Form 1042-S Explained: What It Is, Who Sends It, and What a Foreign Person or US LLC Does With It

Form 1042-S reports US-source income paid to a foreign person and the tax withheld on it. What the boxes mean, the March 15 deadline, when a foreign-owned US LLC must issue one, and how a recipient uses it to claim back tax on Form 1040-NR.

Written by Amel Ouchene, IRS PTIN holderLast updated November 9, 2026Not legal or tax advice10 min read

Form 1042-S, "Foreign Person's U.S. Source Income Subject to Withholding", is the statement a US payer sends to a foreign person, and to the IRS, to report US-source income paid to that person and any US tax withheld on it. If a US platform, publisher, bank or client pays you from abroad, the 1042-S is the document that shows what you were paid and what was kept back. If your US LLC pays certain US-source income to foreign persons, it may be the one that has to issue it. The rules below come from the IRS Instructions for Form 1042-S (2026) and Publication 515 (2026).

In short:

What it reports: amounts "from U.S. sources paid to foreign persons", such as royalties, interest, dividends or pay for services performed in the United States, "even if no amount is deducted and withheld" because of a treaty or a Code exception.

Who sends it: the withholding agent, meaning the person who makes the payment. One copy goes to the IRS, the others to the recipient.

When: by March 15 of the following year, both to the IRS and to the recipient. Forms for 2026 are due March 15, 2027.

Key boxes: box 1 (income code), box 2 (gross income), boxes 3b and 4b (tax rate), box 7a (tax withheld), box 10 (total withholding credit).

What the recipient does with it: if too much tax was withheld, the foreign person can claim it back on Form 1040-NR (line 25g), attaching the 1042-S.

Not for work done abroad: pay for services performed outside the United States is foreign-source income, which is generally not reported on Form 1042-S.

What Form 1042-S is for

The instructions say to use Form 1042-S "to report income described under Amounts Subject to Reporting on Form 1042-S" and "to report amounts withheld under chapter 3 or chapter 4". Chapter 3 is the ordinary 30% withholding on US-source income of nonresident aliens and foreign corporations; chapter 4 is FATCA.

The amounts it covers are US-source amounts paid to foreign persons (including persons presumed to be foreign). The instructions list, among others:

interest and dividends;
rents and royalties;
"compensation for independent personal services performed in the United States";
scholarships, fellowships and pay to foreign students, teachers and researchers;
income effectively connected with a US trade or business, even when no withholding certificate is required.

A key rule: the form must be filed even when nothing was withheld. "You must file a Form 1042-S even if you did not withhold tax under chapter 3 because the income was exempt from tax under a U.S. tax treaty or the Internal Revenue Code."

What it does not cover: wages reported on Form W-2, amounts reported on a Form 1099, and withholding reported on Forms 8805 (section 1446) or 8288-A. As a rule, a US person receives a 1099; a foreign person receives a 1042-S.

The boxes that matter, for a recipient

The form has many boxes, most of them for banks and intermediaries. As a recipient, these are the ones to read:

Box	What it shows
1	Income code. For example 06 dividends, 01 interest, 12 "other royalties (for example, copyright, software, broadcasting, endorsement payments)", 17 independent personal services, 23 other income. A payer must complete a separate Form 1042-S for each type of income
2	Gross income paid during the calendar year, in whole dollars, including the tax withheld
3 / 3a / 3b	Chapter indicator ("3" or "4"), the exemption code and the tax rate applied under chapter 3. Code 04 means a reduced rate or exemption under a tax treaty. Since 2026 an exemption code is required whenever the rate is under 30%
4a / 4b	The same for chapter 4 (FATCA). "00.00" in 4b means no FATCA withholding applied
7a	Federal tax actually withheld by this payer. Always completed, "-0-" if nothing was withheld
10	Total withholding credit: box 7a plus tax withheld by other agents (box 8) and adjustments (box 9). This is the amount you claim on your return
12a to 12m	The payer (withholding agent): name, EIN, status codes, address
13a to 13p	You, the recipient: name, country code, address, US taxpayer number (if any), foreign tax number, status codes

The rates must be ones "allowed by statute, regulations, or treaty", written as "30.00", "15.00" or "00.00". If the payer withheld at one rate part of the year and another rate later, you receive several forms rather than one "blended" rate.

You received a 1042-S: what to do with it

Check the name, country and income code. If box 13b shows your country and box 3a shows code 04, the payer applied a treaty rate. If box 3b shows 30.00 when your country has a treaty, the payer probably did not have a valid W-8 for you at the time of payment, or the treaty does not reduce the rate for that type of income.
Compare the rate with the treaty. The IRS treaty table (Table 1, Rev. May 2023) lists, for example, a 0% rate on copyright royalties (income code 12) and on patent and know-how royalties (code 10) for residents of France and of Switzerland (film and TV royalties, code 11, are 0% for France only), subject to the conditions of each treaty. Our W-8 forms guide explains how the treaty is claimed with the payer.
Fix the future first. Give the payer a correct Form W-8BEN (or W-8BEN-E for a company) so the right rate applies to the next payments.
Claim back what was over-withheld. A nonresident alien claims the credit on Form 1040-NR. The Form 1040-NR instructions say: "Enter on line 25g the total amount shown as federal income tax withheld under chapter 3 or 4 on your Form(s) 1042-S. The withholding credit should be shown in box 10 of your Form(s) 1042-S", and to attach the 1042-S to the front of the return. A return generally needs a US taxpayer number, so you may need an ITIN first. Whether you must or should file is covered in our guide do you need to file Form 1040-NR.

Keep every 1042-S with your records: the IRS may disallow a claim if the copy you attach differs from the copy filed by the payer.

When your US LLC has to issue a 1042-S

Your LLC is a withholding agent when it pays US-source income of the kind listed above to a foreign person. Three common cases for a foreign-owned LLC:

Payment by your US LLC	1042-S?
A freelancer in France or Morocco paid for work done entirely outside the United States	Generally no. Publication 515: "The place where the services are performed determines the source of the income, regardless of where the contract was made, the place of payment, or the residence of the payer." Work done abroad is foreign-source income, and the Form 1042-S instructions say: "Foreign source income is generally not required to be reported on Form 1042-S." Keep the contractor's W-8BEN on file to document their foreign status
A foreign person paid for services performed in the United States, for example during a trip	Yes, as a rule (income code 17), with 30% withholding unless a treaty or Code exception applies
Royalties, interest or rent from US sources paid to a foreign person	Yes (codes 12, 01, 14 and others), with the treaty rate if the recipient gave a valid W-8

If your LLC files any Form 1042-S, it must also file Form 1042, the annual withholding tax return, by March 15. It reports and reconciles the tax withheld for the year. Tax withheld must also be deposited during the year; Publication 515 and the Form 1042 instructions set the deposit rules.

Filing method. Forms 1042-S must be e-filed by anyone required to file 10 or more information returns during the year, by partnerships with more than 100 partners and by financial institutions. The IRS is retiring its FIRE system: 2026 Forms 1042-S (due March 15, 2027) must be e-filed through IRIS. Paper forms go to the IRS with Form 1042-T.

More time. Form 8809 gives an automatic 30-day extension to file with the IRS. A separate one-time 30-day extension to furnish recipient copies can be requested on Form 15397, sent by fax.

Penalties (2026 instructions, per form): $60 if a correct form is filed within 30 days of the due date, $130 if filed by August 1, $340 after August 1 or never, with yearly maximums; a separate penalty of up to $340 per form applies for failing to furnish the recipient copy. Reasonable cause can excuse a failure.

The foreign owner of a disregarded LLC

When a US payer pays your single-member LLC and you, the foreign owner, gave it your W-8, the 1042-S is issued in your name, not the LLC's. The instructions are explicit: the withholding agent "must file a Form 1042-S in the name of the foreign single owner", with the owner's taxpayer number, if one is required. The same logic is why the owner, not the LLC, signs the W-8: see our guide on the W-8BEN-E for a US LLC owner.

How Melya helps

For creators and authors paid by US platforms, the Creators: Recover US Tax Withheld service (from $199) prepares the W-8BEN that claims your treaty rate and, if you are eligible, your Form 1040-NR to claim back the excess shown on your 1042-S, for your signature. Any refund depends on the IRS and is not guaranteed; an ITIN is quoted separately if needed. If you are not sure whether you have to file at all, start with the 1040-NR assessment ($95). Forms 1042 and 1042-S that your LLC would issue to others are not part of our fixed-price list. Melya signs as paid preparer; it does not represent clients before the IRS and does not advise on the tax rules of your country of residence.

Frequently asked questions

What is Form 1042-S?

An IRS information return, "Foreign Person's U.S. Source Income Subject to Withholding". The US payer files it with the IRS and gives copies to the foreign recipient, to report US-source income paid and any tax withheld under chapter 3 or chapter 4.

When are Forms 1042-S due?

By March 15 of the year after the payment, both to the IRS and to the recipient. If the 15th falls on a weekend or legal holiday, the next business day.

What is the difference between Form 1042 and Form 1042-S?

Form 1042-S is the statement per recipient and per type of income. Form 1042 is the payer's annual withholding tax return that totals and reconciles the tax withheld. A payer that files any 1042-S must also file Form 1042.

I received a 1042-S with 30% withheld. Can I get money back?

Possibly. If you qualified for a lower treaty rate, you can claim the excess on Form 1040-NR, using the amount in box 10, and give the payer a correct W-8 for future payments. The IRS decides any refund.

Does my US LLC need to send a 1042-S to a freelancer abroad?

In general, no, for work done entirely outside the United States: that pay is foreign-source income. It does for US-source payments such as services performed in the United States, royalties or interest.

Is a 1042-S the same as a 1099?

No. A Form 1099 reports payments to US persons; Form 1042-S reports US-source payments to foreign persons. The 1042-S instructions say not to use it for items that must be reported on a Form 1099.

Sources

IRS, Instructions for Form 1042-S (2026): purpose, who must file, March 15 due date, e-filing and IRIS, extensions, penalties, disregarded entities, boxes 1 to 13, income codes (Appendix A).
IRS, About Form 1042-S.
IRS, Instructions for Form 1042: annual return, March 15.
IRS, Publication 515 (2026), Withholding of Tax on Nonresident Aliens and Foreign Entities: source of income for personal services, royalty categories.
IRS, Instructions for Form 1040-NR (2025): line 25g, Forms 1042-S.
IRS, Tax Treaty Tables, Table 1: treaty rates on royalties for France and Switzerland.

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This article is general information about US tax rules for foreign-owned LLCs, not advice for your specific situation. Rules change; check the date above and ask before you file.

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