Form 1042-S (2020) — Year-Specific Checklist
Purpose and Scope
Form 1042-S reports U.S.-source income paid to foreign persons and federal tax withheld under Chapters 3 and 4 of the FATCA rules. The 2020 version requires entry of the recipient's date of birth in YYYYMMDD format in box 13l when specific conditions apply.
Financial institutions maintaining accounts at U.S. offices must report this information if the recipient provided documentation containing a birth date or if a birth date exists in the withholding agent's files. The 2020 form expanded GIIN identification fields for participating FFIs and registered deemed-compliant FFIs.
Chapter Selection and Status Reporting
Withholding agents must enter either "3" or "4" in Box 3 to indicate whether the form reports under Chapter 3 (Withholding of Tax on Nonresident Aliens and Foreign Corporations) or Chapter 4 (FATCA). A payment is subject to withholding under either Chapter 3 or Chapter 4, not both.
When a payment falls under both chapters' rules, Chapter 4 withholding takes precedence. You must report both a Chapter 3 and a Chapter 4 status code in boxes 12b and 12c, regardless of payment type.
Chapter 3 Status Code Updates for 2020:
- The deleted codes are 01 (U.S. Withholding Agent - FI), 02 (U.S. Withholding Agent - Other), and 34 (U.S. Withholding Agent - Foreign branch of FI).
- The added codes are 36 (Foreign Government - Integral Part) and 37 (Foreign Government - Controlled Entity).
- Code 19 changed from "Government or International Organization" to "International Organization."
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.
Recipient Information and GIIN Requirements
When the recipient is a participating FFI, registered deemed-compliant FFI, or other FATCA-registered entity, you must enter the Global Intermediary Identification Number in box 13h. The 2020 form explicitly requires this for Chapter 4 recipients.
Absence of a valid GIIN when applicable triggers withholding at the 30% default rate. Financial institutions must also complete box 13i with the recipient's foreign tax identification number when maintaining accounts at U.S. offices or branches.
Income Codes and Treaty Claims
You must enter the appropriate income code (01–55) in box 1 to identify the payment type. For treaty-claimed income, box 13j requires a limitation on benefits code (02–11).
LOB code 10 indicates discretionary determination by the competent authority. The withholding agent should rely on the Form W-8 series documentation collected to establish treaty eligibility and complete reporting requirements.
Chapter 3 Exemption Reporting
When income qualifies for exemption, enter the exemption code (01–23) in box 3a and tax rate 00.00 in box 3b. Common exemptions include portfolio interest, effectively connected income, treaty exemption, or QI assumption of withholding responsibility.
Code 05 applies to portfolio interest exempt under the Internal Revenue Code. You should rely on whichever Form W-8 series documentation you have collected from the recipient, which may include W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, or W-8IMY.
Chapter 4 Exemption Procedures
For FATCA-reportable payments, enter Chapter 4 exemption code (13–21) in box 4a if applicable:
- Code 19 (exempt under IGA) applies when payment is exempt from Chapter 4 withholding based on the terms of an Intergovernmental Agreement.
- Code 20 (dormant account) applies only when the withholding agent makes a withholdable payment to a participating FFI or registered deemed-compliant FFI that represented on its Form W-8IMY withholding statement that the payment is allocable to a dormant account holder for which the escrow procedure under Regulations section 1.1471-4(b)(6) applies.
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 and Intermediary Identification
Complete boxes 12a through 12i with the withholding agent's EIN, Chapter 3 and 4 status codes, GIIN, and address. If a primary withholding agent assumed responsibility, report that entity's name and EIN in boxes 14a and 14b.
The withholding agent and primary withholding agent must match the actual entity that performed withholding and made the payment. When payment passes through a qualified intermediary, withholding foreign partnership, withholding foreign trust, or other intermediary, complete boxes 15a through 15i and check box 15 for pro-rata basis reporting.
Federal Tax Withholding and Adjustments
Enter total federal tax withheld under Chapters 3 and 4 in box 7a. Box 7b applies only when withholding was not deposited with the IRS because you applied escrow procedures under Regulations sections 1.1471-2(a)(5)(ii) or 1.1441-3(d).
Box 7c applies if withholding on a partnership interest occurred in the subsequent tax year. Report tax withheld by other agents in box 8. Report overwithheld tax repaid under reimbursement or set-off procedures in box 9 only if repayment occurred during 2021, the year following the tax year reported.
Combine boxes 7a, 8, and 9 to determine total withholding.
Adjustment Procedures for Overwithholding:
- Withholding agents may make adjustments using reimbursement or set-off procedures until the extended due date for filing Form 1042-S, provided the form has not already been filed or furnished.
- Adjustments must comply with the requirements of Regulations section 1.1461-2(a)(2) or (3) for Chapter 3, or Regulations section 1.1474-2(a)(3) or (4) for Chapter 4.
- If repayment occurred within the same calendar year as withholding, reduce the amount in box 7a rather than using box 9.
- No prior IRS approval or correspondence is required before reporting these repayments.
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.
State Withholding and Payer Information
Enter state income tax withheld in box 17a, payer's state tax identification number in box 17b, and state name in box 17c. Report state withholding only if actually withheld by the withholding agent or another authorized party.
Complete boxes 16a through 16e with payer's name, TIN, GIIN, and Chapter 3 and 4 status codes. You must not estimate or allocate state withholding amounts.
Distribution Requirements for Form Copies
Form 1042-S has five copies for 2020. Copy A goes to the IRS and must be attached to Form 1042-T.
You must provide Copies B, C, and D to the recipient of the income. Copy B is for the recipient's records, while Copy C is for the recipient to attach to any federal tax return filed. Copy D is for the recipient to attach to any state tax return filed. Copy E is for the withholding agent's records.
All recipient copies must match the copy filed with the IRS. You must furnish them to recipients by March 15, 2021.
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.
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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.
