1042 vs 1042-S: The US Withholding
Agent's Filing Guide for 2026
Reviewed by Omnivoo Compliance Team on May 30, 2026
Form 1042 is the annual return a US withholding agent files. Form 1042-S is the per-recipient information return for each foreign payee. Both are due March 15 of the year following the calendar year of the payments. If you withheld any US tax on payments to a foreign person under chapter 3 or chapter 4, you file both.
Two forms, one filer, one deadline.
The withholding agent files both. One is the annual return for the company, the other is one information return per foreign recipient.
| Form 1042 | Form 1042-S | |
|---|---|---|
| What it is | Annual return reporting tax withheld on US-source income paid to foreign persons (chapter 3 and chapter 4). | Per-recipient information return reporting one foreign payee's US-source income and the tax withheld from it. |
| Who files it | Every withholding agent who paid an amount subject to chapter 3 or chapter 4 withholding during the calendar year. IRS Instructions for Form 1042. | The same withholding agent, filing one form per recipient per income code. IRS Instructions for Form 1042-S. |
| When it is due | By the 15th day of the third month after the end of the calendar year (March 15). | Filed with the IRS and furnished to the recipient by March 15 of the following calendar year. |
| Who gets a copy | The IRS. There is no payee copy of Form 1042. | The IRS and the foreign recipient (the payee). |
| Penalty for missing | Failure to file under IRC 6651 and failure-to-deposit under IRC 6656. | Information return penalties per form under IRC 6721 / 6722. |
If you control the payment, you are the withholding agent.
The regulatory definition is broad. Under 26 CFR 1.1441-7, a withholding agent is any US or foreign person that has the control, receipt, custody, disposal, or payment of an item of income of a foreign person that is subject to withholding. The IRS restates this in Publication 515 and on the NRA Withholding landing page.
That sweeps in a US C-corp paying a freelancer in Berlin, a US LLC making a royalty payment to a developer in Manila, a US partnership paying interest to a foreign lender, and a US bank distributing effectively connected income from a publicly traded partnership. The Instructions for Form 1042 confirm the rule plainly: every withholding agent or intermediary who receives, controls, has custody of, disposes of, or pays a withholdable payment to which chapter 4 withholding applies, or an amount subject to withholding, must file an annual return on Form 1042.
There is no de minimis dollar threshold that lets a withholding agent skip the filing. If any tax was withheld, or any reportable payment was made, Form 1042 and Form 1042-S are required.
Form 1042 is the annual return.
Form 1042 is filed at the entity level. The IRS describes it as the form used to report the tax withheld under chapter 3 on certain income of foreign persons, including nonresident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts. See About Form 1042.
On the return the withholding agent reports the aggregate of US-source fixed, determinable, annual, or periodical (FDAP) income paid to foreign persons during the year, the aggregate of any effectively connected income that flowed through to foreign partners or beneficiaries, the total tax withheld, the total deposited during the year, and any remaining balance due. The IRS instructions are explicit on reconciliation: be sure to reconcile amounts on Form 1042 with amounts on Forms 1042-S. The two filings must tie.
Filing deadline: mail Form 1042 by the 15th day of the third month after the end of the calendar year. For calendar-year 2025, that is March 16, 2026, because March 15 is a Sunday. The full Instructions for Form 1042 set out the rules.
Form 1042-S is the per-recipient information return.
Form 1042-S is filed once for every foreign recipient per income code. A single foreign payee who received both royalties and interest gets two Forms 1042-S, one with the royalty income code and one with the interest income code. The IRS describes the scope on About Form 1042-S: income and amounts withheld as described in the Instructions for Form 1042-S, specified federal procurement payments paid to foreign persons that are subject to withholding under section 5000C, and distributions of effectively connected income by a publicly traded partnership or nominee.
The Instructions for Form 1042-S require every withholding agent to file an information return on Form 1042-S to report amounts paid during the preceding calendar year that are described under Amounts Subject to Reporting on Form 1042-S. The instructions also tie the two filings together: if you file Form 1042-S, you must also file Form 1042.
Deadline for both the IRS copy and the recipient copy: March 15 of the following calendar year. The recipient copy is mandatory, not optional. The foreign payee uses it to claim a foreign tax credit in their own jurisdiction or to reconcile the US withholding against any treaty rate they were entitled to.
Most US payers must file electronically.
Treasury final regulation TD 9972, codified at 26 CFR 301.6011-2, lowered the electronic-filing threshold for information returns. A filer that is required to file 10 or more information returns in aggregate across all return types (counting W-2, 1099-series, 1042-S, and others together) must file all of them electronically. The 250-return threshold that existed before tax year 2023 no longer applies.
For Form 1042 itself, electronic filing through the IRS Modernized e-File (MeF) system is required for financial institutions and other large filers, and is available to any withholding agent that chooses to e-file. The mandate has expanded in successive tax years, the Instructions for Form 1042 carry the current requirement and we recommend re-reading the instructions in the calendar year you are filing for.
There is no dollar threshold below which Form 1042-S can be skipped. One foreign payee with a single reportable payment still triggers a Form 1042-S filing and, in turn, a Form 1042.
Late or missing filings stack three separate penalty regimes.
Failure to file the return. IRC 6651 imposes a penalty of 5 percent of the unpaid tax for each month the return is late, capped at 25 percent. A separate failure-to-pay penalty of 0.5 percent per month also applies when tax was owed and not paid.
Failure to deposit withheld tax on time. IRC 6656 imposes a graduated penalty on under-deposits: 2 percent if 1 to 5 days late, 5 percent if 6 to 15 days late, 10 percent if more than 15 days late, and 15 percent if not paid within 10 days of the first IRS notice. Withholding agents on Form 1042 follow a deposit schedule that depends on the size of the liability, and late deposits are penalised even if the underlying Form 1042 is eventually filed on time.
Information return penalties. IRC 6721 imposes a penalty for failing to file a correct information return with the IRS, and the parallel section 6722 imposes a penalty for failing to furnish a correct payee statement. The penalties apply per form. Filing 100 incorrect or missing Forms 1042-S can therefore generate two penalties on every single one, and the per-return amount has been climbing with annual inflation adjustments.
Where US AP teams trip on 1042 / 1042-S.
- Treating 1042 and 1042-S as the same form. They are not. The Instructions for Form 1042-S make explicit that if you file 1042-S, you also file 1042. Both are required, the two filings reconcile.
- Missing the deposit deadlines. Form 1042 is an annual return but the underlying tax is deposited during the year on a schedule set by Treasury. IRC 6656 penalises late deposits independently of the return.
- Wrong recipient TIN. A missing or invalid foreign recipient TIN flips the 1042-S into a presumption regime that typically requires 30 percent withholding. The Publication 515 rules on documentation should be re-read before each filing season.
- Wrong income code. 1042-S has a long list of income codes (royalties, interest, scholarships, services, etc.). Picking the wrong one mis-reports the character of the payment and can drive an IRS notice. The Instructions for Form 1042-S publish the current code table.
- No treaty rate documentation on file. If you withheld at a reduced treaty rate, the file must contain a valid W-8BEN, W-8BEN-E, or equivalent documentation. Without it, the IRS applies the statutory 30 percent rate. The NRA Withholding guidance and Publication 515 both restate this.
Where to go next.
The hub and supporting guides on US withholding, NRA basics, treaty rates, and the 1099-vs-1042-S decision.
Free tooling for US payer compliance.
Frequently asked.
01 Is Form 1042 the same as Form 1042-S? +
No. Form 1042 is the annual return a US withholding agent files with the IRS that summarises all chapter 3 and chapter 4 tax withheld on US-source income paid to foreign persons during the year. Form 1042-S is a per-recipient information return. The withholding agent files one Form 1042 for the entity and one Form 1042-S for each foreign payee per income code. Both are due March 15 of the year following payment.
02 If I filed 1042-S, do I still need to file 1042? +
Yes. The Instructions for Form 1042-S state that if you file Form 1042-S you must also file Form 1042. The two filings reconcile to each other and the IRS expects matching totals.
03 When is Form 1042 due for the 2025 tax year? +
Form 1042 for calendar year 2025 is due March 16, 2026, because March 15, 2026 falls on a Sunday. The Instructions for Form 1042 set the statutory deadline as the 15th day of the third month after the end of the calendar year, with the weekend roll forward applied automatically.
04 Who counts as a withholding agent? +
26 CFR 1.1441-7 defines a withholding agent as any US or foreign person that has the control, receipt, custody, disposal, or payment of an item of income of a foreign person subject to withholding. That includes US corporations, partnerships, individuals, and even foreign branches if they control the payment.
05 Do I have to file electronically? +
Treasury regulation 301.6011-2, as amended by TD 9972, requires filers of 10 or more information returns in aggregate across return types to file electronically. For most US payers that file even a handful of W-2, 1099, and 1042-S forms combined, electronic filing is mandatory. Form 1042 itself is also subject to electronic filing requirements for financial institutions and large filers.
06 What is the penalty for missing the 1042-S deadline? +
IRC 6721 imposes a penalty for failing to file a correct information return with the IRS, and IRC 6722 imposes a separate penalty for failing to furnish a correct payee statement to the recipient. The penalties apply per form and per failure, so missing 100 Form 1042-S filings can mean two stacked penalties on each.
07 What if I withheld but did not deposit the tax on time? +
IRC 6656 imposes a penalty for failure to make required deposits of withheld tax. The penalty ranges from 2 percent to 15 percent of the under-deposit depending on how late the payment is made.
08 Do I file 1042-S for a foreign contractor who delivers services entirely outside the US? +
Services performed entirely outside the United States by a non-US person are foreign-source income under IRC 861 and 862 and are generally not subject to NRA withholding. In that case no Form 1042-S is required for those payments. If any portion of the work is performed inside the US, that portion is US-source and triggers withholding plus a Form 1042-S filing.
This guide is general information for US withholding agents, not legal or tax advice. Forms, thresholds, codes, and penalty amounts change. Confirm every number against the current IRS instructions and Treasury regulations linked above, or work with a qualified US tax professional. Omnivoo does not act as the withholding agent on your contractor payments and the responsibility for Form 1042 and Form 1042-S filings remains with the US payer.