Are you living in the United States and recently received a Form 1042-S? Don’t worry; you’re not alone.
Many individuals find themselves in this situation each tax season, and understanding what to do next can remove any potential confusion or stress.
In this guide, we’ll break down everything you need to know if you received a 1042-S form.
What is a 1042-S form?
The 1042-S is a tax form used to report various types of income paid to nonresidents in the US.
This form is issued by US payers, which can include universities, employers, and financial institutions, in order to report income that is subject to taxation.
Why am I receiving a 1042-S?
If you received a Form 1042-S, it is more than likely that you received certain types of income from US sources, such as:
- Scholarships or Fellowship: If you are a nonresident alien who received a scholarship or fellowship grant that is subject to tax withholding.
- Tax Treaty exempt income – If any part of your income is exempt from tax under a Tax Treaty Agreement between the US and your home country
- Independent personal services, prizes awards and similar payments
- Taxable Income not connected with a US business: This includes income from dividends, interest, rents, royalties, and other fixed or determinable annual or periodical gains, profits, or income.
When do I receive a form 1042-S?
Form 1042-S is typically issued to recipients by 15 March of each year for the previous tax year’s income.
This allows recipients to include the information on their US tax returns, which are due by 15 April in 2024.
If you did not receive 1042-S form by this date, you should reach out to your payroll office to get them to issue you with one.
1042-S vs 1099 – what’s the difference?
The main difference between the 1042 and 1099 forms are the types of payments they report, who they are filed for, and their respective deadlines.
The 1042-S form is used to document taxes withheld on particular income given to foreign individuals.
Meanwhile, the 1099 form is used to report different types of income, such as gross rent, and is used by US residents and businesses only.
The deadline to file Form 1099 is also different to 1042-S, with 31 January marking the final date to submit it without an extension.
What happens if 30% tax was withheld even though I completed a W-8BEN to claim a tax treaty?
In the rare event in which you are a nonresident who completed a Form W-8BEN to claim a reduced rate of withholding under an income tax treaty, but 30% tax was withheld instead, you may be eligible for a refund of this taxation!
To claim a refund, you would need to file a 1040NR – which is the US nonresident tax return, Form 1040-NR, along with Form 1042-S and any other required documentation.
You can do this with Sprintax Returns!
I received a 1042-S, what do I do?
Upon receiving Form 1042-S, you’ll need to review it carefully to ensure that all the information is accurate.
If you believe there is any incorrect information, contact the payroll team to promptly request any corrections.
The next step is to determine whether you need to report the income shown on the form on your US tax return.
Students receiving a 1042-S Form
Students with a taxable scholarship in the US should usually receive a 1042-S form from the school that issued them with the scholarship.
This form will usually be sent to the student the following February after the year when the scholarship was received.
So, if you received a scholarship in 2023, you should receive the 1042-S form by 15 March 2024.
Does 1042-S need to be reported?
Yes, any income reported on Form 1042-S generally needs to be reported on your US tax return, even if no tax was withheld.
Failure to report this income could result in penalties or other consequences.
Remember, you want to avoid any trouble with the IRS as it could lead to potential future visa issues, as well as the aforementioned penalties.
How to report a 1042-S on my nonresident tax return
If you’re confused about how to report 1042-S on a 1040NR, don’t worry – this is a common issue for nonresidents.
You will need to include the 1042-S along with your US non-resident tax return when you are filing.
Follow the instructions provided with the form to ensure accurate reporting.
How long will it take to get my refund?
If you are eligible for a refund of any excess withholding reported on Form 1042-S, the processing time can vary.
Generally, it takes several weeks to several months for the IRS to process refund claims.
Who can help me with my tax forms?
Sprintax Returns!
At Sprintax Returns, we offer the only online solution for nonresident e-filing of federal and state tax returns.
By using Sprintax Returns, you will guarantee 100% US tax compliance. We will prepare every document that you will need to file as well as ensure you don’t pay any more tax than you need to in The States.
We are also the nonresident partner of choice for TurboTax.
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