TaxBandits Knowledge Base

Error Code

Error Message 

How to Fix

FR-1a01

The Unique Form Identifier (UFI) is invalid. See The Error Code Additional Explanations for further help.

UFI must be a 10-digit numeric value starting with 1-9 (not 0) and cannot be the recipient's U.S. or foreign TIN.

FR-1a02

A Unique Form Identifier (UFI) must be unique to each original Form 1042-S filed for the tax year.

Each Form 1042-S must have a unique UFI, except for amended forms, which must retain the original UFI. 

FR01a04

Box 1: Income Code 43 (Earnings as an Artist or Athlete — CWA): Report the gross amount paid in Box 2. Do not use box 5 or 6.

For payments to artists or athletes under a CWA , report the gross amount in Box 2. The withholding agent should retain the CWA and use the tax rate stated in it.

FR03004

If Box 3 indicates withholding was done under chapter 4, then there should be no exemption code for chapter 4 in Box 4a.

If Box 3 contains "4," indicating withholding under Chapter 4, then Box 4a should be "00" or left blank, and a 30% withholding tax applies.

FR03005

If Box 3 is "4", then Box 4b must be 30.00.

If withholding was done under chapter 4, Box 4b must be 30%.

FR05a02

Box 5: This Box should be completed only if the income code reported in Box 1 is 16 to 20 or 42.

Complete this box only if Box 1 reports income code 16, 17, 18, 19, 20, or 42.

FR06a01

Box 6: Net income is required if Box 5 has a number.

Complete Box 6 (Net Income) only if an amount is entered in Box 5; otherwise, leave it blank.

FR06a02

Box 6 should equal Box 2 minus Box 5.

Net Income (Box 6) is calculated as Gross Income (Box 2) minus Withholding Allowances (Box 5).

FR07a01

Box 7a - An entry (including 0) is required.

This field cannot be left blank. Enter the total U.S. federal tax withheld in Box 7a under Chapter 3 or 4. If no tax was withheld, enter "0."

FR08a01

Box 8: If there is an entry in either Box 14a or 14b, Box 8 cannot be blank.

If reporting income already withheld by another agent who provided you a Form 1042-S, enter the amount withheld by them in Box 8.

FR09a02

Box 9: Cannot be larger than the sum of Boxes 7a and 8.

You cannot repay the recipient more than the amount withheld by you and any primary withholding agent.

FR10a02

Box 10: At least one of the numbers in Boxes 7a, 8, 9 and 10 is wrong. Boxes 7a + 8 - 9 should equal Box 10.

At least one value in Boxes 7, 8, 9, or 10 is incorrect. Box 10 should equal the total of Box 7a, Box 8, and Box 9.

FR13f02

Box 13f: Use Recipient's Chapter 3 Status code "21" if Recipient is unknown.

Use recipient code 21 (unknown recipient) only if no withholding certificate or documentation is available or if the payment cannot be reliably linked to a specific recipient. Do not use it solely due to uncertainty about the recipient's status.

FR13g02

Box 13g: If Box 13g (recipient Chapter 4 status code) is 49, then Box 15b (Intermediary Chapter 3 status code) must be 12, 13, or 35.

Use Chapter 4 reporting pool code 49 (QI-Recalcitrant Pool-General) only for recalcitrant account holders of a Qualified Intermediary (QI).

FR13l01

Box 13l: The recipient's date of birth is either not in the required format (YYYYMMDD) or a future date.

Enter the date in YYYYMMDD format. A financial institution must report the recipient’s date of birth if the individual has provided documentation or if it is available in the withholding agent’s files.

FR14a01

Box 14a: The Primary Withholding Agent's Name cannot be blank if Box 8 (Tax withheld by Other Agents) is not 0 or blank.

The (Primary Withholding Agent's Name) field cannot be blank if Box 8 is not 0 or blank. If you did not provide proper recipient status information, another withholding agent may apply presumption rules. If withholding was incorrect, submit a corrected Form 1042-S with:

• The correct withholding rate in Boxes 3b or 4b
• Applicable exemption codes in Boxes 3a and 4a
• The actual tax withheld by the other agent in Box 8
• The recipient’s name, address, and required details in Boxes 13a–d
• The name and EIN of the agent who withheld and deposited the tax.

FR14a02

Box 14a: The Primary Withholding Agent’s Name cannot be blank if Box 14b (Primary Withholding Agent's EIN) is not blank.

Primary Withholding Agent’s Name cannot be blank if Box 14b (Primary Withholding Agent's EIN) is not blank.

FR15b02

Box 15b: Intermediary or Flow-through Entity (I/FTE) Chapter 3 Status Code cannot be blank if box 15d (Name) has an entry.

Box 15b cannot be blank if Box 15d has an entry. If there is a name, there must be a Chapter 3 status code.

FR15c02

Box 15c: Intermediary or Flow-through Entity (I/FTE) Chapter 4 Status Code cannot be blank if box 15d (Name) has an entry.

Box 15c cannot be blank if Box 15d has an entry. If there is a name, there must be a Chapter 4 status code.

FR17a01

Box 17a must be 0 or whole dollars only.

Amount must be entered in whole dollars only, rounding to the nearest dollar (do not enter cents). If no U.S. state tax was withheld, enter zeros. Use numeric characters only, right justify, and fill unused positions with zeros.

4a0001

If Box 4a is blank, Box 4b must be 30%.

If not exempt from Chapter 4 (Box 4a is blank or "00"), the tax rate in Box 4b must be 30%.

4a0002

If Box 4a is blank, Box 3 must be 4.

If not exempt from Chapter 4 (Box 4a is blank or "00"), the Chapter indicator in Box 3 must be "4."

3a0001

Box 3a and (Box 3b or 4b): If not exempt from chapter 3, there should be withholding.

If Box 3a is blank or "00," Box 3b must have a Chapter 3 tax rate > 0%. If exempt from Chapter 3 but not Chapter 4, use EC 3 = 12. If withholding occurred under Chapter 4, you may also enter a Chapter 3 exemption code and tax rate to help the beneficial owner claim a refund. In this case, set the Chapter indicator in Box 3 to "4." If Box 3a is "00" and (Box 10 + Box 11) > $0, there may be overwithholding.

3a0101

Box 3a and Box 13e: Recipient must have a U.S. Taxpayer ID Number to use this exemption code.

If chapter 3 exemption code 01 applies, you must enter the recipient's U.S. TIN in Box 13e if you report the income as effectively connected with a U.S. trade or business. If the recipient's U.S. TIN is unknown or unavailable, you must withhold tax at the rate of 30% (30.00) and enter “00” in Box 3a. 

3a0203

Box 3a and Box 1 - This income code is not exempt. If exemption is due to "not U.S. source", Withholding Agent (WA) should use Chapter 3 exemption code of 03.

Income Codes 33, 34, and 35 (substitute payments) are not exempt. Substitute dividends are payments tied to U.S. source dividends under securities lending or repurchase agreements. See Pub. 515 for Income Code 40.

Use Income Code 43 only if the IRS has issued Letter 4492; otherwise, use Income Code 42 for artist or athlete earnings. If using 42 or 43, enter Recipient Code 22 instead of 16, 15, or 08.

Income Code 44 applies only to non-exempt federal procurement payments.

Income Code 50 is for reporting escrowed tax deposited in the current year for previously reported gross income.

Income Codes 51-54 apply only if a reduced withholding rate was used under a treaty without a TIN per Regulations section 1.1441-6(c)(2).

Use Code 55 for taxable death benefits on life insurance contracts.

3a0204

Box 3a, Box 1 and Box 13e - For chapter 3 Exemption Code = 02 (exempt per code), recipient TIN is required if Income Code = 15 in Box 1, (pensions, annuities, alimony, and/or insurance premiums income).

You must generally withhold tax on the gross amount of U.S. source pensions and annuities, including those from foreign branches of U.S. life insurers. Most tax treaties exempt non-government pensions, but exemptions may not apply to lump sums. Without a treaty exemption, withhold at 30%, though graduated rates may apply for distributions tied to U.S. services after 1986.

3a0301

Box 3a and Box 1- For chapter 3 Exemption Code = 03, only income codes 04 and 08 are expected. Income that is not from U.S. sources is generally not subject to chapter 3 reporting.

Chapter 3 reporting is generally not required for non-U.S. source income (exemption code 03), unless specified. Reporting is optional. Use only with income codes 04 or 08. If the income source is unknown, presume it is U.S. source.

3a0401

Box 3a and Box 3b - Only when the treaty rate is 0% can exemption code of 04 be used. Box 3a should be blank when the treaty rate is above 0%

Chapter 3 Exemption Code 04 (Exempt under tax treaty) should only be used when the treaty rate in Box 3b is 0%. If the treaty rate is above 0%, enter “00” in Box 3a.

3a0701

Box 3a and Box 13f - Recipient chapter 3 status code must be 9 or 11

The chapter 3 Exemption Code 07 (Withholding Foreign Partnership (WP) or Withholding Foreign Trust (WT)) requires the recipient chapter 3 Status Code (Box 13f) of 9 (WP) or 11 (WT). See Form 1042 for a list of valid codes.

3a0801

Box 3a and Box 13f - Recipient chapter 3 status code must be 5 (U.S. branch of a participating foreign financial institution (PFFI) when chapter 3 exemption code is "08".

For Chapter 3 Exemption Code 08 (U.S. branch treated as a U.S. person), the recipient's Chapter 3 status code (Box 13f) must be 5 (U.S. branch of a participating foreign financial institution).

3a0802

Box 3a and Box 13e - Recipient TIN (Taxpayer ID Number) must be populated when chapter 3 exemption code is "08".

For chapter 3 Exemption Code 08 (U.S. branch treated as U.S. Person), the Recipient TIN (Taxpayer ID Number) [Box 13e] must NOT be blank. 

3a0901

Box 3a and Box 13f - Recipient chapter 3 status code must be 3 (Territory Financial Institution treated as a U.S. person) when chapter 3 exemption code is "09".

For chapter 3 (Exemption Code 09 Territory Financial Institution (FI) treated as U.S. Person), Recipient chapter 3 status code [Box 13f] must be 3 (Territory FI treated as a U.S. person).

3a0902

Box 3a and Box 13e - Recipient TIN (Taxpayer ID Number) must be populated when chapter 3 exemption code is "09"

For chapter 3 Exemption Code 09 (Territory Financial Institution (FI) treated as U.S. Person), the Recipient TIN (Taxpayer ID Number) [Box 13e] must NOT be blank. 

3a1101

Boxes 3a and (13f or 15b) - Recipient or Intermediary Chapter 3 status code must be 13 or 14 (Qualified Securities Lender (QSL)) when chapter 3 exemption code is "11"

Use Exemption Code 11 (Qualified Securities Lender) for Chapter 3 only if making a substitute dividend payment to a financial institution (including a QI) that acts as a QSL per Form W-8IMY. The recipient or intermediary status code should be 13 (QSL – QI) or 14 (QSL – Other). Use Exemption Code 12 if the recipient was withheld under Chapter 4, making Chapter 3 withholding inapplicable.

3a1201

Box 3a and Box 3 - chapter indicator must be (chapter) 4 if the reason for exemption from chapter 3 withholding is that the payment was subject to chapter 4 withholding.

A withholding agent should use exemption code 12 (payee subjected to chapter 4 withholding) for chapter 3 purposes if the recipient has been withheld under chapter 4 and thus Box 3 should = 4.

3a1202

Box 3a and Box 4b - chapter 4 tax rate must be 30% if the reason for exemption from chapter 3 withholding is that the payment was subject to chapter 4 withholding.

Regarding a payment subject to chapter 4 withholding per chapter 3 Exemption Code =12, the correct withholding rate in Box 4b is “30.00”. 

3a2201

Boxes 3a and (13f or 15b) - Recipient or Intermediary Chapter 3 status code must be 35 (Qualified Derivatives Dealer (QDD)) when chapter 3 exemption code is "22"

If the chapter 3 Exemption Code (EC3) = 22 (Qualified derivatives dealer (QDD) that assumes primary withholding responsibility), then the Intermediary's chapter 3 Status Code (SC3) of Box 15b or the recipient's SC3 of Box 13f must be 35, a Qualified derivatives dealer (QDD). A QDD is a qualified intermediary that is an eligible entity that agrees to meet the requirements of Regulations section 1.1441-1(e)(6)(i) and the QI agreement. An eligible entity is defined in Regulations section 1.1441-1(e)(6)(ii).

3a2401

Box 3a and Box 13f - Recipient chapter 3 status code must be 19, 24, 36 or 37 if chapter 3 exemption code is 24

If exemption code = 24 (Exempt under section 892), then status code 3 in Box 13f must be 19, 24, 36, or 37.

3b0101

Box 3b and Box 1 - When Income Code = 14 (Real property income, etc.), chapter 3 tax rate is normally 30% or 15% or 21%.

Box 1, Income Code = 14 is for Real property income and natural resources royalties. When subject to FIRPTA, Box 3b is normally 30%, 15%, or 21%.

3b0102

Box 3b and Box 1 - When Income Code = 24 (Qualified Investment Entity distributions), chapter 3 tax rate is expected to be 21% or 30%. Also, some capital gains are Effectively Connected Income (ECI).

Income Code 24 (QIE capital gain distributions) is subject to 21% FIRPTA withholding. Some gains are Effectively Connected Income. QIEs include REITs and certain RICs. See Form 1042-S instructions for look-through rules. QIEs report withholding on Forms 1042-S and 1042; other section 1445 withholding is reported on Forms 8288 and 8288-A.

3b0104

Box 3 and Box 1 - When Income Code = 26 (Unsevered growing crops and timber distributions by a trust subject to IRC section 1445), the default withholding rate is 15%.

Box 1, Income Code 26 is for unserved growing crops and timber distributions by a trust subject to IRC section 1445. The default withholding tax rate is 15%. 

3b0105

Boxes 1, 3b and 13f - Income Code 27 is only used for publicly traded partnerships (PTP) distributing money (or property), that is not US source FDAP. Tax rate should be 21% for documented corporation recipients and 37% for all others.

Box 1, Income Code 27 is only used for publicly traded partnerships distributing money (or property), that is not FDAP. Any non-FDAP cash distributions are subject to withholding. Box 3b tax rate should be 21% for documented corporation recipients. Box 3b tax rate is 37% for all others.

3b0302

Box 3b and Box 13e - A 4% tax rate (for Private Foundations) requires a Recipient TIN.

The tax rate of 4% in Box 3b for Private Foundations requires a recipient TIN in box 13e. 

3b0401

Box 3b and Box 1 - The tax rate on scholarship income is expected to be 14% when properly documented.

Box 3b: 14% is a correct code based tax rate only for scholarship income (Income Code = 16) when the scholarship and recipient are properly documented.

3b0501

Boxes 3a, 3b, 1 and 13b - Tax rate should be 0% (and exempt), or 30% for Income Code = 17 to 20 using Treaty Table 2

Income Codes 17-20 (Table 2) usually allow a 0% tax rate for a limited time or up to a compensation limit. Excess amounts are subject to 30% withholding on a separate Form 1042-S. Use EC3 = 04 for exempt amounts. Income Code 16 may have a 14% tax rate. Graduated rates may apply in some cases. See Pub 515 and tax treaty tables for details.

3b0601

Boxes 3a, 3b, 1 and 13b - Income Code = 42 is expected to have a tax rate of 0% (and exempt) and/or 30% using Treaty Table 2.

Income Code 42 (Artist/Athlete – No CWA) often requires two Forms 1042-S: one for 0% tax (treaty-exempt income) and one for 30% withholding. Use Treaty Table 2 for details. Without a treaty, withhold 30% for independent contractors and graduated rates for employees. If the payer-artist/athlete relationship is unclear, withhold 30%.

3b0602

Boxes 3b, 1, 13b and 2 - For Income Code = 42, the amount of exempt gross income is higher than most treaties in Treaty Table 2 allow. Check the actual treaty for the correct exempt amount allowable in Box 2.

For Income Code 42, the exempt income amount in Box 2 for an athlete or performer varies by country, but most treaties set the limit at $20,000. Check the specific treaty for the maximum exempt amount.

3b0801

Boxes 3b, 1 and 13b - For Income Codes 6, 34, 40, 52, 53, 56 (dividends) and 10 and 13 (royalties) you used a tax rate that is lower than the highest Treaty Table 1 tax rate for the income type. Check Table 1 and the treaty to verify rates by subtypes of income.

Dividend and royalty income may have different treaty rates based on type. REIT dividends often have higher rates for entities and individuals owning over 25%. Royalty tax rates depend on the category. Ensure the correct tax rate in Box 3b using treaty resources.

3b0802

Box 3b, 1 and 13b - Caution: The tax rate does not appear in the body of Treaty Table 1 or 2. The Caution for IC=4 or IC=8 is because most foreign source income need not be reported for validly documented recipients.

If the Box 3b tax rate isn't in Treaty Table 1 or 2 of Pub 515, check treaty footnotes or full provisions. Some income codes (e.g., 4, 8) are foreign source FDAP and may not require reporting. A W-8 may justify a 0% rate.

3b0803

Boxes 3b, 1, 13b, and (13e or 13i) - Treaty-based tax rate for this income code is only valid with either a U.S. TIN or a foreign TIN.

A treaty-based tax rate in Box 3b requires a U.S. or foreign TIN unless using one of five income codes for publicly traded income. If claiming treaty benefits, a TIN must be on the withholding certificate. If no TIN, an explanation is required.

3b0804

Boxes 3b, 1, 13b, 13f, and 13j - When using a treaty based tax rate in Box 3b, an Limitation of Benefits (LOB) code in Box 13j should not be used for an individual recipient (code 16).

When using a treaty-based tax rate in Box 3b for an individual recipient, Box 13j (LOB) should be blank. LOB codes apply only to entities claiming treaty benefits.

3b0805

Boxes 3b, 1, 13b, 13f, 13l - Individuals need a date of birth in Box 13l when claiming treaty rates in Box 3b.

If an individual claims a treaty rate in Box 3b, Box 13l (DOB) must be filled. Financial institutions must obtain the DOB for individual account holders on Form W-8BEN to ensure validity for U.S. source income payments on Form 1042-S, even if the tax rate is 30%.