IRS Instruction 1042-S – IRS Forms, Instructions, Pubs 2026 – Form 1042-S reports U.S.-source income paid to foreign persons (nonresident aliens, foreign corporations, partnerships, trusts, etc.) that is subject to withholding under chapter 3 or chapter 4 (FATCA) of the Internal Revenue Code. Withholding agents use it to document gross income, exemptions, tax withheld, and recipient details. Recipients rely on it to claim credits or refunds on their U.S. tax returns (e.g., Form 1040-NR).
The official 2026 Instructions for Form 1042-S (for calendar year 2025 payments, filed in 2026) are available here:
→ Download the PDF
→ HTML version on IRS.gov
Who Must File Form 1042-S?
Every withholding agent must file if they paid (or are responsible for withholding on) reportable amounts during the year. This includes:
- U.S. persons or entities
- Qualified intermediaries (QIs), withholding foreign partnerships (WPs), withholding foreign trusts (WTs)
- Nonqualified intermediaries (NQIs), flow-through entities, and certain foreign persons acting as agents
You must file even if no tax was withheld (e.g., due to a treaty exemption). Individuals generally do not file unless acting in a trade or business.
You must also file Form 1042 (Annual Withholding Tax Return) to report total tax liability.
What’s New for 2026?
- Chapter 3 exemption code required when withholding is less than 30% (e.g., 14% on scholarships → use code 02 in box 3a).
- FIRE system retirement — Use IRIS (Information Returns Intake System) for all 2026 Forms 1042-S (due March 15, 2027). FIRE is still available for 2025 forms due in 2026.
- Address fields on the form are now separated into individual boxes.
- Credit-forward framework for substitute dividends ends after 2024.
- Phase-in relief for qualified derivatives dealers (QDDs) extended through 2026.
- Unique 10-digit numeric form identifier required on every original Form 1042-S.
Amounts Subject to Reporting on Form 1042-S
Reportable income includes:
- Interest, dividends, rents, royalties, pensions, annuities
- Compensation for personal services
- Scholarships/fellowships
- Gambling winnings
- Dividend equivalents (section 871(m))
- PTP distributions and amounts realized (sections 1446(a) and (f))
- Distributions from QIEs or PTPs attributable to U.S. real property interests
- Specified federal procurement payments (2% withholding under section 5000C)
Key Boxes on Form 1042-S (2026 Version)
| Box | Description | Important Notes |
|---|---|---|
| 1 | Income Code | 2-digit code (see full list in Appendix A of instructions). Use the most specific code. |
| 2 | Gross Income | Total amount paid (whole dollars). |
| 3 | Chapter Indicator | “3” = chapter 3; “4” = chapter 4. |
| 3a | Chapter 3 Exemption Code | Required if withholding < 30%. |
| 3b | Chapter 3 Tax Rate | e.g., 30.00, 15.00, 00.00. |
| 4a/4b | Chapter 4 Exemption Code & Rate | Required for withholdable payments. |
| 7a–7d | Federal Tax Withheld | New box 7d for QI/WP/WT pool revisions. |
| 7c | Check if withholding in subsequent year (partnerships/trusts). | — |
| 12a–m | Withholding Agent’s Information | EIN, name, GIIN, status codes, address. |
| 13a–p | Recipient’s Information | Name, country code, TIN/FTIN/GIIN, status codes, LOB code, account number, DOB. |
| 15a–m | Intermediary/Flow-Through Entity | Required when reporting through an NQI or flow-through. |
Common Income Codes (examples)
- 01 – Interest (general)
- 06 – Dividends (U.S. corporations)
- 16 – Compensation for personal services
- 27 – PTP distributions (ECI)
- 57 – Amounts realized on PTP interest transfer
- 28 – Gambling winnings
Chapter 3 Status Codes (recipient box 13j)
01 = Individual, 08 = Corporation, 12 = QI, 16 = Nonresident alien, 21 = Unknown recipient, etc.
Chapter 4 Status Codes (box 13k)
05 = Participating FFI, 15 = Payee not subject, 21 = Unknown recipient, etc.
Filing Deadlines & Electronic Filing
- Furnish to recipient → March 15, 2026 (for 2025 payments)
- File with IRS → March 15, 2026 (paper or e-file)
- Extensions → Form 8809 (automatic 30 days); Form 15397 for recipient copy extension.
Electronic filing is mandatory if you file 10 or more information returns in a year (or if you are a financial institution or partnership with >100 partners). Starting 2026, IRIS is required.
Penalties for Non-Compliance
- Late filing → $60–$340 per form (higher for intentional disregard)
- Failure to furnish to recipient → up to $340 per form
- Failure to e-file when required → same penalties apply
Tips to Avoid Common Errors
- Always use the exact IRS-approved codes and rates.
- Truncate TINs/FTINs on recipient copies (show only last 4 digits).
- Assign a unique 10-digit numeric identifier to each original form.
- File separate Forms 1042-S for different income codes, chapter indicators, or withholding rates.
- Keep records for at least 3 years.
Need Help?
- Official instructions → IRS.gov/instructions/i1042s
- Form itself → Form 1042-S (2026)
- IRIS information → IRS.gov/IRIS
- Questions → Contact the IRS at 267-941-1000 (international) or consult a tax professional familiar with international withholding.
Staying compliant with Form 1042-S protects both withholding agents and foreign recipients from penalties and ensures proper tax credits. Download the latest instructions today and review your 2025 payment records early.
Last updated: February 2026 (based on IRS publications released December 2025). Always verify the most current version directly on IRS.gov, as rules can change.