The IRS has reminded withholding agents of their responsibilities, some reporting changes and some common errors. The IRS also described filing requirements for non-U.S. citizens in certain circumstances.
The due date for Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, is March 15. To request a 30-day extension to file Form 1042-S, withholding agents should file Form 8809, Application for Extension of Time To File Information Returns, before the March 15 due date of the Form 1042-S. When Form 8809 is timely filed, an automatic 30-day extension will be granted.
Withholding agents complete Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. Five copies of Form 1042-S are required. If withholding agents create a substitute Form 1042-S, all five copies must be in the same physical format.
New field. The IRS has created a new field on the 2017 Form 1042-S. The new field requires withholding agents to assign a unique identifying number to each original Form 1042-S that is filed. The Unique Form Identifier (UFI) must be numeric and exactly 10 digits.
Extension. If more time is needed, a second Form 8809 must be filed before the end of the initial extension period, the IRS explained. A further extension is granted only at the discretion of the IRS and only if the filer can show extenuating circumstances that prevent filing of the Forms 1042-S within the first 30-day extension.
Errors. The IRS reported that a common error is to have a Form 1042-S listing two or more recipients in box 13a. The 2016 instructions to Form 1042-S have been updated to clarify that in the case of joint owners, Form 1042-S can only list one of the owners in box 13a. Another common error is tax rates are not the same on all copies.
Amended forms. An amended Form 1042-S must be filed with the IRS and copies must be furnished to the recipient. The IRS reminded withholding agents that the information on each copy of the amended Form 1042-S must match exactly. If a Form 1042-S has never been filed for a recipient, the withholding agent should issue an original Form 1042-S, the IRS instructed.
If a withholding agent issues a Form 1042-S with an incorrect recipient name, it must issue an amended Form 1042-S to correct the original submission.
Substitutes. Some withholding agents, the IRS reported, create a substitute version of Form 1042-S. The IRS explained that all five copies must be in the same physical format. The size, shape and format of any substitute form must adhere to the rules of Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns.
Generally, the IRS explained that non-U.S. citizens, whom the tax laws define as either resident or non-resident aliens, who are engaged in a trade or business within the U.S., must file tax returns. Non-resident aliens such as foreign students, teachers or trainees temporarily in the United States on F, J, M or Q visas are considered engaged in a trade or business.
The IRS further explained that individuals in F-1, J-1, M-1, Q-1 and Q-2 non-immigrant status are eligible to be employed in the U.S. and are eligible to apply for a Social Security number if they are actually employed in the U.S. Individuals ineligible for an SSN but who have a tax filing requirement may request an Individual Taxpayer Identification Number (ITIN) from the IRS.