1042-S
With an exception for employee compensation payments subject to graduated tax withholding (i.e. employment wages), all other payments made to nonresident aliens that are subject to reports, regardless of whether taxable or tax exempt, are required to be reported on Form 1042-S. The Office of International Taxation generates a Form 1042-S for each individual NRA who will be required to report withholding.
Income Reported on a 1042-S:
- Taxable non-qualified scholarships, fellowships, and grants (charged as ITAX on a student bill)
- Tax exempt non-scholarships, fellowships, and grants (exempt due to a tax treaty benefit)
- Wages exempt from taxation (due to a tax treaty benefit)
- Prizes
- Taxable reimbursements
- Self-employment income (independent personal services)
- Royalties
- Cancellation of indebtedness
Income Not Reported on a 1042-S:
- Qualified scholarships (money used to pay for tuition, fees, and books)
- Taxable wages reported on a W-2
Form 1042-S Specifics:
- Form Reports:
- Type of income (NOTE: If there is more than one type of income, there will be separate income lines listing each type, amount and income code.)
- Total amount of income paid
- Applicable tax rate OR reason for tax exemption
- Total amount of income tax withheld, if any
- Country of individual's tax residence
- Copies:
- Copy A -- Filed by the withholding agent (University of Richmond) with the IRS on an annual basis
- Copies B, C and D -- Distributed by UR to individual NRAs
- Copy E -- Kept on file at UR for a minimum of 3 years
- It is possible to receive a 1042-S and W-2 listing wages if an individual claims an income tax treaty exemption for compensation (wages) that has a maximum dollar limit and the annual earnings exceed that limit. Tax is withheld on the amount over the treaty limit and is taxed at a graduated tax withholding rate. The tax exempt wages are reported on a 1042-S and taxable wages are reported on a W-2.
