Form 1042-S: Complete guide for nonresident aliens and withholding agents (2026)

Written by  Mel Whitney, EA

Last updated Jul 23, 2026

Form 1042-S is the IRS information return used to report US-source income paid to foreign persons and any tax withheld under Chapter 3 or Chapter 4 – FATCA – rules.

The default withholding rate under Chapter 3 is 30% of gross income, and withholding agents must furnish a copy to each recipient by March 16, 2026 for tax year 2025.

The 1042-S tax form is issued by the withholding agent – the entity that controls or pays the income – not by the foreign person who receives it. If you are a nonresident alien, foreign corporation, foreign partnership, foreign trust, or foreign estate that received US-source income during the year, the payer is responsible for preparing and delivering this form to you.

The form matters for two reasons. It documents how much income you received and how much US tax was withheld.

If the withholding exceeds your actual US tax liability – for example, because a tax treaty entitles you to a lower rate – the Form 1042-S is your proof for claiming a refund on your US tax return.

Who gets a Form 1042-S? Eligible recipients explained

Any foreign person who receives US-source fixed, determinable, annual, or periodical – FDAP – income should expect to receive a 1042-S for nonresident aliens and other foreign persons, even when the withholding amount is zero. FDAP income includes dividends, interest, royalties, rents, scholarships, fellowships, compensation for services, and other recurring payment types.

Five categories of recipients receive Form 1042-S:

• Nonresident alien individuals
• Foreign corporations
• Foreign partnerships
• Foreign trusts
• Foreign estates

F-1 and J-1 visa holders who receive scholarship or fellowship income from US universities are among the most common individual recipients.

These visa holders are generally treated as nonresident aliens during their applicable exemption periods under the substantial presence test. Taxable scholarship or fellowship payments are generally reported on Form 1042-S, while wages are generally reported on Form W-2 unless a treaty-exempt portion must be reported on Form 1042-S.

If you are an F-1 international student who received Form 1042-S, use it to determine whether you must file Form 1040-NR and, if you do file, to report the income and any tax withheld. Filing requirements depend on your income, withholding, and individual circumstances.

Who files Form 1042-S? Withholding agent responsibilities

A withholding agent – not the foreign recipient – is responsible for filing Form 1042-S with the IRS and furnishing a copy to the recipient by March 16, 2026 for payments made during tax year 2025.

Five types of withholding agents file most Forms 1042-S:

1. US financial institutions paying dividends, interest, or other investment income to foreign account holders.
2. Universities and colleges paying scholarships, fellowships, or stipends to foreign students and researchers.
3. Employers paying wages or other compensation to foreign workers who are nonresident aliens.
4. Businesses paying foreign independent contractors for services performed in the United States generally report those payments on Form 1042-S when the payments are subject to Chapter 3 withholding or are otherwise required to be reported under the Form 1042-S instructions.
5. Partnerships allocating income to foreign partners.

Withholding agents must submit IRS 1042-S forms electronically through the IRS FIRE system – or the IRS Information Returns Intake System (IRIS), which accepts tax year 2025 Forms 1042-S beginning January 1, 2026 – when filing 10 or more information returns in total.

A separate Form 1042-S is required for each recipient, each income code, and each tax rate applied.

If your business pays foreign contractors for US-source services and the payment is reportable under the Chapter 3 withholding rules, it is generally reported on Form 1042-S rather than Form 1099-NEC.

The recipient does not file Form 1042-S – that obligation sits with the withholding agent. Individual nonresident aliens who are required to file a US income tax return generally report the income on Form 1040-NR.

Other foreign recipients may have different filing requirements depending on their entity type and circumstances.

Form 1042-S vs 1099: Key differences at a glance

Form 1042-S applies to foreign persons subject to NRA withholding under Chapters 3 and 4, while Form 1099 applies to US persons – receiving the wrong form signals a residency classification issue that needs to be corrected.

1042-S vs W-2

A common 1042-S vs W-2 question arises for international students. If you are a nonresident alien, scholarship or fellowship income appears on a 1042-S, not a W-2. Wages from on-campus employment may appear on a W-2, but any treaty-exempt portion of those wages is typically reported on a 1042-S.

If you receive a 1099 but believe you are a foreign person for tax purposes, contact the payer immediately. You may need to submit Form W-8BEN to correct your classification.

For a broader look at how the 1099-MISC form works for US-source income, see our separate guide.

Form 1042-S income codes, exemption codes, and Chapter 3 status codes

The codes on Form 1042-S tell both the IRS and the recipient exactly what type of income was paid, why withholding was reduced or eliminated, and how the recipient is classified. Three code fields matter most: Box 1 for the income code, Box 3a for the exemption code, and Box 13f for the recipient’s Chapter 3 status code.

Common income codes

Income Code 16 – scholarships and fellowships – is the most common code seen by international students receiving payments from US universities.

The 1042-S income code in Box 1 identifies the type of payment. The five most common codes are:

Common exemption codes

The two most-used exemption codes in Box 3a determine whether withholding was reduced or eliminated.

The 1042-S exemption code in Box 3a shows the basis for any reduced withholding:

Chapter 3 status codes

The 1042-S Chapter 3 status code identifies the recipient’s classification for withholding purposes. Use the IRS Chapter 3 status code table in the Form 1042-S instructions to determine the correct code for the recipient.

For a broader overview of US international tax forms and withholding forms that interact with the 1042-S, see our guide.

1042-S tax rate: Default withholding and treaty reductions

The default 1042-S withholding rate is 30% on FDAP income paid to foreign persons under Chapter 3. This rate applies automatically unless the withholding agent has documentation – typically Form W-8BEN – showing the recipient qualifies for a lower rate.

The 30% default withholding rate on Form 1042-S can be reduced to 0–15% if the foreign recipient qualifies under an applicable US tax treaty and submits Form W-8BEN to the withholding agent before payment.

Four common rate scenarios

• 30% – default Chapter 3 rate on FDAP income when no treaty benefit is claimed or no W-8BEN is on file.
• Effectively connected income (ECI) generally is not subject to the flat 30% Chapter 3 withholding when properly documented, such as with Form W-8ECI. Instead, it is generally taxed on a net basis at the applicable graduated US income tax rates after the recipient files the appropriate US tax return.
• Reduced treaty rates. The applicable withholding rate depends on the specific US income tax treaty and the type of income, with common treaty rates including 0%, 5%, 10%, or 15%. For example, dividends paid to a UK resident are subject to 15% withholding under Article 10 of the US-UK tax treaty. Some treaties also reduce or eliminate withholding on certain scholarship or fellowship payments, but eligibility depends on the specific treaty and its conditions.
• 0% – portfolio interest. Qualifying portfolio interest paid to foreign persons is exempt from withholding under IRC §871(h).

1042-S Box 7a shows the withholding rate that was actually applied to the payment. If this rate is higher than the treaty rate you are entitled to, you can claim a refund by filing Form 1040-NR.

To claim a reduced rate prospectively, foreign individuals must provide Form W-8BEN to the withholding agent. Foreign entities use Form W-8BEN-E.

Form 1042-S deadlines for tax year 2025

Unlike most IRS information returns, Form 1042-S has a single March 15 deadline for both paper and electronic filing – there is no automatic later e-file date. For tax year 2025, March 15 falls on a Sunday, so the actual due date shifts to March 16, 2026.

Three dates matter for TY2025:

• March 16, 2026 – the 1042-S recipient copy must be furnished to the foreign person.
• March 16, 2026 – paper copies must be filed with the IRS, with Form 1042-T as the transmittal.
• March 16, 2026 – electronic filing deadline through the IRS FIRE or IRIS system.

The withholding agent must also file Form 1042-T as a transmittal when submitting paper Forms 1042-S. Electronic filers do not submit Form 1042-T.

How to fill out Form 1042-S: Box-by-box instructions

The 1042-S instructions for tax year 2025 require a separate form for each combination of recipient, income code, and tax rate. A withholding agent paying two types of income to the same foreign person – dividends at 15% and royalties at 30% – must prepare two Forms 1042-S.

Box 2 must reflect the total gross income before any withholding – a common error is entering the net amount paid, which causes IRS matching discrepancies.

Critical boxes

Each 1042-S form must include the following nine fields:

1. Box 1 – income code. Use the IRS income code table – for example, Code 06 for dividends, Code 16 for scholarship or fellowship grants, and Code 17 for compensation for independent personal services.
2. Box 2 – gross income. The 1042-S gross income amount is the total before withholding. Do not enter the net amount received by the payee.
3. Box 3a – exemption code. If withholding was reduced or eliminated, enter the applicable code from the IRS exemption code table in the Form 1042-S instructions.
4. Box 13f – recipient’s Chapter 3 status code. Enter the recipient’s classification using the IRS recipient status code table – for example, 16 for individual, 15 for corporation. Numerous other codes apply to other recipient classifications.
5. Box 7a – tax rate. The actual withholding rate applied to the payment.
6. Box 7b – US federal tax withheld. Dollar amount of tax withheld.
7. Box 12 – withholding agent EIN. The employer identification number of the entity that withheld.
8. Box 13 – recipient name and address. Full name and foreign address of the payee.
9. Box 13b – recipient country code. Two-letter country code for the recipient’s country of residence.

For background on how the substantial presence test determines nonresident alien status, see our guide.

How to report Form 1042-S on your US tax return

Nonresident aliens who receive Form 1042-S must report the income on Form 1040-NR and can claim a credit for any US tax withheld shown in Box 7b – overpaid withholding is refundable.

If you are a nonresident alien filing a 1042-S tax return, follow these five steps:

1. Confirm your residency status using the substantial presence test. If you are a nonresident alien, you file Form 1040-NR.
2. Locate your gross income in Box 2 and the amount of federal tax withheld in Box 7b.
3. Enter the income on the appropriate part of Form 1040-NR. Wages generally are reported on Form 1040-NR, taxable scholarship or fellowship income is reported as instructed for Form 1040-NR, and US-source FDAP dividends generally are reported on Schedule NEC.
4. Claim the withholding credit by reporting the tax withheld from Box 7b as a payment against your tax liability.
5. If you file a paper Form 1040-NR, attach the required copy of each Form 1042-S that shows US tax withheld. If you file electronically, retain the form with your records unless otherwise instructed.

Filing deadline for NRAs with no US wages

Nonresident aliens who are required to file Form 1040-NR and who did not receive wages subject to US income tax withholding generally have until June 15, 2026, to file their return for tax year 2025. Any tax due generally remains due by April 15, 2026, and interest accrues on unpaid amounts after that date.

If your tax status changed during the year – for example, you arrived in the US and became a resident alien partway through – you may need to file a dual-status return rather than a standard 1040-NR.

Form 1042-S for international students: Scholarships and fellowship income

F-1 visa holders are generally treated as nonresident aliens for their first five calendar years in the United States under the substantial presence test exemption. J-1 visa holders have varying exemption periods based on their specific category – students, teachers, trainees, or researchers – as outlined in IRS Publication 519.

While classified as nonresident aliens, these individuals will receive Form 1042-S – not a W-2 – for taxable scholarship or fellowship income.

The 1042-S form for international students typically shows Income Code 16 for scholarship or fellowship payments. The portion of a scholarship that covers tuition and required fees is generally not taxable and may not appear on the form. The taxable portion – covering living expenses, travel, and room and board – is reported as gross income in Box 2.

TFX client scenario

An F-1 student from South Korea receives a $20,000 fellowship from a US university. Under Article 21 of the US-South Korea tax treaty, payments received by a student for education and training may be exempt from US tax.

If the student qualifies under the applicable treaty and provides the required documentation, the university may issue Form 1042-S using Income Code 16 and the appropriate exemption code specified in the IRS instructions. The student would report this on Form 1040-NR and owe no US tax on the exempt portion.

Treaty benefits for students vary by country

Not all treaties include a student or trainee article, and those that do may impose dollar limits, time limits, or other conditions. The specific benefit depends on the applicable treaty between the US and the student’s country of tax residence.

Our CPAs handle nonresident returns – from 1042-S review to 1040-NR filing.

Get started

Form 1042-S filing requirements and e-filing rules

For tax year 2025 (filed in 2026), withholding agents that are required to file 10 or more information returns during the year generally must file Forms 1042-S electronically. For the 2026 filing season, electronic filing may be completed through either the IRS FIRE system or the IRS Information Returns Intake System (IRIS).

1042-S filing is required for any amount of US-source FDAP income paid to a foreign person, even if withholding is zero because of a treaty exemption. There is no minimum dollar threshold.

Key filing rules

• A separate Form 1042-S must be filed for each income type, each tax rate, and each recipient.
• The mandatory e-filing threshold is 10 or more information returns in total – not 10 Forms 1042-S alone. This threshold, reduced from 250 by regulations under the Taxpayer First Act effective 2024, counts all information return types combined.
• Paper filers must include Form 1042-T as a transmittal document.
• In addition to Forms 1042-S, the withholding agent must file Form 1042 – the annual withholding tax return that summarizes total payments and withholding for the year.
• Filing on paper when e-filing is required may result in penalties of up to $340 per return under IRC §6721, depending on when the failure is corrected and whether reasonable cause applies.

Where to file IRS 1042-S

Withholding agents have two options:

• Electronically – through the IRS FIRE system at fire.irs.gov or the IRIS platform at irs.gov/iris.
• By mail – paper Forms 1042-S with Form 1042-T transmittal go to: Department of the Treasury, Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.

For a broader look at FATCA reporting obligations that may overlap with 1042-S compliance, see our guide to FATCA and CRS reporting requirements.

Form 1042-S late filing penalties and how to avoid them

A withholding agent who fails to furnish Form 1042-S to the recipient by March 16 faces a separate penalty per form on top of the IRS filing penalty – both can apply simultaneously for the same form.

The 1042-S late filing penalty starts at $60 per form for returns filed within 30 days of the due date, increases to $130 per form for returns filed more than 30 days late but by August 1, and rises to $340 per form for returns filed after August 1 or not filed. For intentional disregard, the penalty is the greater of $680 per form or 10% of the amount required to be reported, with no annual maximum.

Small businesses with average annual gross receipts of $5 million or less are subject to lower annual caps. The IRS penalties page for Form 1042-S lists the current caps by business size.

For guidance on penalty abatement strategies for other international information returns, see our article on Form 3520 late filing penalty abatement.

Form 1042-S extensions: How to request more time

Filing Form 8809 grants an automatic 30-day extension for the IRS copy of Form 1042-S, but there is no automatic extension for furnishing the recipient copy – Form 15397 is required separately.

A 1042-S extension is available by filing Form 8809 by March 16, 2026. The four rules for requesting more time are:

1. File Form 8809 by March 16, 2026 for an automatic 30-day extension – this moves the IRS filing deadline to approximately April 15, 2026.
2. A withholding agent may request additional time only as permitted under the current Form 8809 instructions. Any extension beyond the automatic extension is subject to the IRS rules in effect for tax year 2025 and is not automatic.
3. To extend the recipient copy deadline, submit Form 15397 – Application for Extension of Time to Furnish Recipient Statements – to the IRS by March 16. This request requires an explanation of hardship and is subject to IRS approval.
4. Extensions do not extend the time to deposit withheld taxes. Deposits remain due on the standard deposit schedule regardless of any filing extension.

Form 1042-S corrections: How to fix errors after filing

Correcting a Form 1042-S requires following the IRS correction procedures in the Instructions for Forms 1042 and 1042-S. The required correction method depends on the type of error being corrected and whether the form was filed on paper or electronically.

Filing a new form without following the proper correction process causes duplicate reporting and IRS matching errors.

The following five steps apply when fixing errors:

1. Prepare a corrected Form 1042-S using the method prescribed for the applicable type of error.
2. For paper corrections, submit the corrected form with a new Form 1042-T transmittal.
3. For e-filed corrections, resubmit through the IRS FIRE or IRIS system using the corrected record type.
4. Furnish a corrected copy to the recipient promptly.
5. If the error affects the Form 1042 annual return – for example, a change in the total withholding amount – file an amended Form 1042 as well.

Correct errors as soon as they are discovered. If a filing penalty applies, the amount depends on when the failure is corrected and whether the filer qualifies for reasonable-cause relief or another exception under the IRS penalty rules.

FREE

Handling 1042-S compliance for your organization?

We manage preparation, e-filing, and corrections.

Schedule my free call

Claiming tax treaty benefits on Form 1042-S

To claim a reduced treaty rate, the foreign recipient must submit Form W-8BEN – individuals – or Form W-8BEN-E – entities – to the withholding agent before payment. Failure to do so results in the full 30% withholding, which must then be reclaimed by filing a tax return.

TFX client scenario

A UK resident receives $50,000 in US dividends during tax year 2025. Without a treaty, the withholding agent withholds $15,000 at 30%. A UK resident individual receiving ordinary portfolio dividends generally qualifies for a 15% withholding rate under Article 10 of the US-UK income tax treaty, provided all treaty requirements are met.

Different rates may apply in certain ownership situations. In this example, the 15% rate reduces withholding to $7,500 – a savings of $7,500. The withholding agent reflects this on Form 1042-S by entering 15% in Box 7a and the applicable Chapter 3 exemption code in Box 3a as prescribed by the current IRS instructions.

Three conditions for claiming treaty benefits

1042-S treaty benefits depend on three conditions:

• The recipient must be a resident of a treaty country.
• The specific income type must be covered by a treaty article that reduces the rate.
• The recipient must have submitted the correct W-8 form to the withholding agent before the first payment.

The US maintains income tax treaties with over 65 countries. Each treaty has different rates and provisions by income type. A 0% rate on scholarships under one treaty does not guarantee the same rate under another.

If the full 30% was withheld because the W-8BEN was not submitted in time, the recipient can still claim the treaty rate by filing Form 1040-NR after year-end and requesting a refund of the excess withholding.

For a comparison of how the Foreign Tax Credit and Foreign Earned Income Exclusion work for US persons paying foreign taxes, see our guide.

FREE

Overwithheld on your 1042-S?

We help nonresident aliens claim refunds on Form 1040-NR.

Schedule my free call

Related articles

Mel Whitney • Mar 31, 2026

F-1 International Student Tax Return 101

Do international F-1 students have to file US taxes? Read our guide to learn about Form 8843 for no income, 1040-NR, and FICA exemptions on OPT/CPT.

Read more

Mel Whitney • Feb 04, 2012

US Taxes for Foreign Nationals. Substantial Presence Test

An explanation of the substantial presence test for expats living abroad

Read more

Andrew Coleman • Mar 12, 2026

Dual-status alien tax return: 2026 complete filing guide

Find out who the IRS considers to be dual-status aliens, how they must file their tax returns, and what mistakes they should avoid when filing.

Read more