What Form 1042 (2011) Is For
IRS Form 1042 (2011) is the annual withholding tax return used by the Internal Revenue Service to collect information about payments made to foreign persons. It is filed by withholding agents who are responsible for reporting income tax withholding on U.S.-source income paid to foreign individuals, corporations, partnerships, trusts, and estates. The form ensures that income paid to nonresident aliens and other foreign entities is correctly reported and any tax owed is deposited with the IRS.
The form applies to income subject to withholding, including interest, dividends, rents, royalties, compensation for personal services, pensions, scholarships, and certain payments under government contracts. Even if no tax was withheld because of a tax treaty or exemption, the withholding agent must still file Form 1042 to report the amounts paid.
Any United States-based institution, corporation, partnership, or employer that makes payments to foreign persons for services or other taxable activities must file Form 1042. It is also used by universities, payroll offices, and businesses that pay non-U.S. citizens or international students for wages, stipends, or scholarships.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our comprehensive Form 1042 (2011) Instructions: Guide for Withholding Agents.
When You’d Use Form 1042 (2011)
IRS Form 1042 (2011) is the annual withholding tax return used by withholding agents to report tax withheld and income paid to foreign persons, foreign corporations, foreign partnerships, and foreign trusts. It covers source income subject to withholding, such as wages, dividends, interest, and certain income reported under a tax treaty. The form ensures the Internal Revenue Service receives accurate information on the income of foreign persons and payments made to nonresident aliens.
Key Rules or Details for 2011
For 2011, all taxes withheld had to be deposited electronically through EFTPS, and withholding agents who filed 250 or more Forms 1042-S were required to use electronic filing. Foreign partnerships, foreign estates, and foreign corporations were required to report amounts paid and income subject to withholding. Failure to file or pay on time could result in penalties unless reasonable cause was shown.
For complete details on wage reporting, withholdings, and unemployment tax filings, see our guide for the Annual Withholding Tax Return for U.S. Source Income.
Step-by-Step (High Level)
Step 1: Determine the Filing Obligation
A withholding agent must review all payments made during 2011 and determine whether the income was U.S. source income paid to foreign persons or other entities subject to withholding.
Step 2: Obtain the Employer Identification Number (EIN)
A withholding agent must have an EIN or special identifier, such as a QI-EIN, WP-EIN, or WT-EIN, before filing.
Step 3: Maintain Deposit Records
A withholding agent must deposit withheld taxes through EFTPS on schedule and maintain a complete record of all payments.
Step 4: Prepare Form 1042-S
A separate Form 1042-S must be completed for each foreign person or corporation that received income. This form details the type of income, tax withheld, and any treaty benefits applied.
Step 5: Complete Form 1042
A withholding agent must summarize all Form 1042-S information on Form 1042, reconciling total income paid and tax withheld.
Step 6: Verify Accuracy
All amounts reported on Form 1042 must match those on Form 1042-S. Discrepancies can result in correspondence from the IRS or an audit.
Step 7: File and Retain Copies
The form must be filed by the due date, either electronically or by mail to the IRS Ogden Service Center. Copies of Form 1042, 1042-S, and deposit confirmations must be kept for at least three years.
Common Mistakes and How to Avoid Them
Withholding agents frequently make errors on Form 1042 that can lead to penalties, delays, or IRS notices. Careful attention to filing details helps ensure accurate and compliant reporting.
- Failing to reconcile Form 1042 and Form 1042-S: Always verify that totals on Form 1042 match recipient amounts reported on all Forms 1042-S to avoid audit triggers or correction notices.
- Missing deposit deadlines: Deposits made through EFTPS must be initiated by 8 p.m. Eastern Time on the day before the due date to be considered timely.
- Reporting income on the wrong line or period: Each liability line corresponds to a specific quarter or monthly period; ensure income and payments are reported in the correct period.
- Incorrectly handling overwithholding adjustments: Use the reimbursement or set-off procedure for excess tax withheld; do not amend a prior-year return to correct overwithholding.
- Filing both paper and electronic forms: Choose one filing method and confirm successful electronic transmission before completing the process.
Thorough reconciliation, adherence to deposit rules, and accurate reporting help withholding agents file Form 1042 correctly and avoid costly compliance issues.
What Happens After You File
After the form is filed electronically or on paper, the IRS reviews the return and verifies the reported amounts against all related 1042-S forms. If an overpayment or discrepancy is found, the withholding agent may request a refund or apply it to the next tax return for U.S. source income. The Internal Revenue Service may issue correspondence for clarification or impose penalties if willful neglect or underreporting occurs.
FAQs
Who must file IRS Form 1042 (2011)?
IRS Form 1042 (2011) must be filed by any withholding agent, such as a United States-based institution, payroll office, or employer, that reports tax withheld and payments made to foreign persons, foreign corporations, or nonresident aliens during the calendar year.
What is the main difference between Form 1042 and Form 1042-S?
Form 1042 is the annual withholding tax return summarizing total income tax withholding and payments made, while the 1042-S Form reports amounts paid to each foreign person, foreign trust, or foreign estate subject to withholding under IRS regulations.
How does a withholding agent report income subject to withholding?
A withholding agent must report amounts paid to foreign persons or entities on Form 1042 and 1042-S, including income subject to withholding, such as interest, dividends, personal services, and certain income reported under the applicable tax treaty.
Can international students or universities use Sprintax Calculus for tax purposes?
Yes. International students, universities, and payroll offices often use Sprintax Calculus or similar tax preparation software to calculate tax withholding, report income paid, and prepare IRS tax forms for nonresident aliens and other foreign persons.
When is the due date to file Form 1042 for 2011?
The due date to file IRS Form 1042 (2011) was March 15, 2012. If this legal holiday or weekend fell on a non-business day, the next business day became the filing deadline for the tax return for U.S. source income.
How are errors or overpayments handled after filing?
If a withholding agent discovers errors or overpayments, they may file an amended return or request adjustments to correct them. The agent must provide a detailed explanation and ensure the corrected information is filed electronically or by paper forms with the Internal Revenue Service.
What types of payments are subject to withholding under Form 1042?
Payments subject to withholding include U.S. source income of foreign persons, such as interest, royalties, wages, scholarships, and dividends, as well as certain types of income from foreign sources. These payments made to foreign corporations or partnerships must be reported accurately to the IRS...
