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Form 1042: Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
IRS Form 1042 is the Annual Withholding Tax Return for U.S. Source Income of Foreign Persons. This form reports tax liability, and penalties for late filing can be up to 25% of unpaid tax.
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IRS Form 1042 - Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
IRS Form 1042 is the Annual Withholding Tax Return for U.S. Source Income of Foreign Persons. This form reports tax liability, and penalties for late filing can be up to 25% of unpaid tax.
Risk Radar
Scan points- 1Ensure the sum of monthly totals in Section 1 matches total tax liability on lines 64b, 64c, and 64d.
- 2Failing to designate the tax liability as either a chapter 3 or chapter 4 liability.
- 3Not ensuring Section 2—Reconciliation of Payments is completed, even if no Chapter 4 amounts were withheld.
- 4Omitting adjustments from line 64a when calculating the total tax liability for lines 64b through 64d.
- 5Reporting an amount on line 59 that does not reflect repayments made in the subsequent calendar year (if applicable).
Plain English
This form tells the IRS how much tax has been taken out (withheld) from income earned by someone who is not a U.S. citizen or resident. It shows the total tax owed, allowing the filer to reconcile that amount against what was actually paid. If filed late, penalties and interest may be charged.
Submission Date
- Filing date: 2025-12-09 10:10:39
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when reporting tax withheld under chapter 3 (excluding withholding under sections 1445 and 1446 unless indicated) on certain income of foreign persons, including nonresident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts.
- Do not use Form 1042 when the payment is subject to withholding under section 1441 (for pensions, annuities, or other deferred income); these payments should also be reported on Form 1042-S.
- Check Form 945 instead when reporting tax withheld on a withholdable payment that is also a reportable payment made to recalcitrant account holders of a PFFI or RDCFFI electing Section 3406 withholding.
Form selector
Use this form or another form?
Wages/Pensions (Nonresident Alien Employee)
Used to report income tax withheld and social security and Medicare taxes on wages paid to a nonresident alien employee.
✓ Check if you are paying wages or pensions.
Household Wages (Nonresident Alien)
Used to report income tax withheld and social security and Medicare taxes on wages paid to a nonresident alien household employee.
✓ Verify the recipient is classified as a household employee.
PFFI electing Section 3406 withholding
Use this form to report tax withheld when you elect to withhold under section 3406 instead of chapter 4.
✓ Confirm the election was made and requires reporting on Form 945.
Deadline or filing window
Late filing incurs a penalty of 5% of unpaid tax for each month or part of a month late, up to 25%. For reimbursement, the repayment must occur by the earlier of filing Form 1042-S or the due date (generally March 15 of the following year).
Checklist
What you need before filling it out
Chapter 3 Withholding
The amount withheld under chapter 3 on income of foreign persons · Form 1042 / Instructions p.2
Filer Responsibility
Every withholding agent or intermediary who receives, controls, has custody of, disposes of, or pays a withholdable payment (to which chapter 4 applies) · Instructions p.2
Paper Filing Deadline
The due date is the 15th day of the 3rd month after the end of the calendar year · Instructions p.4
Electronic Filing Requirement
Whether the withholding agent qualifies as a financial institution · Instructions p.4
Section 3406 Election
The election to withhold under section 3406 instead of chapter 4 · Form 1042 / Instructions p.4
Deposit Requirement
Use of EFTPS or IRS Direct Pay for deposits · Instructions p.4
Before you submit
- 1Verify that all payments reported are subject to withholding under chapter 3, unless otherwise noted.
- 2Confirm if you must file as a Withholding Agent or Intermediary for Form 1042.
- 3Check the required filing method: Paper (Mail) or Electronic (required for financial institutions).
- 4Ensure that all payments reported are accounted for regarding whether Chapter 3 or Chapter 4 withholding applied.
- 5If reporting Section 3406, confirm Form 945 was used to report tax withheld on those specific payments.
- 6Confirm the required deposit method is EFTPS or IRS Direct Pay (do not mail deposits directly).
- 7Verify that if filing by mail, the due date is March 15th, and account for holidays/weekends.
How to file this form
- 1Determine if Form 1042 must be filed based on whether the entity acts as a withholding agent or intermediary.
- 2Complete all sections of Form 1042, detailing the tax withheld under chapter 3 (or other applicable chapters).
- 3Deposit the total amount of tax required to be shown on Form 1042 using either EFTPS or IRS Direct Pay.
- 4Mail the completed Form 1042 by March 15th to P.O. Box 409101, Ogden, UT 84409 (if not filing electronically), and retain a copy for proof of filing.
Known limitations
- 1If a withholding agent has multiple branches and does not have an EIN for all of them (other than the U.S. branch), they must get a separate EIN to file Form 1042 on behalf of those other branches.
- 2The amount of tax required to be shown on Form 1042 determines the frequency of deposits; specific rules explain how often these deposits must occur.
- 3If an overwithholding is discovered after March 15 of the following calendar year, the withholding agent should not adjust the tax liability reported on Form 1042 or any prior deposit/payment unless they are a QI, WP, WT, PFFI, or reporting Model 1 FFI making a collective refund claim.
Field map
Compact field-by-field guide
Personal Info
3 items
Enter your legal first and last name as shown on your Social Security card.
Your SSN must match IRS records exactly.
Current mailing address including street, city, state, and ZIP code.
Filing Status
1 items
Select: Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Surviving Spouse.
Income
1 items
Sum of all income sources — wages, interest, dividends, business income, capital gains, unemployment, retirement, and other income.
Adjustments
1 items
Total income minus above-the-line deductions such as IRA contributions, student loan interest, and HSA contributions.
Deductions
1 items
Choose the higher of the standard deduction for your filing status or total itemized deductions from Schedule A.
Tax
1 items
AGI minus deductions. This determines your tax bracket and the amount of tax owed.
Payments
1 items
Sum of federal tax withheld, estimated tax payments, and refundable credits like the Child Tax Credit.
Signatures
1 items
You must sign and date the return. Unsigned returns are invalid.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is 20/25. Instructions direct users to IRS.gov/Form1042 for the latest information regarding Form 1042.
What changed or needs a fresh check
- Edition date — confirm the revision reads 20/25.
- Mailing address (Paper filing) — confirm the address is P.O. Box 409101, Ogden, UT 84409.
- Electronic Filing Requirement — confirm electronic filing is required if the withholding agent is a financial institution.
- Filing Deadline (Paper) — confirm the due date is March 15th (the 15th day of the 3rd month after year-end).
- Deposit Method — confirm you must use EFTPS or IRS Direct Pay to deposit tax withheld.
Quick Facts
Downloads
After you file
- 1Retain a copy of the filed Form 1042.
- 2If interest or penalties are included with the payment, identify and enter that amount in the bottom margin of Form 1042 (do not include it in the balance due on line 69).
- 3If you expect to file this form again, ensure you check the appropriate box on Form 1042.
- 4If you do not expect to file Form 1042 in the future, check the corresponding box on Form 1042.
- 5When receiving an EIN for a branch, file amended Forms 1042-S.
- 6For claims of credit or refund by the beneficial owner of an applicable borrow fee, refer to the Instructions for Form 1040-NR and Form 1120-F.
Sources
- SRCInstructions p.1 — The official title is Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.
- SRCInstructions p.1 — Notice 2025-63 was released on October 23, 2025, regarding proposed regulations for certain borrow fees.
- SRCInstructions p.1 — For claims for credit or refund by the beneficial owner, refer to Instructions for Form 1040-NR and Form 1120-F.
- SRCInstructions p.4 — Tax must be deposited using either Electronic Federal Tax Payment System (EFTPS) or IRS Direct Pay; mailing deposits directly is cautioned against.
- SRCInstructions p.6 — If filing late or failing to pay when due, penalties and interest may apply unless failure was due to reasonable cause and not willful neglect.
- SRCInstructions p.11 — If overwithheld after March 15 of the following calendar year, do not adjust liability on Form 1042 or prior deposits/payments unless you are a QI, WP, WT, PFFI, or reporting Model 1 FFI making a collective refund.
- SRCForm p.1 — The form is titled Annual Withholding Tax Return for U.S. Source Income of Foreign Persons and has OMB No. 1545-0096.
- SRCInstructions p.3 — Form 1042 includes reporting Model 2 FFI.
Common confusion points
Should I include interest or penalties in the balance due on line 69?
Interest and penalties must be identified and entered separately in the bottom margin of Form 1042.
→ Check that you do not enter them into the main 'balance due' amount on Line 69.
What happens if I overwithheld tax for the prior year after March 15?
Do not adjust the reported tax liability or previous deposits/payments unless you are a specific type of entity (QI, WP, WT, PFFI, or reporting Model 1 FFI making a collective refund).
→ Confirm that your entity status matches one listed in the instructions.
How do I pay the required tax?
Use either the Electronic Federal Tax Payment System (EFTPS) or IRS Direct Pay; mailing deposits directly to the IRS is cautioned against.
→ Verify you are using EFTPS or IRS Direct Pay for deposit.
What if my branch has multiple locations and needs a separate EIN?
Each branch requires its own EIN, unless it is the U.S. branch. If you don't have one, apply via IRS.gov/EIN.
→ Ensure you have an EIN assigned to every entity filing on Form 1042.
What if I file late or fail to pay?
You may be liable for penalties and interest unless the failure was due to reasonable cause and not willful neglect.
→ Check your payment date against the required deposit schedule.
Where do direct deposit details go?
The lines 71b, 71c, and 71d have been added to Line 71 on Form 1042 for direct deposit information.
→ Confirm you are using the expanded fields (71b-71d) if providing bank account details.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 7004 to request an extension of time to file, which dictates deposit requirements.
Questions about IRS Form 1042
What is IRS Form 1042 used for?
This form tells the IRS how much tax has been taken out (withheld) from income earned by someone who is not a U.S. citizen or resident. It shows the total tax owed, allowing the filer to reconcile that amount against what was actually paid. If filed late, penalties and interest may be charged.
Who must file IRS Form 1042?
A withholding agent must file IRS Form 1042. This applies when reporting the tax liability for U.S. Source Income of Foreign Persons.
What information does IRS Form 1042 require?
The form collects details on the tax liability itself, which is reported in Section 1 (lines 5 through 60). It also requires completing Section 2—Reconciliation of Payments of U.S. Source FDAP Income to show payments made.
When is IRS Form 1042 due?
Filing deadlines depend on the procedure used; for reimbursement, the deadline is the earlier of filing Form 1042-S or the due date for that form (generally March 15 of the following year).
Where do I file IRS Form 1042?
The source does not specify a single service center address but implies routing based on the submission method. The instructions cover procedures for reimbursement and set-off.
How do I complete IRS Form 1042?
The filer must first calculate the total tax liability reported in Section 1 (lines 64b, 64c, and 64d). Then, they must complete Section 2 to reconcile payments. Finally, the form requires signatures, though this is a general mechanic not explicitly detailed as part of a specific section step.
What happens if IRS Form 1042 is filed incorrectly?
If IRS Form 1042 is filed late or tax is unpaid when due, penalties and interest may be assessed unless reasonable cause and no willful neglect can be shown.
Should I include interest or penalties in the balance due on line 69?
Interest and penalties must be identified and entered separately in the bottom margin of Form 1042. Check that you do not enter them into the main 'balance due' amount on Line 69.
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