Get Answers Support Tax Filings & Payments Other Forms Form 1042 What is Tax Liability in Section 1 of Form 1042? Last modified 3/6/2024 1:01:10 AM EST Record of Federal Tax Liability (Lines 1-60) Tax liability represents the amount of U.S. tax owed on payments made to foreign persons under Chapter 3 or Chapter 4. The tax liability should be reported for the period when the income was paid or distributed, regardless of when the tax was deposited and whether it was withheld or paid by the withholding agent. If a reduction to liability is required due to repayment under the reimbursement or set-off procedure, it should be reported on Line 59. If this results in a negative amount, the adjustment should be applied to an earlier period to ensure no negative values appear on Lines 1 through 60. Was this helpful? Yes No Related Questions What are the new updates in Form 1042 for the 2023 Tax Year? How do chapter 3 or chapter 4 codes apply in Form 1042? What is Schedule Q (Form 1042)? How do I file Form 1042 with TaxBandits? Go to Home Page Need more help? Get in touch with our dedicated support team Contact Us (704) 684-4751 support@taxbandits.com Sign Up for a FREE TaxBandits Account! The Smart CPA Choice Register Now Already have an account? Sign in