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Instructions for Form 1042-S
taxmap/instr2/i1042s-013.htm#en_us_publink64278ad0e2245

taxmap/instr2/i1042s-013.htm#TXMP6d7ac7fa
Multiple Withholding Agent Rule(p18)

rule
A withholding agent is not required to file Form 1042-S if a return is filed by another withholding agent reporting the same amount and the withholding agent has withheld correctly.
The multiple withholding agent rule does not relieve withholding agents from Form 1042-S reporting responsibility in the following circumstances.
Furthermore, the multiple withholding agent rule does not relieve the following from Form 1042-S reporting responsibility.
Under the multiple withholding agent rule, a withholding agent reporting amounts withheld by another withholding agent must use box 8 (Tax withheld by other agents) to report such amounts and must provide the name and EIN of the withholding agent that withheld in boxes 14a and 14b (Primary Withholding Agent's Name and EIN). See instructions for boxes 14a and 14b, later.

taxmap/instr2/i1042s-013.htm#TXMP3a5d0d99
Example 17.(p18)

NQI, a foreign bank that is a participating FFI, acts as a nonqualified intermediary for four different foreign persons (A, B, C, and D) who own securities from which they receive interest that is a withholdable payment. The interest is paid by a U.S. withholding agent (WA) as custodian of the securities for NQI. A, B, C, and D each own a 25% interest in the securities. NQI has furnished WA a Form W-8IMY to which it certifies its status as a participating FFI and has attached Forms W-8BEN from A and B. NQI's Form W-8IMY contains an attachment stating that 25% of the securities are allocable to each of A and B, and 50% to a pool of recalcitrant account holders with U.S. indicia. WA pays $100 of interest during the calendar year. WA treats the $25 of interest allocable to A and the $25 of interest allocable to B as portfolio interest and completes Forms 1042-S for A and for B as the recipients. WA includes information relating to NQI in boxes 15a through 15i on the Forms 1042-S for A and B. WA subjects the remaining $50 of interest to 30% withholding under chapter 4 and reports the interest on a Form 1042-S by treating NQI as the recipient in box 13a and uses chapter 3 status code 25 (nonqualified intermediary), chapter 4 status code 43 (recalcitrant pool – U.S. indicia), “30.00” in box 4b (chapter 4 tax rate), and $15 as the amount withheld in boxes 7 and 10. Under the multiple withholding agent rule, NQI is not required to file a Form 1042-S, but must file a Form 1042-S if, for example, C and D seek to make a claim for refund and NQI has not filed a collective refund claim on behalf of C and D for the tax withheld under chapter 4 on the payment (see Regulations section 1.1471-4(h)).

taxmap/instr2/i1042s-013.htm#TXMP423aeeaa
Example 18.(p18)

WA, a U.S. withholding agent, makes a $100 dividend payment that is a withholdable payment to a foreign bank (NQI) that is a participating FFI and acts as a nonqualified intermediary. NQI receives the payment on behalf of A, documented as a foreign individual exempt from chapter 4 withholding and a resident of a treaty country who is entitled to a 15% rate of withholding under chapter 3, and B, documented as a foreign individual exempt from chapter 4 withholding and a resident of a country that does not have a tax treaty with the United States and who is subject to 30% withholding under chapter 3. NQI provides WA with its Form W-8IMY that certifies its status as a participating FFI to which it associates the Forms W-8BEN from both A and B and a complete withholding statement that allocates 50% of the dividend to A and 50% to B. A's Form W-8BEN claims a 15% treaty rate of withholding. B's Form W-8BEN does not claim a reduced rate of withholding. WA, however, mistakenly withholds only 15%, $15, from the entire $100 payment. WA completes a Form 1042-S for each A and B as the recipients, showing on each form $50 of dividends in box 2, a withholding rate of 15.00 in box 3b (chapter 3 tax rate), and $7.50 as the amount withheld in boxes 7 and 10. Under the multiple withholding agent rule, NQI is not required to file a Form 1042-S for A. However, because NQI knows (or should know) that B is subject to a 30% rate of withholding, and assuming it knows that WA only withheld 15%, the multiple withholding agent rule does not apply to the dividend paid to B, and NQI must withhold an additional 15% from the payment to B. NQI then must file a Form 1042-S for B showing $50 of dividends in box 2, “00” in box 3a (chapter 3 exemption code), 30.00 in box 3b (the correct chapter 3 tax rate), $7.50 withheld by NQI in box 7, $7.50 withheld by WA in box 8, and $15 in box 10 (the combined amount withheld). NQI also must enter chapter 4 exemption code 15 (payee not subject to chapter 4 withholding) in box 4a and “00.00” in box 4b (chapter 4 tax rate). See the instructions for box 3b, later.