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

Disclaimer: This information is provided as a self-help tool and does not constitute legal or financial advice. Laws, regulations and lending products are changing daily and decisions as to whether or how to use this information and/or what actions to take are solely those of the employer. The providers of this information disclaim any and all responsibility and liability for its accuracy, completeness or fitness for your particular business purposes