires 1 year from the due            report the amount of income and withholding to the payee. 
date (without any extensions) for filing your 2023 Form 1042. If         Section 6109 requires you to provide your identifying number on 
you or your designee desires to terminate the authorization, a           the return. Routine uses of this information include giving it to the 
written statement conveying your wish to revoke the                      Department of Justice for civil and criminal litigation, and to 
authorization should be submitted to the IRS service center              cities, states, the District of Columbia, and U.S. commonwealths 
where the return was processed.                                          and territories for use in administering their tax laws. We may 
                                                                         also disclose this information to other countries under a tax 
Paid Preparers                                                           treaty or tax information exchange agreement, to federal and 
A withholding agent or intermediary may designate a partner,             state agencies to enforce federal nontax criminal laws, or to 
member, owner, any corporate office authorized to sign, or               federal law enforcement and intelligence agencies to combat 
fiduciary to sign Form 1042. The paid preparer's space should            terrorism. If you fail to provide this information in a timely manner, 
remain blank if the form is completed by one of these individuals.       you may be liable for penalties.
  If the form is completed by a paid preparer with a valid 
preparer tax identification number (PTIN), the paid preparer             You are not required to provide the information requested on 
should complete the paid preparer's section. Generally, anyone           a form that is subject to the Paperwork Reduction Act unless the 
who is paid to prepare the return must do the following.                 form displays a valid OMB control number. Books or records 
• Sign the return in the space provided for the preparer's               relating to a form or its instructions must be retained as long as 
signature.                                                               their contents may become material in the administration of any 
• Fill in the other blanks in the “Paid Preparer Use Only” area of       Internal Revenue law. Generally, tax returns and return 
the return. A paid preparer cannot use a social security number          information are confidential, as required by section 6103.
(SSN) in the “Paid Preparer Use Only” box. The paid preparer             The time needed to complete and file this form will vary 
must use a PTIN.                                                         depending on individual circumstances. The estimated burden 
• Give the withholding agent or intermediary a copy of the               for business taxpayers filing this form is approved under OMB 
return in addition to the copy to be filed with the IRS.                 control number 1545-0123. The estimated burden for all other 
  A paid preparer may sign original or amended returns by                taxpayers who file this form is: Recordkeeping, 10 hr., 31 min.; 
rubber stamp, mechanical device, or computer software                    Learning about the law or the form, 2 hr., 25 min.; Preparing 
program.                                                                 the form, 4 hr., 34 min.; and Copying, assembling, and 
                                                                         sending the form to the IRS, 32 min.
Amended Return                                                           If you have comments concerning the accuracy of these time 
If you have to make changes to your Form 1042 after you submit           estimates or suggestions for making this form simpler, we would 
it, file an amended Form 1042. Use a Form 1042 for the year you          be happy to hear from you. You can send us comments from 
are amending. Check the “Amended Return” box at the top of the           IRS.gov/FormComments. Or you can write to the Internal 
form. You must complete the entire form, including all filing            Revenue Service, Tax Forms and Publications, 1111 
information for the calendar year, and sign the return. Attach a         Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not 
statement explaining why you are filing an amended return (for           send the form to this address. Instead, see Where and When To 
example, you are filing because the tax liability for May was            File, earlier.
incorrectly reported due to a mathematical error).
  If you are also amending Form(s) 1042-S, see Amended 
Return in the Form 1042-S instructions.

Instructions for Form 1042 (2023)                                    -11-

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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     3             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    9      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 3        Section 3. Potential Section 871(m) 
Avoid Common Errors      5                Nonparticipating FFI 3                  Transactions      10
                                          Nonqualified intermediary   3          Section 4. Dividend Equivalent 
C                                         Nonwithholding foreign partnership   3  Payments by a Qualified 
Certain distributions subject to          Nonwithholding foreign trust   3        Derivatives Dealer (QDD)               10
  section 1445 withholding tax   2        Participating FFI 3                    Specific Instructions 5
Chapter 3 and 4 status codes 1            Passive non-financial foreign entity    Address   5
Corporate distributions  7                (NFFE)     3                            Chapter 3 and 4 status codes of 
                                          Qualified derivatives dealer (QDD)   3  withholding agent      5
D                                         Qualified intermediary 2                Employer identification number 
                                                                                  (EIN)   5
                                          Qualified securities lender 3
Deposit Requirements     4                                                        Rounding off to whole dollars          5
                                          Recalcitrant account holder   3
  Depositing on time 4                                                           Specified federal procurement 
                                          Registered deemed-compliant FFI      3
  Deposits made during subsequent                                                 payment   7
  year   4                                Withholding foreign partnership or 
                                          withholding foreign trust     2
  Electronic deposit requirement 4                                               T
  Escrow procedure   4                                                           Third Party Designee    10
                                        P
  Same-day wire payment option   4                                               Total Gross Amounts Reported              7
                                        Potential 871(m) transactions     1
                                                                                 Total Net Tax Liability 8
E                                       Privacy Act and Paperwork Reduction 
                                          Act Notice 11                          Total Tax Reported as Withheld or 
                                                                                  Paid 8
Election To Withhold Under Section      Publicly traded partnerships (section 
  3406 4                                  1446 withholding tax)    2
Escrow procedure    4 7,                                                         W
Excise tax on specified federal         Q                                        Where and When To File     3
  procurement payments     7                                                      Extension of time to file 3
                                        Qualified derivatives dealers 
F                                         (QDDs)   1                             Who Must File 2
                                        Qualified intermediaries with no         Withholding after the time of 
Foreign partners of U.S. partnerships     primary chapters 3 and 4                payment   7
  and foreign beneficiaries of U.S.       withholding responsibility     7       Withholding Agent    2
  trusts 6                                                                        Liability for tax 2

                                                       -12-

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