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IRS.gov Website
Instructions for Form 1042-S
taxmap/instr2/i1042s-015.htm#en_us_publink64278ad0e2367

taxmap/instr2/i1042s-015.htm#TXMP6b4d13e5
Avoid Common Errors(p19)

rule
To ensure that your Forms 1042-S can be correctly processed, be sure that you:
All information you enter when reporting the payment must correctly reflect the intent of the statute and regulations. In most cases, you should rely on the withholding documentation you have collected (Form W-8 series, Form 8233, etc.) to complete your Form 1042-S submissions.
taxmap/instr2/i1042s-015.htm#f64278a02

Income Codes

Box 1.Enter the appropriate income code.
    
Code Interest Income 16Scholarship or fellowship grants
 
01Interest paid by U.S. obligors – general17Compensation for independent personal services2
02Interest paid on real property mortgages18Compensation for dependent personal services2
03Interest paid to controlling foreign corporations19Compensation for teaching2
04Interest paid by foreign corporations20Compensation during studying and training2
05Interest on tax-free covenant bonds23Gross income – Other
22Interest paid on deposit with a foreign branch of a domestic corporation or partnership24Real estate investment trust (REIT) distributions of capital gains
29Deposit interest25Trust distributions subject to IRC section 1445
30Original issue discount (OID)26Unsevered growing crops and timber distributions by a trust subject to IRC section 1445
31Short-term OID27Publicly traded partnership distributions subject to IRC section 1446
33Substitute payment – interest28Gambling winnings3
51Interest paid on certain actively traded or publicly offered securities1
Code   Dividend Income32Notional principal contract income4
  35Substitute payment – other
06Dividends paid by U.S. corporations – general36Capital gains distributions
07Dividends qualifying for direct dividend rate37Return of capital
08Dividends paid by foreign corporations38Eligible deferred compensation items subject to IRC section 877A(d)(1)
34Substitute payment – dividends39Distributions from a nongrantor trust subject to IRC section 877A(f)(1)
40Other dividend equivalents under IRC section 871(m) (formerly 871(l))41Guarantee of indebtedness
52Dividends paid on certain actively traded or publicly offered securities142Earnings as an artist or athlete – no central withholding agreement5
53Substitute payments‐ dividends from certain actively traded or publicly offered securities 1  
    
Code  Other Income43Earnings as an artist or athlete – central withholding agreement5
09Capital gains44Specified Federal procurement payments
10Industrial royalties50Income previously reported under escrow procedure6
11Motion picture or television copyright royalties54Other income
12Other royalties (e.g., copyright, software, broadcasting, endorsement payments)  
13Royalties paid on certain publicly offered securities1  
14Real property income and natural resources royalties  
15Pensions, annuities, alimony, and/or insurance premiums  
1This code should only be used if the income paid is described in §1.1441‐6(c)(2) and withholding agent has reduced the rate of withholding under an income tax treaty without the recipient providing a U.S. or foreign TIN.
2 If compensation that otherwise would be covered under Income Codes 17 through 20 is directly attributable to the recipient's occupation as an artist or athlete, use Income Code 42 or 43 instead.
3 Subject to 30% withholding rate unless the recipient is from one of the treaty countries listed under Gambling winnings (Income Code 28) in Pub. 515.
4 Use appropriate Interest Income Code for embedded interest in a notional principal contract.
5 Income Code 43 should only be used if Letter 4492, Venue Notification, has been issued by the Internal Revenue Service (otherwise use Income Code 42 for earnings as an artist or athlete). If Income Code 42 or 43 is used, Recipient Code 22 (artist or athlete) should be used instead of Recipient Code 16 (individual), 15 (corporation), or 08 (partnership other than withholding foreign partnership).
6 Use only to report gross income the tax for which is being deposited in the current year because such tax was previously escrowed for chapters 3 and 4 and the withholding agent previously reported the gross income in a prior year and checked the box to report the tax as not deposited under the escrow procedure. See the instructions to this form for further explanation.
 
taxmap/instr2/i1042s-015.htm#en_us_publink1000307497

Exemption Codes and Recipient Codes

Boxes 3a and 4a. Exemption code (applies if the tax rate entered in boxes 3b and 4b is 00.00).04Territory FI – not treated as U.S. Person
CodeAuthority for Exemption 05U.S. branch – treated as U.S. Person
Chapter 3 06U.S. branch – not treated as U.S. Person
01Effectively connected income 07U.S. branch – ECI presumption applied
02Exempt under IRC (other than portfolio interest)08Partnership other than Withholding Foreign Partnership
03Income is not from U.S. sources09Withholding Foreign Partnership
04Exempt under tax treaty10Trust other than Withholding Foreign Trust
05Portfolio interest exempt under IRC11Withholding Foreign Trust
06QI that assumes primary withholding responsibility12Qualified Intermediary
07WFP or WFT13Qualified Securities Lender – Qualified Intermediary
08U.S. branch treated as U.S. Person14Qualified Securities Lender – Other
09Territory FI treated as U.S. Person15Corporation
10QI represents that income is exempt16Individual
11QSL that assumes primary withholding responsibility17Estate
12Payee subjected to chapter 4 withholding18Private Foundation
Chapter 4 19Government or International Organization
  20Tax Exempt Organization (Section 501(c) entities)
13Grandfathered payment21Unknown Recipient
14Effectively connected income22Artist or Athlete
15Payee not subject to chapter 4 withholding23Pension
16Excluded nonfinancial payment24Foreign Central Bank of Issue
17Foreign Entity that assumes primary withholding responsibility25Nonqualified Intermediary
18U.S. Payees – of participating FFI or registered deemed-compliant FFI26Hybrid entity making Treaty Claim
19Exempt from withholding under IGA734U.S. Withholding Agent-Foreign branch of FI
20Dormant account8  
21Excluded payment on offshore obligation  
22Excluded Payments on Collateral9  
    
CodeType of Recipient, Withholding Agent, Payer, or Intermediary  
    
Chapter 3Status Codes  
  Pooled Reporting Codes 10
01U.S. Withholding Agent – FI27Withholding Rate Pool – General
02U.S. Withholding Agent – Other28Withholding Rate Pool – Exempt Organization
03Territory FI treated as U.S. Person29PAI Withholding Rate Pool – General
  30PAI Withholding Rate Pool – Exempt Organization
  31Agency Withholding Rate Pool – General
  32Agency Withholding Rate Pool – Exempt Organization
  33Joint Account Withholding Rate Pool
7 Use only to report a U.S. reportable account or non-consenting U.S. account that is receiving a payment subject to chapter 3 withholding.
8 Use only if applying the escrow procedure for dormant accounts under 1.1471‐4(b)(6). If tax is withheld and deposited under chapter 3, do not check box "Check if tax not deposited with IRS pursuant to escrow procedure" and you must check box 3 and complete box 3b.
9 This code should only be used if the income paid is not subject to withholding under chapter 4 pursuant to 1.1473‐1(a)(4)(vii).
10 These codes should only be used by a QI, QSL, WP, or WT.
taxmap/instr2/i1042s-015.htm#en_us_publink1000307501

Recipient Codes (continued)

CodeType of Recipient, Withholding Agent, or Intermediary35 Sponsored direct reporting NFFE
Chapter 4Status Codes36Excepted Inter-affiliate FFI
01U.S. Withholding Agent – FI37Undocumented Preexisting Obligation
02U.S. Withholding Agent – Other38US branch – ECI presumption applied
03Territory FI –not treated as U.S. Person39Account Holder of Excluded Financial Account 11
04Territory FI – treated as U.S. Person40Passive NFFE reported by FFI 12
05Participating FFI – Other41NFFE subject to 1472 withholding
06Participating FFI – Reporting Model 2 FFI50U.S. Withholding Agent-Foreign branch of FI
07Registered Deemed-Compliant FFI – Reporting Model 1 FFI Pooled Reporting Codes
08Registered Deemed-Compliant FFI – Sponsored Entity42Recalcitrant Pool – No U.S. Indicia
09Registered Deemed-Compliant FFI – Other43Recalcitrant Pool – U.S. Indicia
10Certified Deemed-Compliant FFI – Other44 Recalcitrant Pool – Dormant Account
11Certified Deemed-Compliant FFI – FFI with Low Value Accounts45Recalcitrant Pool – U.S. Persons
12Certified Deemed-Compliant FFI – Non-Registering Local Bank46Recalcitrant Pool – Passive NFFEs
13Certified Deemed-Compliant FFI – Sponsored Entity47Nonparticipating FFI Pool
14Certified Deemed-Compliant FFI – Investment Advisor or Investment Manager48U.S. Payees Pool
15Nonparticipating FFI49QI‐Recalcitrant Pool‐General 13
    
16Owner-Documented FFIBox 13j.LOB Code (enter the code that best describes the applicable limitation on benefits (LOB) category that qualifies the taxpayer for the requested treaty benefits).
17Limited Branch treated as Nonparticipating FFI  
18Limited FFI treated as Nonparticipating FFI CodeLOB Treaty Category
19Passive NFFE identifying Substantial U.S. Owners01Individual
20Passive NFFE with no Substantial U.S. Owners02Government – contracting state/political subdivision/local authority
21Publicly Traded NFFE or Affiliate of Publicly Traded NFFE03Tax exempt pension trust/Pension fund
22Active NFFE04Tax exempt/Charitable organization
23Individual05Publicly-traded corporation
24Section 501(c) Entities06Subsidiary of publicly-traded corporation
25Excepted Territory NFFE 07 Company that meets the ownership and base erosion test
26Excepted NFFE – Other08Company that meets the derivative benefits test
27Exempt Beneficial Owner09Company with an item of income that meets the active trade or business test
28Entity Wholly Owned By Exempt Beneficial Owners10 Discretionary determination
29Unknown Recipient11Other
30Recalcitrant Account Holder  
31Nonreporting IGA FFI  
32Direct reporting NFFE  
33U.S. reportable account  
34Non – consenting U.S. account  
    
    
    
    
11 This code should only be used if income is paid to an account that is excluded from the definition of financial account under 1.1471‐5(b)(2) or under Annex II of the applicable Model 1 IGA or Model 2 IGA.
12 This code should only be used when the withholding agent has received a certification on the FFI withholding statement of a participating FFI or registered deemed‐compliant FFI that maintains the account that the FFI has reported the account held by the passive NFFE as a U.S. account (or U.S. reportable account) under its FATCA requirements. The withholding agent must report the name and GIIN of such FFI in boxes 15d and 15e.
13 This code should only be used by a withholding agent that is reporting a payment (or portion of a payment) made to a QI with respect to the QI’s recalcitrant account holders.
Also note the following:
caution
You, the withholding agent, are liable for the tax if you know, or should have known, that underwithholding on a payment has occurred.
taxmap/instr2/i1042s-015.htm#TXMP46baa14d

taxmap/instr2/i1042s-015.htm#TXMP68e5f54d
Specific Instructions for Withholding Agents(p19)

rule
caution
All amounts must be reported in U.S. dollars.
taxmap/instr2/i1042s-015.htm#en_us_publink64278ad0e3276

taxmap/instr2/i1042s-015.htm#TXMP28871b15
Rounding Off to Whole Dollars(p19)

rule
You must round off cents to whole dollars. To round off amounts to the nearest whole dollar, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3. If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding and only round off the total.