When to file Form 1042 instead of a 1099 to report payments to IRS
If you work with vendors, business owners or landlords who live internationally, you may need to file IRS Form 1042 instead of a 1099 to report your payments to them.
IRS Form 1042 is used to report funds that are paid to a non-US person or entity who receives US taxable income. There are two forms that need to be filed in this case: your income tax return on Form 1042, and the information return for the recipient on Form 1042-S. Even if you are not withholding taxes (exempt), you are required to file a Form 1042-S.
To file a Form 1042, you will need a W-8 instead of a W-9 form from the payee. If the person or entity is tax-exempt or has a tax reduction, they should also provide a treaty. If there is not a treaty in place for a tax reduction or exemption, withhold 30% of any payment for taxes.
Whether filed on paper or electronically, Forms 1042 and 1042-S are due to the IRS and to the recipient by March 15 (or following business day if the date falls on a weekend or holiday). The IRS intends to make all filing electronic in the future, but for now, make sure to include Form 1042-T if transmitting paper forms. You can file an extension for Form 1042 by filing Form 7004, or file an extension for Form 1042-S by filing Form 8809. For Form 1042-S, this will result in an automatic 30-day extension. Late filing or payments may incur penalties.
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IRS Form 1042 Resources
- Discussion of Forms 1042, 1042-S, and 1042-T
- About Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
- About Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding
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