Publication 515 |
2000 Tax Year |
Every withholding agent, whether U.S. or foreign, must file Forms
1042 and 1042-S to report payments of amounts subject to NRA
withholding unless an exception applies. Do not use Forms 1042 and
1042-S to report tax withheld on the following:
- Wages or salaries subject to graduated income tax
withholding (see Wages Paid to Employees--Graduated
Withholding, earlier under Pay for Personal Services
Performed),
- Any portion of a U.S. or foreign partnership's effectively
connected taxable income allocable to a foreign partner (see
Partnership Withholding on Effectively Connected Income,
later),
- Dispositions of U.S. real property interests by foreign
persons (see U.S. Real Property Interest, later),
- Pensions, annuities, and certain other deferred income
reported on Form 945, and
- Income, social security, and Medicare taxes withheld on
wages paid to a household employee reported on Schedule H (Form
1040).
The Forms 1042 and 1042-S must be filed by March 15 of the
year following the calendar year in which the income subject to
reporting was paid. If March 15 falls on a Saturday, Sunday, or legal
holiday, the due date is the next business day.
Form 1042.
Every U.S. and foreign withholding agent that is required to file a
Form 1042-S must also file an annual return on Form 1042. You
must file Form 1042 even though you were not required to withhold any
income tax.
You must file Form 1042 with the
Internal Revenue Service Center
Philadelphia, PA 19255.
Form 1042-S.
Every U.S. and foreign withholding agent must file a Form
1042-S for amounts subject to NRA withholding unless an
exception applies. The form can be filed magnetically, electronically,
or on paper. A separate Form 1042-S (or tape record) is required
for each recipient of income to whom you made payments during the
preceding calendar year regardless of whether you withheld or were
required to withhold tax. You must use a separate Form 1042-S
for each type of income that you paid to the same recipient. See
Statements to recipients, later.
You must furnish a Form 1042-S for each recipient even though
you did not withhold tax because you repaid the tax withheld to the
recipient or because the income payment was exempt from tax under the
Internal Revenue Code or under a U.S. income tax treaty.
Form 1042-T is a new transmittal form that is expected to be
available in November 2001. It will be used for 2001 returns filed in
2002.
Magnetic media reporting.
If Form 1042-S is filed on paper, it must be filed together
with Form 1042-T. Withholding agents or their agents generally
must use magnetic or electronic media to file 250 or more Forms
1042-S with the IRS. You are encouraged to file electronically
or magnetically even if you are not required to.
A completed Form 4419, Application for Filing Information
Returns Magnetically/ Electronically, should be filed with the
Martinsburg Computing Center at least 30 days before the due date of
the return. Returns may not be filed magnetically or electronically
until the application has been approved by the IRS.
For information and instructions on filing Forms 1042-S on
magnetic media, get Publication 1187, Specifications for Filing
Form 1042-S, Foreign Person's U.S. Source Income Subject to
Withholding Magnetically/ Electronically.
Deposit interest paid to alien individuals who are residents
of Canada.
If you pay deposit interest of $10 or more to a nonresident alien
individual who resides in Canada and is not a U.S. citizen, you may
have to report it on Form 1042-S. This reporting requirement
generally applies to interest that a) is on a deposit maintained at a
bank's office in the United States, and b) is not effectively
connected with a trade or business within the United States. However,
this reporting requirement does not apply to interest paid on certain
bearer certificates of deposit as described in section
1.6049-8(b) of the regulations if you pay that interest outside
the United States.
How to report.
Although you only have to report the interest paid to residents of
Canada who are not U.S. citizens, you can comply by reporting payments
to all foreign persons receiving bank deposit interest, if that way is
easier for you.
Determining residency.
You determine whether a payee is a Canadian resident based on the
permanent residence address required to be provided on the Form
W-8BEN. If you have actual knowledge that the payee is a U.S.
person, you must report the payment on Form 1099-INT.
Statements to recipients.
You must furnish a statement to each recipient for whom you are
filing a Form 1042-S (or magnetic media report) with the IRS by
the due date for filing Forms 1042 and 1042-S. You may use a
copy of the official Form 1042-S for this purpose. Or, you may
provide recipients with the information together with, or on, other
(commercial) statements or notices. These statements must clearly
identify the type of income (as described on the official form), the
amount of tax withheld, the withholding rate (including 0% if exempt),
and the country involved. You may include more than one type of income
on the copies of the Form 1042-S that you provide to the
recipient of the income. You may not, however, include more than one
income line on the copy of the form filed with the IRS.
You must get prior annual approval to use a substitute Form
1042-S unless it meets the requirements listed in Publication 1167, Substitute Printed, Computer-Prepared and
Computer-Generated Tax Forms and Schedules. Get Publication 1167
for more information.
Extension of time to file.
You may request an extension of time to file Form 1042 by filing
Form 2758, Application for Extension of Time to File Certain
Excise, Income, Information, and Other Returns. You may request
an extension of time to file Form 1042-S by filing Form 8809,
Request for Extension of Time to File Information Returns.
You should send Forms 2758 and 8809 far enough in advance of the due
date of Forms 1042 and 1042-S to allow the IRS time to consider
your application and to reply before the due date of the return.
Penalties.
The penalty for not filing Form 1042 when due (including
extensions) is usually 5% of the unpaid tax for each month or part of
a month the return is late, but not more than 25% of the unpaid tax.
A penalty may be imposed for failure to file Form 1042-S when
due (including extensions) or for failure to provide complete and
correct information. The amount of the penalty depends on when you
file a correct Form 1042-S. The penalty for each Form
1042-S is:
- $15 if you file a correct form within 30 days, with a
maximum penalty of $75,000 per year ($25,000 for a small
business),
- $30 if you file after 30 days but before August 2, with a
maximum penalty of $150,000 ($50,000 for a small business), or
- $50 if you file after August 1 or do not file a correct
form, with a maximum penalty of $250,000 per year ($100,000 for a
small business).
A small business is a business that has average annual gross
receipts of not more than $5 million for the most recent 3 tax years
(or for the period of its existence, if shorter) ending before the
calendar year in which the Forms 1042-S are due.
If you fail to provide a complete and correct statement to each
recipient, a penalty of $50 for each failure may be imposed. The
maximum penalty is $100,000 per year. If you intentionally disregard
the requirement to report correct information, the penalty for each
Form 1042-S (or statement to recipient) is the greater of $100
or 10% of the total amount of the items that must be reported, with no
maximum penalty.
Failure to file on magnetic media.
If you are required to file on magnetic media but you fail to do
so, and you do not have an approved waiver, you may be subject to a
penalty of $50 per return for failure to file Form 1042-S on
magnetic media unless you show reasonable cause. The penalty applies
separately to original and corrected returns.
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