Form 1042-S (2019) – Checklist
Purpose and Scope
Form 1042-S reports U.S.-source income paid to foreign persons subject to Chapter 3 and Chapter 4 withholding. Withholding agents must distinguish between Chapter 3 status codes under IRC sections 1441–1442 and Chapter 4 status codes under FATCA regulations.
The 2019 form includes new reporting features for partnership withholding and escrow procedures. Each form must report only one income type per recipient, and withholding agents must file separate forms when both Chapter 3 and Chapter 4 withholding apply to the same payment.
Financial institutions that maintain accounts at U.S. offices must report payments on an account-by-account basis for the same recipient. The same type of income paid to multiple financial accounts held by one recipient requires separate Forms 1042-S for each account.
This requirement applies to accounts defined under Regulations section 1.1471-5(b)(1). Withholding agents must assign a unique ten-digit identifying number to each form filed, and this number cannot be the recipient's U.S. or foreign tax identification number.
Key Reporting Requirements
Chapter Indicator (Box 3)
You must enter either "3" for Chapter 3 withholding or "4" for Chapter 4 withholding. When both chapters apply to a payment, you must file separate Forms 1042-S for each chapter rather than combining the reporting on a single form.
Income Codes (Box 1)
Select the appropriate code from the 2019 income code table, ranging from 01 through 55. Income Code 40 designates "Other dividend equivalents under IRC section 871(m)" and reflects updated terminology from the former section 871(l) reference. Income Code 55 reports taxable death benefits paid on life insurance contracts, which represents a new addition for 2019.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Withholding Agent Information (Box 12)
Enter your Employer Identification Number in Box 12a, Chapter 3 status code in Box 12b, and Chapter 4 status code in Box 12c. Box 12e requires your Global Intermediary Identification Number if you qualify as a Financial Institution under FATCA. Non-Financial Institution withholding agents may omit the GIIN or enter "N/A" when the withholding agent operates as a U.S. person engaged in a trade or business.
Escrow Procedures (Box 7b)
Check this box only when federal tax was withheld but not deposited with the IRS because you applied escrow procedures under Regulations sections 1.1471-2(a)(5)(ii) or 1.1441-3(d). These procedures apply when you cannot determine the beneficial owner's status or verify treaty claim certifications at the time of payment. You must report payments subject to escrow procedures on separate Forms 1042-S from other payments.
Partnership Withholding (Box 7c)
Check this box if you are a partnership that received an amount subject to withholding during the calendar year and you are withholding on the amount includible in a foreign partner's distributive share in the subsequent year. Check the box only when you have designated the deposit as attributable to the preceding year. This checkbox represents a new requirement for the 2019 reporting year.
Recipient Status and Treaty Benefits
Status Codes (Boxes 13f and 13g)
Enter the recipient's Chapter 3 status code in Box 13f and the Chapter 4 status code in Box 13g. Both boxes require completion regardless of the payment type being reported.
Artist and Athlete Reporting
When you use Income Code 42 (no central withholding agreement) or Income Code 43 (central withholding agreement), you must enter Recipient Code 22 for artist or athlete instead of Code 16 for individual. Income Code 43 applies only when the IRS has issued Letter 4492, Venue Notification. Without this letter, you must use Income Code 42 and still apply Recipient Code 22.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Limitation on Benefits (Box 13j)
Enter the applicable LOB code when an entity claims treaty benefits based on a reduced withholding rate. Codes range from 02 through 11 and identify which limitation on benefits provision qualifies the entity for treaty benefits. Code 10 indicates a discretionary determination, and you must obtain documentation establishing the applicable LOB article from the beneficial owner before entering this code.
Date of Birth (Box 13l)
Financial institutions filing Form 1042-S for payments on obligations maintained at U.S. offices or U.S. branches must report the recipient's date of birth when the recipient is an individual. Enter the date in YYYYMMDD format. This requirement applies when the recipient has furnished documentation providing a date of birth or when the date appears in your files.
Withholding Credit Reconciliation and State Reporting
Add the amounts from Boxes 7a, 8, and 9 to determine the total withholding credit reported in Box 10. Report overwithheld tax repaid to the recipient in Box 9 as a negative amount in parentheses.
The net credit calculated in Box 10 cannot exceed the gross income amount you report in Box 2. Accurate reconciliation prevents discrepancies that may delay recipient refund claims or trigger IRS correspondence.
State Withholding (Box 17)
Complete Boxes 17a through 17c when you have withheld state income tax on the reported payment. Enter the state income tax withheld in Box 17a, your state tax identification number in Box 17b, and the state name in Box 17c. You may omit these boxes when no state withholding occurred.
Chapter 4 Pooled Reporting
Withholding agents using pooled reporting codes 42 through 49 for Chapter 4 purposes must hold valid FATCA documentation for the accounts included in each pool. Code 44 designates a Recalcitrant Pool for Dormant Accounts and applies only when you use escrow procedures for dormant accounts under Regulations section 1.1471-4(b)(6).
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
When you apply dormant account escrow procedures for Chapter 4, you must check Box 7b unless you withheld and deposited tax under Chapter 3 for the same payment. Proper application of these codes ensures compliance with both domestic withholding requirements and international information reporting obligations.
Filing Deadlines and Copy Distribution
Forms 1042-S must be filed with the IRS by March 16, 2020, whether filed on paper or electronically. You must also furnish Form 1042-S to the recipient of the income by March 16, 2020. Copy A accompanies Form 1042-T when filing with the IRS.
You must provide Copy B to the recipient, Copy C for the recipient's federal return attachment, Copy D for state return purposes, and retain Copy E for your records. All copies must match the information filed with the IRS to prevent processing delays and refund claim complications.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
