TaxBandits Knowledge Base

What is Form 1042-S?

Form 1042-S, ‘Foreign Person’s U.S. Source Income Subject to Withholding,’ is used to report certain types of income paid to foreign individuals, entities, or non-resident aliens that are subject to U.S. withholding tax. This includes, but is not limited to:

• Wages earned by non-resident employees
• Scholarships, grants, or fellowship payments
• Dividends, interest, and royalties
• Payments to foreign partners of U.S. partnerships

U.S. withholding agents, such as businesses or institutions making these payments, must file Form 1042-S with the IRS and provide a copy to the recipient. The form helps ensure proper tax reporting and withholding compliance.