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Instructions for Form 1042-S
taxmap/instr2/i1042s-011.htm#en_us_publink64278ad0e1932

taxmap/instr2/i1042s-011.htm#TXMP59149711
Amounts Paid by Qualified Intermediaries(p15)

rule
taxmap/instr2/i1042s-011.htm#en_us_publink64278ad0e1939
taxmap/instr2/i1042s-011.htm#TXMP75a03313
In general.(p15)
rule
For purposes of chapter 4, a QI must complete a Form 1042-S for payments withheld under chapter 4 determined in accordance with the income codes used to file Form 1042-S. A QI that is a participating FFI or registered deemed-compliant FFI may use the chapter 4 pooled reporting codes 42 through 48 to allocate payments made to its recalcitrant account holders, payees that are nonparticipating FFIs, and payees that are U.S. persons. A QI should not use chapter 4 reporting pool 49 (QI‐ Recalcitrant Pool‐ General) to report its accounts but may use it to report accounts maintained by another QI. A QI that is an NFFE or an FFI treated as deemed-compliant under an applicable IGA (as described in Regulations section 1.1441-1(e)(5)(ii)(A)) may use chapter 4 reporting pool code 47 to report payments allocable to a pool of nonparticipating FFIs. QI may also use the chapter 4 pooled reporting codes to report payments allocable to account holders, payees, or owners of another participating FFI or registered deemed-compliant FFI that is an NQI, NWP, or NWT and provides its chapter 4 withholding rate pools on its withholding statement. In such case, the QI must include the NQI, NWP, or NWT as the recipient in box 13a and the applicable recipient code for such entity as the chapter 3 status code. For payments that are exempt from chapter 4 withholding, and made by the QI directly to foreign beneficial owners (or that are treated as paid directly to beneficial owners), the QI may report on the basis of chapter 3 reporting pools, in most cases. A QI may not report on the basis of reporting pools in the circumstances described in Recipient-by-Recipient Reporting, later. For payments not subject to chapter 4 withholding, a QI may use a single chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) and a single chapter 3 reporting pool code 27 (Withholding rate pool – general) as the chapter 3 status code for all reporting pools, except for amounts paid to foreign tax-exempt recipients for which chapter 3 reporting pool code 28 should be used. Note, however, that a QI should use recipient code 28 only for pooled account holders that have claimed an exemption based on their tax-exempt status and not some other exemption (tax treaty or other Code). If a QI uses a chapter 3 pooled reporting code (because chapter 4 withholding does not apply and the QI is not allocating the payment to a U.S. pool of payees), it should leave blank the recipient code for the chapter 4 status code.

taxmap/instr2/i1042s-011.htm#TXMP6c07aa1f
Example 11.(p15)

QI, a qualified intermediary and participating FFI, has four direct account holders, A and B, foreign individuals, and X and Y, foreign corporations. The withholdable payments made to these direct account holders are exempt from chapter 4 withholding because of the chapter 4 status of each account holder. A and X are residents of a country with which the United States has an income tax treaty and have provided documentation that establishes that they are entitled to a lower treaty rate of 15% on withholding of dividends from U.S. sources. B and Y are not residents of a treaty country and are subject to 30% withholding on dividends. QI receives U.S. source dividends on behalf of its four customers. QI must file one Form 1042-S for the 15% withholding rate pool. This Form 1042-S must show income code 06 (dividends paid by U.S. corporations – general) in box 1, 00 in box 3a (chapter 3 exemption code), 15.00 in box 3b (chapter 3 tax rate), chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) in box 4a, 00.00 in box 4b (chapter 4 tax rate), Withholding rate pool in box 13a (recipient's name), chapter 3 reporting pool code 27 (withholding rate pool – general) as the chapter 3 status code, and a blank chapter 4 status code. QI also must file one Form 1042-S for the 30% withholding rate pool that contains the same information as the Form 1042-S filed for the 15% withholding rate pool, except that it will show 30.00 in box 3b (chapter 3 tax rate).

taxmap/instr2/i1042s-011.htm#TXMP472af9dc
Example 12.(p15)

The facts are the same as in Example 11, except that Y is an organization that has tax-exempt status in the United States and in the country in which it is located, and B is a recalcitrant account holder with U.S. indicia. QI must file three Forms 1042-S. One Form 1042-S (for amounts allocable to A and X) will contain the same information as in Example 11. The second Form 1042-S (for amounts allocable to Y) will contain information for the withholding rate pool consisting of the amounts paid to Y. This Form 1042-S will show income code 06 (dividends paid by U.S. corporations – general) in box 1, exemption code 02 (exempt under IRC (other than portfolio interest)) in box 3a, 00.00 in box 3b (chapter 3 tax rate), chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) in box 4a, 00.00 in box 4b (chapter 4 tax rate), Zero rate withholding pool-exempt organizations, or similar designation, in box 13a (recipient's name), chapter 3 code 28 (withholding rate pool – exempt organization) in box 13f, and a blank chapter 4 status code in box 13g. The third Form 1042-S will contain information for the recalcitrant pool consisting of amounts paid to B. This Form 1042-S will show income code 06 (dividends paid by U.S. corporations-general) in box 1, code 12 (payee subjected to chapter 4 withholding) in box 3a (chapter 3 exemption code), 00.00 in box 3b (chapter 3 tax rate), 00 in box 4a (chapter 4 exemption code), 30.00 in box 4b (chapter 4 tax rate), recalcitrant pool – U.S. indicia or similar designation, in box 13a (recipient's name), chapter 4 recipient code 43 (recalcitrant pool-U.S. indicia) as the chapter 4 status code in box 13g, and a blank chapter 3 status code in box 13f.
caution
Under the terms of its Qualified Intermediary (or QI) agreement with the IRS, a QI that is an FFI may be required to report the amounts paid to U.S. non-exempt recipients on Form 1099 or Form 8966 using the name, address, and TIN of the payee to the extent those items of information are known. These amounts must be reported on Form 1042-S if allocated to a chapter 4 withholding rate pool of U.S. payees.
taxmap/instr2/i1042s-011.htm#en_us_publink64278ad0e2003

taxmap/instr2/i1042s-011.htm#TXMP334ec89c
Amounts Paid to Private Arrangement Intermediaries(p16)

rule
In most cases, a QI must report payments made to each private arrangement intermediary (PAI) (defined earlier in Definitions) as if the PAI's direct account holders were its own. For purposes of chapter 4, a QI that is a participating FFI, registered deemed-compliant FFI, or an FFI treated as deemed-compliant under an applicable IGA (as described in Regulations section 1.1441-1(e)(5)(ii)(A)) may use the chapter 4 reporting pool code 47 to allocate payments made to the PAI's payees that are nonparticipating FFIs, and may treat the PAI as the recipient on Form 1042-S with respect to each such pool. For chapter 3 purposes, if the payment is made directly by the PAI to the recipient, the QI may report the payment on a pooled basis. A separate Form 1042-S is required for each withholding rate pool of each PAI. However, the QI must include the name and address of the PAI and use reporting pool code 29 or 30 (PAI withholding rate pool – general and PAI-withholding rate pool-exempt organization) as the chapter 3 status code. If the PAI is providing recipient information from an NQI or flow-through entity, the QI may not report the payments on a pooled basis for chapter 3 purposes. Instead, it must follow the same procedures as a U.S. withholding agent making a payment to an NQI or flow-through entity.

taxmap/instr2/i1042s-011.htm#TXMP5e31c89d
Example 13.(p16)

QI, a qualified intermediary, pays U.S. source dividends to direct account holders that are foreign persons and beneficial owners. It also pays a part of the U.S. source dividends to two private arrangement intermediaries, PAI1 and PAI2. The private arrangement intermediaries pay the dividends they receive from QI to foreign persons that are beneficial owners and direct account holders of PAI1 or PAI2. All payees are exempt from chapter 4 withholding based on their respective chapter 4 statuses and the dividends paid are subject to a 15% rate of withholding. QI must file a Form 1042-S for the dividends paid to its own direct account holders that are beneficial owners. QI also must file two Forms 1042-S, one for the dividends paid to the direct account holders of each of PAI1 and PAI2. Each of the Forms 1042-S that QI files for payments made to PAI1 and PAI2 must contain the name and address of PAI1 or PAI2, recipient code 29 (PAI withholding rate pool – general) as the chapter 3 status code, and a blank chapter 4 status code, and should use chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) in box 4a.
taxmap/instr2/i1042s-011.htm#en_us_publink64278ad0e2030

taxmap/instr2/i1042s-011.htm#TXMP42f23e16
Amounts Paid to Certain Partnerships and Trusts(p16)

rule
A QI that is applying the special pool reporting allowance provided in the QI agreement for certain partnerships or trusts (Joint Account or Agency Option) must file separate Forms 1042-S reflecting reporting pools for each partnership or trust that has provided reporting pool information in its withholding statement. For purposes of chapter 4, a QI that is a participating FFI or registered deemed-compliant FFI may use the chapter 4 reporting pool code 47 to allocate payments made to the partnership or trust's payees that are nonparticipating FFIs, and may treat the partnership or trust as the recipient on Form 1042-S. For chapter 3 purposes, if the payment is made directly by the partnership or trust to the recipient, the QI may use reporting pool code 31 (Agency withholding rate pool - general), 32 (Agency withholding rate pool - exempt organization), or 33 (Joint account withholding rate pool) as the chapter 3 status code. However, to the extent required in the QI agreement, the QI must file separate Forms 1042-S for partners, beneficiaries, or owners of such partnership or trust that are indirect partners, beneficiaries, or owners, and for direct partners, beneficiaries, or owners of such partnership or trust that are intermediaries or flow-through entities.
taxmap/instr2/i1042s-011.htm#en_us_publink64278ad0e2046

taxmap/instr2/i1042s-011.htm#TXMP19c70e7f
Recipient-by-Recipient Reporting(p16)

rule
If a QI is not permitted to report on the basis of reporting pools, it must follow the same rules that apply to a U.S. withholding agent. For chapter 3 purposes, a QI may not report the following payments on a reporting pool basis, but rather must complete Form 1042-S for each appropriate recipient and must provide the applicable chapter 4 exemption code.
taxmap/instr2/i1042s-011.htm#en_us_publink64278ad0e2054
taxmap/instr2/i1042s-011.htm#TXMP0564609f
Payments made to another QI, QSL, WP, or WT.(p16)
rule
The QI must complete a Form 1042-S treating the other QI, QSL, WP, or WT as the recipient.
taxmap/instr2/i1042s-011.htm#en_us_publink64278ad0e2063
taxmap/instr2/i1042s-011.htm#TXMP6512791e
Payments made to an NQI (including an NQI that is an account holder of a PAI).(p16)
rule
For chapter 3 purposes, the QI must complete a Form 1042-S for each recipient who receives the payment from the NQI. A QI that is completing Form 1042-S for a recipient that receives a payment through an NQI must include in boxes 15a through 15i the name, country code, address, TIN, if any, GIIN, if any, and status codes of the NQI from whom the recipient directly receives the payment. In the case of an NQI that is a participating FFI or registered deemed-compliant FFI, the QI must complete a Form 1042-S for the chapter 4 withholding rate pool of the NQI provided in a withholding statement associated with its Form W-8IMY and must report the NQI as the recipient. In such a case, the QI must include the name and address of the NQI as the recipient and use chapter 4 pool reporting codes 42 through 48 as the chapter 4 status code and chapter 3 status code 25 (nonqualified intermediary). If the NQI fails to provide sufficient allocation information with respect to a withholdable payment, the QI must complete a Form 1042-S with the recipient as "Unknown Recipient" using reporting pool code 29 (unknown recipient) and must include the NQI's information in boxes 15a through 15i.

taxmap/instr2/i1042s-011.htm#TXMP11705e5a
Example 14.(p16)

QI, a qualified intermediary, has NQI, a nonqualified intermediary that is a participating FFI, as an account holder. NQI has two account holders, A and B, both recalcitrant account holders with U.S. indicia who receive a withholdable payment of U.S. source dividends from QI. NQI provides QI with a valid Form W-8IMY and a complete withholding statement that allocates the dividends paid to NQI to recalcitrant pool- U.S. indicia for both A and B. QI must complete one Form 1042-S reporting NQI as the recipient and using reporting pool code 43 (recalcitrant pool – U.S. indicia) as the chapter 4 status code.

taxmap/instr2/i1042s-011.htm#TXMP086b6f1b
Example 15.(p16)

QI has NQI, a nonqualified intermediary that is a reporting Model 2 FFI, as an account holder. NQI has two account holders, A and B, who receive a withholdable payment of U.S. source dividends from QI. A is a nonparticipating FFI. NQI treats B as a non-consenting U.S. account under the applicable IGA and is not required to withhold on payments to B under chapter 4. NQI provides QI with a valid Form W-8IMY and a complete withholding statement that allocates 50% of the dividends paid to A and 50% to B. NQI designates B as an individual exempt from withholding under an IGA but cannot include B in a chapter 4 withholding rate pool of U.S. payees because the payment is subject to chapter 3 withholding and under the presumption rules of Regulations section 1.1441-1(b)(3) the payment is presumed made to an unknown, undocumented foreign payee. QI must complete two Forms 1042-S. One Form 1042-S must show NQI as the recipient and use reporting pool code 47 (nonparticipating FFI pool). The second Form 1042-S must show the recipient as Unknown Recipient, NQI's information in boxes 15a through 15i, chapter 4 exemption code 19 (exempt from withholding under IGA), chapter 4 status code 34 (non-consenting U.S. account), chapter 3 status code 21 (unknown recipient), and 30% withholding under chapter 3 for the payment allocated to B as a presumed foreign person under chapter 3.
taxmap/instr2/i1042s-011.htm#en_us_publink64278ad0e2082
taxmap/instr2/i1042s-011.htm#TXMP588fa824
Payments made to a flow-through entity.(p17)
rule
The QI must complete a Form 1042-S for each recipient who receives the payment from the flow-through entity. A QI that is completing a Form 1042-S for a recipient that receives a payment through a flow-through entity must include in boxes 15a through 15i the name, country code, address, TIN, if any, GIIN, if any, and status codes of the flow-through entity from which the recipient directly receives the payment.
For chapter 4 purposes and in the case of a flow-through entity that is a participating FFI or registered deemed-compliant FFI (other than a WP or WT), the QI must complete a Form 1042-S for each chapter 4 withholding rate pool provided in the withholding statement associated with the Form W-8IMY of the flow-through entity. The QI must include the name, address, and GIIN of the flow-through entity as the recipient and the applicable chapter 3 status code for the flow-through entity, and use pooled reporting codes 42 through 48 as the chapter 4 status code.

taxmap/instr2/i1042s-011.htm#TXMP23463cd8
Example 16.(p17)

QI, a qualified intermediary, has FP, a nonwithholding foreign partnership that is a registered deemed-compliant FFI, as an account holder. QI pays interest that is a withholdable payment described by income code 01 (interest paid by U.S. obligors – general) to FP. FP has three partners, A, B, and C, all of whom are exempt from withholding under chapter 4 based on their respective chapter 4 statuses. FP provides QI with a Form W-8IMY with which it associates the Forms W-8BEN from each of A, B, and C. In addition, FP provides a complete withholding statement in association with its Form W-8IMY that allocates the interest payments among A, B, and C. QI must file three Forms 1042-S, one each for A, B, and C. The Forms 1042-S must show information relating to FP in boxes 15a through 15i along with the chapter 3 and 4 status codes and chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) for A, B, and C.
taxmap/instr2/i1042s-011.htm#en_us_publink64278ad0e2105

taxmap/instr2/i1042s-011.htm#TXMP398cfa94
Amounts Paid by Withholding Foreign Partnerships and Trusts(p17)

rule
taxmap/instr2/i1042s-011.htm#en_us_publink64278ad0e2114
taxmap/instr2/i1042s-011.htm#TXMP26f10a7f
In general.(p17)
rule
For chapter 4 purposes, payments that are made by a withholding foreign partnership (WP) or withholding foreign trust (WT) that is a participating FFI or a registered deemed-compliant FFI directly to its partners, owners, or beneficiaries that are recalcitrant account holders, payees that are nonparticipating FFIs, and payees that are U.S. persons may be reported on the basis of chapter 4 reporting pools. A WP or WT may also use the chapter 4 pooled reporting codes to report payments allocable to account holders, payees, or owners of another participating FFI or registered deemed-compliant FFI that is an NQI, NWP, or NWT and provides its chapter 4 withholding rate pools on its withholding statement when the WP or WT applies section 9.03 of its Agreement to such entity. In such case, the WP or WT must include the NQI, NWP, or NWT as the recipient in box 13a. If a WP or WT has not made a pooled reporting election, for chapter 3 purposes, a WP or WT must file a separate Form 1042-S for each direct partner, beneficiary, or owner that is exempt from chapter 4 withholding and to whom the WP or WT distributes, or in whose distributive share is included, an amount subject to withholding under chapter 3, in the same manner as a U.S. withholding agent. However, if the WP or WT has made a pooled reporting election in its WP or WT agreement, the WP or WT may instead report payments to such direct partners, beneficiaries, or owners on the basis of chapter 3 reporting pools and file a separate Form 1042-S for each reporting pool. For payments not subject to chapter 4 withholding, a WP or WT may use a single chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) and a single chapter 3 reporting pool code 27 (withholding rate pool – general) as the chapter 3 status code for all chapter 3 reporting pools, except for amounts paid to foreign tax-exempt recipients for which a separate recipient code 28 must be used. For this purpose, a foreign tax-exempt recipient includes any organization that is not subject to withholding and is not liable to tax in its country of residence because it is a charitable organization, pension fund, or foreign government. See the WP and WT agreements for when a WP and WT can pool report payments to an indirect partner, beneficiary, or owner. See section 9 of the WP or WT Agreement.