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Form 1042 Instructions for 2024
IRS Form 1042 consists of two pages, divided into four sections. You must complete both pages and sign the form. In this article, we'll provide you the step-by-step instructions on how to fill out Form 1042.
Charles Hardy | Last Updated: March 10, 2025
The Deadline to File Form 1042 is March 17, 2025. Start Filing Now!
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Table of Contents
IRS Form 1042 Instructions for 2024
If you are a withholding agent or intermediary, you need to fill out and file Form 1042 to report tax withheld on certain income paid to foreign persons, including non-resident aliens, foreign corporations, and other non-U.S. entities. To avoid major mistakes, learn the Form 1042 instructions and know how to fill out Form 1042.
Complete Withholding Agent Information
First, complete the basic details
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Name of withholding agent
Enter the name of the withholding agent.
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Employer Identification Number
- If you are filling out the 1042 Form, you must provide your EIN. If you are a QI, WP, or WT, use the specific QI-EIN, WP-EIN, or WT-EIN. If you are a QSL and QI, use your QI-EIN. Otherwise, use the EIN assigned to you.
- If you are a PFFI or another financial institution with a GIIN for Chapter 4 reporting, you must still obtain an EIN to complete Form 1042. Use your existing EIN, like the QI-EIN, for a QI.
- If you are a PFFI or another financial institution submitting this form for a branch outside the U.S., don't use your U.S. branch's EIN. Instead, get a separate EIN for filing on behalf of all your non-U.S. branches.
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Chapter 3 and Chapter 4 status codes
Enter your Chapter 3 and Chapter 4 status codes from the list of “Type of Recipient, Withholding Agent, Payer, or Intermediary Code” on Form 1042‐S.
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Address
Enter the Street, City or town, country, and zip or foreign postal code of the withholding agent.
Section 1: Record of Federal Tax Liability
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Lines 1 - 60
Enter the withholding agent's federal tax liability owed for each quarter-monthly period when the income was paid or collected under Chapter 3 or 4.
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Line 61
Enter the number of Forms 1042-S filed on paper and electronically.
- If your LLC is a Disregarded entity, you must check the box ‘Individual/sole proprietor or single-member LLC’.
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If your LLC is treated as a Partnership or Corporation, you must check the box ‘Limited liability company’ and enter the corresponding code to indicate the classification.
- C = C Corporation,
- S = S Corporation,
- P = Partnership
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Line 62
Enter the amounts from all Forms 1042-S and include amounts from all Forms 1000.
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Line 62a
Enter the total of all amounts in box 2 of Form 1042-S that represent payments of U.S. source Fixed, Determinable, Annual, Periodical (FDAP) income.
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Line 62b
The amount on:
- Line 62b(1) should equal the sum of all amounts shown in box 2 of Form 1042-S that are U.S. source substitute dividend payments and
- The amount shown on line 62b(2) should equal all amounts shown in box 2 of Form 1042-S that are U.S. source substitute payments other than substitute dividend payments.
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Line 62c
Enter the total of all U.S. source FDAP income amounts in box 2 of Form 1042-S and all gross interest amounts reported on Form 1000.
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Line 62d
Enter the gross amounts of U.S. source FDAP income from Forms 1000 and 1042-S if they differ from the totals reported on both forms.
Total Tax Reported as Withheld or Paid
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Line 63a
Enter the amounts withheld by the withholding agent before any adjustments are reported on lines 63c(1) and 63c(2).
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Line 63c(1)
Enter the amounts you repaid to the beneficial owner or payee in the year after the calendar year due to over-withholding. Report these amounts as a deduction on line 59, reducing the tax liability.
The total on line 63c(1) should match the sum of all amounts reported in box 9 of the corresponding Forms 1042-S.
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Line 63c(2)
Report on line 63c(2) the amounts withheld in the year after underwithholding, from future payments to a beneficial owner or from property or contributions you control. Also, include any other amounts withheld in the year after the related payments were made, as allowed under applicable regulations in Chapter 3 or 4.
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Line 63d
Report on line 63d the amounts paid by the withholding agent from their own funds instead of withholding from the recipient’s payment. This amount should match the total of all amounts in box 11 of Forms 1042-S sent to recipients.
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Line 63e
Enter the total tax withheld or paid. The amount on line 63e should equal the sum of lines 63a through 63d.
Computation of Tax Due or Overpayment
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Line 64a
Enter any adjustments to the total net tax liability on line 64a. For example, include adjustments when:
- A distributing corporation made a reasonable estimate of accumulated and current earnings and profits under the Regulations section.
- A distributing corporation or intermediary paid any underwithheld tax by March 17, 2025.
Do not include the amount on line 64a in the Record of Federal Tax Liability (lines 1–60).
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Line 64b and 64c
Enter the total from the Record of Federal Tax Liability (sum of lines 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, and 60) for Chapter 3 (line 64b) liability. On line 64c, enter the total for Chapter 4 liability.
Do not include amounts from lines 64a and 64d, and do not make any other adjustments.
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Line 64d
Enter the amounts from the Record of Federal Tax Liability related to liability for specified federal procurement payments under section 5000C.
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Line 64e
The amount on line 64e should be the total of lines 64a through 64d.
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Line 65
Enter the total tax deposits made for the year, including payments with a filing extension.
- On line 65a, report deposits of tax withheld in the same calendar year as the related payment.
- On line 65b, report deposits of tax withheld in the following year, if allowed under applicable regulations in Chapter 3 or 4.
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Line 66
Enter any overpayment reported on the 2023 Form 1042 that you are applying as a credit on Form 1042 for 2024.
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Line 67
Claim a credit for amounts withheld by other withholding agents that apply to the total net tax liability on lines 64b and 64c.
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Line 70a and 70b
Enter any overpayment from payments subject to withholding under Chapters 3 and 4 (70a). Enter any overpayment from payments subject to the excise tax on specified federal procurement payments (70b).
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Line 71
You can claim an overpayment (lines 70a and 70b) as a refund or a credit. Mark the appropriate box on line 71 to indicate your choice. If you choose a credit, it will reduce your required deposits of withheld tax for 2025. Remember that if you repaid overwithheld amounts to the recipient after 2024 using reimbursement or set-off procedures, you could not claim a refund on the 2024 Form 1042.
Section 2: Reconciliation of Payments of U.S. Source FDAP Income
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Line 1
Enter U.S. source FDAP income amounts subject to withholding under Chapter 4, including any amounts that were withheld but not deposited due to an escrow procedure.
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Line 2
Enter the amounts of U.S. source FDAP income on lines 2a through 2d that are exempt from withholding under Chapter 4. The amount on line 2e should be the total of lines 2a through 2d.
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Line 2a
Enter the amounts of U.S. source FDAP income subject to withholding, but the withholding agent has documentation showing a Chapter 4 status that exempts withholding (e.g., PFFI).
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Line 2b
Enter the amounts of U.S. source FDAP income that are not subject to withholding because they are nonfinancial payments (e.g., royalties, services, rents).
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Line 2c
Enter the amounts of U.S. source FDAP income not subject to withholding because they are related to grandfathered obligations (e.g., obligations outstanding on July 1, 2014).
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Line 2d
Enter the amounts of U.S. source FDAP income not subject to withholding because they are payments of effectively connected income (ECI).
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Line 2e
Enter the total of all U.S. source FDAP income that must be reported on Form 1042 but is not subject to withholding under Chapter 4 (sum of lines 2a through 2d).
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Line 4
Enter the total of all amounts in box 2 of Form 1042-S that are payments of U.S. source FDAP income (including those reported under both Chapter 3 and Chapter 4). The amount on line 4 should equal the total U.S. source FDAP income on line 62c.
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Line 5
The amount on line 5 should be the total from line 4 (total U.S. source FDAP income from all Forms 1042-S) minus the total from line 3 (total U.S. source FDAP income under Chapter 4).
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Line 6
If the amount on line 5 is not zero, provide an explanation for the difference here. If you need more space, attach a separate sheet with the details to Form 1042.
Section 3: Potential Section 871(m) Transactions
If you are a withholding agent who makes any payment under a potential Section 871(m) transaction during the year, including a notional principal contract or other derivative contract linked to a U.S. stock or underlying security.
Section 4: Payments by a Qualified Derivatives Dealer (QDD)
If a QI (including any branch or home office) was a QDD during the tax year, enter the regular EIN (not the QI-EIN) and attach Schedule(s) Q (Form 1042) for each QDD. This is required even if the QDD has zero tax liability.
If the QI's tax year is not the calendar year, two Schedules Q (Form 1042) must be filed for each QDD - one for the part of the year in the first tax year and another for the second tax year.
How to Submit Form 1042?
To file Form 1042, complete all applicable sections based on the type of income and withholding applicable. The IRS accepts Form 1042 filings both on paper and online. However, the IRS recommends you to file 1042 electronically considering several benefits of e-filing. Also according to the latest IRS revisions to Form 1042, electronic filing is mandated for withholding agents filing 10 or more information returns annually or partnerships with over 100 partners. Choose TaxBandits to meet your 1042 filing deadline to ensure compliance.
TaxBandits, an IRS-authorized e-file provider, allows you to e-file Form 1042 with the IRS and receive instant status updates on your Form 1042 returns. Get to know how TaxBandits simplifies your 1042 filing process!