2026 Instructions for Form 1042-S

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2026

Instructions for Form 1042-S
Foreign Person’s U.S. Source Income Subject to Withholding
Section references are to the Internal Revenue Code
unless otherwise noted.

Future Developments

For the latest information about developments related to
Form 1042-S and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
Form1042S.

What’s New
Credit forward framework. After December 31, 2024,
withholding agents (including a QSL) may no longer use
the credit forward framework set forth in Notice 2010-46,
2010-24 I.R.B. 757, for substitute dividends paid in a
series of security loans or stock repurchase agreements.
See FAQ 26 under the General compliance section of
FATCA - FAQs general, available at IRS.gov/
FATCAFAQsGeneral.
Address fields. We separated the address fields into
individual entry boxes.
Chapter 3 exemption codes. A chapter 3 exemption
code is now required in all cases where the tax withheld is
less than 30%. For example, if you are reporting payments
of scholarship or fellowship grants that are subject to a
14% withholding tax under section 1441(a), you must
report chapter 3 exemption code 02 (exempt or reduced
withholding under IRC) in box 3a. See Boxes 3a and 4a
for more information.
Filing Information Returns Electronically (FIRE) system being retired. FIRE is set to retire for tax year 2026
and will not be available for submissions for filing season
2027 (forms due in 2027). The Information Returns Intake
System (IRIS) will be the only intake system for
information returns currently received through FIRE. For
more information on e-filing or IRIS, go to IRS.gov/
InfoReturns.
Information Returns Intake System (IRIS). The IRS
has developed IRIS, an online portal that allows taxpayers
to e-file information returns and will replace FIRE for
e-filing Forms 1042-S. IRIS will also let you file corrections
and request automatic extensions. IRIS will be available
beginning January 1, 2026, and must be used to e-file
2026 Forms 1042-S (due March 15, 2027). Either IRIS or
FIRE may be used to e-file 2025 Forms 1042-S (due
March 15, 2026). For more information, go to IRS.gov/
IRIS.

Reminders
Income codes 59, 60, and 61. The income codes for
consent fees, loan syndication fees, and settlement
payments will remain optional for 2026.

Nov 10, 2025

Reliance on proposed regulations reducing burden
under FATCA and chapter 3. On December 18, 2018,
the IRS and the Department of the Treasury issued
proposed regulations (REG-132881-17) to reduce
taxpayer burden with respect to certain requirements
under chapters 3 and 4. The proposed regulations provide
that, under section 7805(b)(1)(C), taxpayers may
generally rely on the proposed regulations until final
regulations are issued. Specifically, for purposes of these
instructions, a withholding agent may rely on the following
provisions in connection with completing Form 1042-S.
• Withholding and reporting in a subsequent year. A
partnership or trust that is permitted to withhold in a
subsequent year with respect to a foreign partner’s or
beneficiary's share of income for the prior year may
designate the deposit of the withholding as attributable to
the preceding year and in some cases a partnership is
provided an extended due date for filing and furnishing
Form 1042-S. See the instructions for box 7c, later.
• Adjustments to overwithholding under the
reimbursement and set-off procedures. A withholding
agent may make adjustments to overwithholding using
either the reimbursement or set-off procedures until the
extended due date for filing Form 1042-S (unless the Form
1042-S has already been filed or furnished). Additionally,
a withholding agent may use the extended due date for
filing a Form 1042 to claim a credit for any adjustments
made to overwithholding. See the instructions for box 9,
later.
Withholding rates. The rate of withholding under section
1446(a) by a publicly traded partnership (PTP) on a
distribution of income effectively connected to a U.S. trade
or business is 21% for corporate partners and 37% for all
other partners.
The rate of withholding by a qualified investment entity
(QIE) on a distribution to a nonresident alien or foreign
corporation that is treated as gain from the sale or
exchange of a U.S. real property interest by the
shareholder is 21%.
Qualified derivatives dealers (QDDs). These
instructions provide guidance on how to report payments
on Form 1042-S that are made to and by QDDs. See
Payments by U.S. Withholding Agents and Amounts Paid
by QIs, later. For more information on the withholding and
reporting requirements associated with payments made to
and by QDDs, see Rev. Proc. 2022-43, 2022-52 I.R.B.
570, available at IRS.gov/irb/2022-52_IRB#RP-2022-43.
See also Notice 2024-44, 2024-25 I.R.B. 1737, available
at IRS.gov/irb/2024-25_IRB#NOT-2024-44, which extends
the phase-in period provided in Notice 2022-37, 2022-37
I.R.B. 234, available at IRS.gov/irb/
2022-37_IRB#NOT-2022-37, for certain provisions of the

Instructions for Form 1042-S (2026) Catalog Number 64278A
Department of the Treasury Internal Revenue Service www.irs.gov

section 871(m) regulations for 2 years (including 2026),
including for certain requirements of a QDD.
Foreign Account Tax Compliance Act (FATCA). Form
1042-S reports payments and amounts withheld under the
provisions commonly known as FATCA or chapter 4 of the
Internal Revenue Code (chapter 4) in addition to those
amounts required to be reported under chapter 3 of the
Internal Revenue Code (chapter 3). Form 1042-S requires
the reporting of an applicable exemption to the extent
withholding under chapter 4 did not apply to a payment of
U.S. source fixed or determinable annual or periodical
(FDAP) income (including deposit interest) that is
reportable on Form 1042-S. For payments to
intermediaries, flow-through entities, and recipients, Form
1042-S requires that the chapter 3 status (or
classification) and, when the payment reported is a
withholdable payment, the chapter 4 status, be reported
on the form according to the codes provided in these
instructions. For the requirement of a withholding agent to
file a Form 1042-S for chapter 4 purposes, see
Regulations section 1.1474-1(d).
Unique form identifier. Withholding agents must assign
a unique identifying number to each Form 1042-S they
file. This identifying number is used, for example, to
identify which information return is being corrected or
amended when multiple information returns are filed by a
withholding agent with respect to the same recipient. The
unique identifying number cannot be the recipient’s U.S.
taxpayer identification number (TIN) or foreign tax
identification number (FTIN). The unique identifying
number must be numeric. The length of a given identifying
number must be exactly 10 digits. The identifying number
must be unique to each original Form 1042-S filed for the
current year. The identifying number can be used on a
new original form in a subsequent year.
List of country codes. Form 1042-S filers must use the
same list of country codes used on other IRS forms (for
example, Forms 926, 1118, 3520, and 8805). This list of
country codes may be found at IRS.gov/CountryCodes.

General Instructions
Purpose of Form

Use Form 1042-S to report income described under
Amounts Subject to Reporting on Form 1042-S, later, and
to report amounts withheld under chapter 3 or chapter 4.
Use Form 1042-S to report specified federal
procurement payments paid to foreign persons that are
subject to withholding under section 5000C.
Use Form 1042-S to report payments of eligible
deferred compensation items or distributions from
nongrantor trusts to covered expatriates that are subject to
withholding under section 877A. See Box 1, later.
Use Form 1042-S to report certain distributions that are
made by publicly traded trusts and QIEs (as defined under
section 897(h)(4)(A)). See Distributions Attributable to
Dispositions of U.S. Real Property Interests by Publicly
Traded Trusts and Qualified Investment Entities, later.
Use Form 1042-S to report distributions of effectively
connected income (ECI) by a PTP or nominee and
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amounts realized paid on certain transfers of PTP
interests. See Publicly Traded Partnerships (Section
1446(a) and (f) Withholding Tax), later.
Caution: Every person required to deduct and withhold
any tax under chapter 3 or chapter 4 is liable for such tax.
Do not use Form 1042-S to report an item required to
be reported on any of the following forms.
• Form W-2 (wages and other compensation made to
employees (other than compensation for dependent
personal services for which the beneficial owner is
claiming treaty benefits), including wages in the form of
group-term life insurance).
• Form 1099 (except if indicated otherwise in these
instructions).
• Form 8288-A, Statement of Withholding on Certain
Dispositions by Foreign Persons; or Form 8805, Foreign
Partner’s Information Statement of Section 1446
Withholding Tax. Withholding agents otherwise required to
report a distribution partly on a Form 8288-A or Form 8805
and partly on a Form 1042-S may instead report the entire
amount on Form 8288-A or Form 8805.
• Form 8966, FATCA Report. Foreign financial institutions
(FFIs), sponsoring entities of certain FFIs and other
foreign entities, and withholding agents are required to
report on Form 8966 certain account holders and payees.
An FFI or withholding agent may also be required to file
Form 1042-S to report payments of U.S. source FDAP
income made to such persons and to report tax deducted
and withheld, if any.

Who Must File

Every withholding agent (defined in Definitions, later) must
file an information return on Form 1042-S to report
amounts paid during the preceding calendar year that are
described under Amounts Subject to Reporting on Form
1042-S, later. However, withholding agents who are
individuals are not required to report a payment on Form
1042-S if they are not making the payment as part of their
trade or business and no withholding is required to be
made on the payment. For example, an individual making
a payment of interest that qualifies for the portfolio interest
exception from withholding is not required to report the
payment if the portfolio interest is paid on a loan that is not
connected to the individual’s trade or business. However,
an individual who is a withholding agent paying an amount
that actually has been subject to withholding is required to
report the payment. Also, an individual paying an amount
on which withholding is required must report the payment,
whether or not the individual actually withholds. See
Multiple Withholding Agent Rule, later, for exceptions to
reporting when another person has reported the same
payment to the recipient. Note that there may be a
payment for tax purposes, even if there is no net payment.
For example, see Regulations section 1.871-15(i) for
when there is a dividend equivalent.

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, including the exemption for income that is
effectively connected with the conduct of a trade or
business in the United States, or you released the tax
Instructions for Form 1042-S (2026)

withheld to the recipient. For exceptions, see Amounts
That Are Not Subject to Reporting on Form 1042-S, later.
Amounts paid to an individual that is a bona fide
resident of a U.S. territory are not subject to reporting on
Form 1042-S if the beneficial owner of the income is a
U.S. citizen, national, or resident alien (such amounts may
be subject to Form 1099 reporting).
Caution: If you file Form 1042-S, you must also file Form
1042, Annual Withholding Tax Return for U.S. Source
Income of Foreign Persons. See Form 1042 and its
instructions for more information.

Where, When, and How To File

Forms 1042-S, whether filed on paper or electronically,
must be filed with the IRS and be furnished to the recipient
of the income by March 15 of the following calendar year.
If the 15th falls on a Saturday, Sunday, or legal holiday in
the District of Columbia or where the return is to be filed,
the due date is the next business day.
Copy A is filed with the IRS. Send all paper Forms
1042-S with Form 1042-T, Annual Summary and
Transmittal of Forms 1042-S, to the address in the Form
1042-T instructions. You must use Form 1042-T to
transmit paper Forms 1042-S. Use a separate Form
1042-T to transmit each type of Form 1042-S. See
Payments by U.S. Withholding Agents, later, and the Form
1042-T instructions for more information.

Electronic filing requirement. See Electronic
Reporting, later, for information on who is required to file
Form 1042-S electronically.
Tip: Attach only Copy A to Form 1042-T. Provide Copies
B, C, and D to the recipient of the income. All copies must
match the copy filed with the IRS. Any differences
between the copy of the form issued to recipients and the
copy filed with the IRS will lead to delays in processing the
recipient’s tax return. The IRS may disallow claims for
refund or credit for amounts withheld reported on Form
1042-S if the form attached to such claims differs from the
copy that was filed with the IRS.
With respect to a withholdable payment, the recipient
copy should be provided to the intermediary or
flow-through entity named as a recipient with respect to a
chapter 4 reporting pool, if applicable.
Extension of time to file. To request an extension of
time to file Forms 1042-S, file Form 8809, Application for
Extension of Time To File Information Returns. See the
instructions for Form 8809 at IRS.gov/Form8809 for where
to file that form. You should request an extension as soon
as you are aware that an extension is necessary, but no
later than the due date for filing Form 1042-S. By filing
Form 8809, you will get an automatic 30-day extension to
file Form 1042-S. If you need more time, you may submit a
second Form 8809 before the end of the initial extended
due date. See Form 8809 for more information.
Recipient copies. You may request a one-time 30-day
extension to furnish copies of Forms 1042-S to the
recipients using Form 15397, Application for Extension of
Time to Furnish Recipient Statements. This form must be
sent by fax to:
Instructions for Form 1042-S (2026)

Internal Revenue Service
Technical Services Operation
Attn: Extension of Time Coordinator
Fax: 877-477-0572
(International fax: 304-579-4105)
Your request must be received no later than the date the
Forms 1042-S must be furnished to the recipients. If your
request for an extension is approved, generally you will be
granted a maximum of 30 extra days to furnish the
recipient copies. See Extension to provide statements to
recipients in Pub. 515, Withholding of Tax on Nonresident
Aliens and Foreign Entities.

Electronic Reporting

Forms 1042-S must be e-filed if:
• You are a person (including a corporation, partnership,
individual, trust, or estate) that is required to file 10 or
more information returns during the year; or
• You are a partnership with more than 100 partners; or
• You are a financial institution (whether U.S. or foreign)
regardless of the number of returns required to be filed.
Beginning January 1, 2026, you can use IRIS to e-file
2025 Forms 1042-S (due March 15, 2026). Prior year
Forms 1042-S would still be required to be e-filed using
FIRE until this system is retired, which is expected to
happen on December 31, 2026. After December 31,
2026, IRIS will be required to e-file Forms 1042-S. For
more information, go to IRS.gov/IRIS.
A withholding agent required to e-file its original Form
1042-S returns under the above requirements must also
e-file any amended Form 1042-S returns during the
calendar year.
Caution: If you e-file, do not file the same returns on
paper. Duplicate filing may cause penalty notices to be
generated.
Note: Regardless of the above requirements, the IRS
encourages filers to e-file.
Hardship waiver. To receive a hardship waiver from
e-filing Forms 1042-S, submit Form 8508, Application for a
Waiver from Electronic Filing of Information Returns.
Waiver requests should be filed at least 45 days before the
due date of the returns. See Form 8508 for more
information.

Truncation of TIN Rules

Withholding agents may truncate the recipient’s TIN
(social security number (SSN), individual taxpayer
identification number (ITIN), or employer identification
number (EIN)) on the recipient’s copy of Form 1042-S
(that is, Copies B, C, and D), including a substitute form.
To truncate the recipient’s TIN, only the last four digits of a
TIN must be displayed and the remaining digits must be
replaced with either asterisks (*) or Xs. For example, an
SSN or ITIN must be truncated on the recipient’s copy as
XXX-XX-nnnn. An EIN must be truncated as XXXXXnnnn.
Withholding agents may also truncate a recipient’s
FTIN on the recipient’s copy of Form 1042-S (Copies B, C,
and D), including a substitute form. The same rules for
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truncating a recipient’s U.S. TIN stated above must be
followed if truncating a recipient’s FTIN.
Note: The recipient’s TIN and FTIN must not be truncated
on Copy A filed with the IRS. The withholding agent’s EIN
cannot be truncated on any copy.
Need assistance? For additional information and
instructions on e-filing Forms 1042-S, extensions of time
to file (Form 8809), and hardship waivers (Form 8508), go
to IRS.gov/IRIS. You can also call the IRIS help desk at
866-937-4130 (toll free) or 470-769-5100 (not a toll-free
number). Do not call the IRIS help desk for tax law
questions.
If you have tax law questions pertaining to Form
1042-S, call 267-941-1000 (not a toll-free number).

Penalty for filing incorrect substitute form. Privately
printed substitute Forms 1042-S must be exact copies of
both the format and content of the official Form 1042-S. If
you file a substitute for Form 1042-S, Copy A, with the IRS
that is not an exact copy of the official Form 1042-S, Copy
A, you may be subject to a penalty for failure to file a
correct information return. See Penalties, later.

Account-by-Account Reporting by Certain
Financial Institutions

For more information on the withholding of tax, see Pub.
515. This publication can only be seen online at IRS.gov/
Pub. 515.

A U.S. financial institution or U.S. branch of an FFI
maintaining an account within the United States is
required to report payments of the same type of income
(as determined by the income code in box 1) made to
multiple financial accounts held by the same recipient on a
separate Form 1042-S for each account. For this purpose,
a financial account is an account described in Regulations
section 1.1471-5(b)(1). See Box 13o, later, for information
on designating each account with a separate account
number.

You can download or print some of the forms and
publications you may need at IRS.gov/Forms. Otherwise,
you can place an order online at IRS.gov/OrderForms or
by calling 800-TAX-FORM (800-829-3676) to have forms
and publications mailed to you. You should receive your
order within 10 business days.

Rev. Proc. 99-50 provides special procedures for
successor entities to use combined information reporting
under chapter 3 in certain situations following a merger or
acquisition. A withholding agent may also use these
procedures for purposes of reporting under chapter 4.

Record Retention

Deposit Requirements

Additional Information

Combined Reporting Procedures

Withholding agents should retain a copy of the information
returns filed with the IRS, or have the ability to reconstruct
the data, for at least 3 years after the reporting due date.

For information and rules concerning federal tax deposits,
see Depositing Withheld Taxes in Pub. 515 or Deposit
Requirements in the Instructions for Form 1042.

Substitute Forms

Definitions

The official Form 1042-S is the standard for substitute
forms. All substitute forms must comply with the rules set
forth in Pub. 1179, General Rules and Specifications for
Substitute Forms 1096, 1098, 1099, 5498, and Certain
Other Information Returns. A substitute of Form 1042-S
that is furnished to the recipient (Copy B, C, or D) must
conform in format and size to the official IRS form and
must contain the exact same information as the copy filed
with the IRS. However, the size of the form may be
adjusted if the substitute form is presented on a
landscape-oriented page instead of portrait. Only one
Form 1042-S may be submitted per page, regardless of
orientation. You may be subject to a penalty for failure to
furnish a correct information return. See Penalties, later.
Note: A withholding agent is required to provide a
recipient with a separate substitute Form 1042-S for each
type of payment of income (as determined by the income
code in box 1).
Caution: All of the fields on the substitute form must
match the copy filed with the IRS and must comply with
IRS standards (see Pub. 1179). Any differences between
the substitute form issued to recipients and the copy filed
with the IRS will lead to delays in processing the
recipient’s tax return. The IRS may disallow claims for
refund or credit for amounts withheld reported on Form
1042-S if the substitute form attached to such claims
differs from the copy that was filed with the IRS.

4

Withholding agent. A withholding agent is any person,
U.S. or foreign, that has control, receipt, or custody of an
amount subject to withholding under chapter 3 who can
disburse or make payments of an amount subject to
withholding, or who makes a withholdable payment under
chapter 4. The withholding agent may be an individual, a
corporation, a partnership, a trust, an association, or any
other entity. The term “withholding agent” also includes,
but is not limited to, a qualified intermediary (QI), a
nonqualified intermediary (NQI), a withholding foreign
partnership (WP), a withholding foreign trust (WT), a
flow-through entity, a U.S. branch that is treated as a U.S.
person under Regulations section 1.1441-1(b)(2)(iv)(A), a
territory FI, a nominee under section 1446, and an
authorized agent. A person may be a withholding agent
even if there is no requirement to withhold from a payment
or if another person has already withheld the required
amount from a payment.
In most cases, the U.S. person who pays (or causes to
be paid) the item of U.S. source income to a foreign
person (or to its agent) must withhold. However, other
persons may be required to withhold. For example, if a
payment is made by a QI (whether or not it assumes
primary withholding responsibility) and the QI knows that
withholding was not done by the person from which it
received the payment, then that QI is required to do the
appropriate withholding. In addition, withholding must be
done by any QI that assumes primary withholding
Instructions for Form 1042-S (2026)

responsibility under chapters 3 and 4, a WP, a WT, a U.S.
branch that agrees to be treated as a U.S. person under
Regulations section 1.1441-1(b)(2)(iv)(A), or an
authorized agent. Finally, if a payment is made by an NQI
or a flow-through entity that knows, or has reason to know,
that withholding was not done, that NQI or flow-through
entity is required to withhold because it also falls within the
definition of a withholding agent.
Account holder. Generally, the account holder is the
person that holds the account. See Regulations section
1.1471-5(a).
Amount realized. An amount realized on the transfer of a
PTP interest is the amount of gross proceeds (as defined
in Regulations section 1.6045-1(d)(5)) paid or credited to
a partner or broker (as applicable) that is a transferor of
the interest. The amount realized on a PTP distribution is
the amount of the distribution reduced by the portion of
the distribution that is attributable to the cumulative net
income of the partnership (as determined under
Regulations section 1.1446(f)-4(c)(2)(iii)).
Amount subject to chapter 3 withholding. Generally,
an amount subject to chapter 3 withholding is an amount
from sources within the United States that is FDAP
income. FDAP income is all income included in gross
income, including interest (as well as original issue
discount (OID)), dividends, rents, royalties, and
compensation. Amounts subject to chapter 3 withholding
do not include amounts that are not FDAP, such as most
gains from the sale of property (including market discount
and option premiums), as well as other specific items of
income (such as interest on bank deposits and short-term
OID). See Regulations section 1.1441-2.
Authorized agent. An agent is an authorized agent for
purposes of filing Form 1042 or making tax deposits and
payments on behalf of its principal (payer) only if all five of
the following conditions apply.
1. There is a written agreement between the payer and
the person acting as agent.
2. A Form 8655, Reporting Agent Authorization, is filed
with the IRS if the agent is filing Form 1042 (in its own
name) on behalf of the payer.
3. The books and records and relevant personnel of
the agent are available to the payer.
4. The payer remains fully liable for the acts of its
agent and does not assert any of the defenses that may
otherwise be available.
5. If the agent is filing Form 1042 (in its own name) on
behalf of the payer, the agent is reported as the
withholding agent in boxes 12a through 12m and
information about the payer is reported in boxes 16a
through 16e of the Form 1042-S.
A sponsoring entity is a reporting agent with respect to
withholdable payments and must fulfill the above
conditions to be an authorized agent.
For more information on these conditions, see
Regulations sections 1.1441-7(c) and 1.1474-1(a)(3)(ii).
Beneficial owner. For payments other than those for
which a reduced rate of withholding is claimed under an
income tax treaty, the beneficial owner of income in most
Instructions for Form 1042-S (2026)

cases is the person who is required under U.S. tax
principles to include the income in gross income on a tax
return. A person is not a beneficial owner of income,
however, to the extent that person is receiving the income
as a nominee, agent, or custodian, or to the extent the
person is a conduit whose participation in a transaction is
disregarded. In the case of amounts paid that do not
constitute income, beneficial ownership is determined as
if the payment were income.
Foreign partnerships, foreign simple trusts, and foreign
grantor trusts are not the beneficial owners of income paid
to the partnership or trust for chapter 3 purposes. The
beneficial owners of income paid to a foreign partnership
in most cases are the partners in the partnership, provided
that the partner is not itself a partnership, foreign simple or
grantor trust, nominee, or other agent. The beneficial
owner of income paid to a foreign simple trust (a foreign
trust that is described in section 651(a)) in most cases is
the beneficiary of the trust, if the beneficiary is not a
foreign partnership, foreign simple or grantor trust,
nominee, or other agent. The beneficial owner of a foreign
grantor trust (a foreign trust to the extent that all or a part
of the income of the trust is treated as owned by the
grantor or another person under sections 671 through
679) is the person treated as the owner of the trust. The
beneficial owner of income paid to a foreign complex trust
(a foreign trust that is not a foreign simple trust or foreign
grantor trust) is the trust itself.
The beneficial owner of income paid to a foreign estate
is the estate itself.
A payment to a U.S. partnership, trust, or estate is not
subject to withholding under chapter 3 or 4. A U.S.
partnership, trust, or estate should provide the withholding
agent with a Form W-9, Request for Taxpayer
Identification Number and Certification. In most cases,
these beneficial owner rules apply for purposes of section
1446; however, there are exceptions.
1. Chapter 3 withholding rate pool. A payment of a
single type of income, determined in accordance with the
income codes used to file Form 1042-S, that is subject to
a single rate of withholding and a single chapter 4
exemption code.
2. Chapter 4 withholding rate pool. A pool of account
holders or payees provided on an FFI withholding
statement (or a chapter 4 withholding statement) that is
described in Regulations section 1.1471-1(b)(20).
Broker. A broker is a person described in Regulations
section 1.1446(f)-1(b)(1) when referenced in connection
with a transfer of a PTP interest.
Chapter 3. Chapter 3 (Withholding of Tax on Nonresident
Aliens and Foreign Corporations), excluding sections
1445 and 1446.
Disregarded entity. A business entity that has a single
owner and is not a corporation under Regulations section
301.7701-2(b) is disregarded as an entity separate from
its owner.
Disclosing QI. For purposes of section 1446(a) or (f), a
QI that provides with its withholding statement the specific
payee documentation referenced in Regulations section
1.1446(f)-4(a)(7)(iii) (for an amount realized) or
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Regulations section 1.1446-4(e)(4) (for withholding on a
PTP distribution under section 1446(a)) instead of the
chapter 3 withholding rate pool information otherwise
permitted to be included on the withholding statement. A
QI that acts as a disclosing QI for a payment must act as a
disclosing QI for the entire payment. See the 2023 QI
agreement in Rev. Proc. 2022-43 for further information.
Dividend equivalent. To the extent specified in section
871(m) and the regulations thereunder, a dividend
equivalent is a payment (within the meaning of
Regulations section 1.871-15(i)) that, directly or indirectly,
is contingent on, or determined by reference to, the
payment of a dividend from U.S. sources, including
pursuant to a securities lending, sale-repurchase
transaction, a specified notional principal contract, or a
specified equity-linked instrument.
Certain other payments made by the withholding agent
to satisfy a tax liability with respect to a dividend
equivalent by the party receiving the dividend equivalent
are dividend equivalents. See Regulations section
1.871-15(c) for additional information, including the
definitions of specified notional principal contract and
specified equity-linked instrument.
Any section 871(m) amount of a QDD is treated as a
dividend equivalent. See Rev. Proc. 2022-43 for additional
information, including the definition of a section 871(m)
amount.
Exempt beneficial owner. An exempt beneficial owner
means a person that is described in Regulations section
1.1471-6 and includes a foreign government, a political
subdivision of a foreign government, a wholly owned
instrumentality or agency of a foreign government or
governments, an international organization, a wholly
owned agency or instrumentality of an international
organization, a foreign central bank of issue, a
government of a U.S. territory, certain retirement funds,
and certain entities wholly owned by one or more exempt
beneficial owners. In addition, an exempt beneficial owner
includes any person treated as an exempt beneficial
owner under an applicable Model 1 IGA or Model 2 IGA.
Exempt recipient. An exempt recipient is any payee that
is exempt from the Form 1099 reporting requirements.
Caution: Exempt recipients are not exempt from
withholding under chapter 3 unless they are U.S. persons
or foreign persons entitled to an exemption from
withholding under chapter 3.
Expatriate. A person is considered an expatriate if they
relinquish U.S. citizenship or, in the case of a long-term
resident of the United States, cease to be a lawful
permanent resident as defined in section 7701(b)(6).
Fiscally transparent entity. An entity is treated as
fiscally transparent with respect to an item of income for
which treaty benefits are claimed to the extent that the
interest holders in the entity must, on a current basis, take
into account separately their shares of an item of income
paid to the entity, whether or not distributed, and must
determine the character of the items of income as if they
were realized directly from the sources from which
realized by the entity. For example, partnerships, common
trust funds, and simple trusts or grantor trusts in most
6

cases are considered to be fiscally transparent with
respect to items of income received by them.
Flow-through entity. For chapter 3 purposes, a
flow-through entity is a foreign partnership (other than a
WP), a foreign simple or grantor trust (other than a WT),
or, for any payments for which a reduced rate of
withholding under an income tax treaty is claimed, any
entity to the extent the entity is considered to be fiscally
transparent under section 894 with respect to the payment
by an interest holder’s jurisdiction.
Financial institution. A financial institution generally
means an entity that is a depository institution, a custodial
institution, an investment entity, or an insurance company
(or holding company of an insurance company) that
issues cash value insurance or annuity contracts. See
Regulations section 1.1471-5(e).
Foreign financial institution (FFI). An FFI is an entity
described in Regulations section 1.1471-5(d) or an entity
treated as a financial institution under an
Intergovernmental Agreement (IGA).
Deemed-compliant FFI. Under section 1471(b)(2),
certain FFIs are deemed to comply with the regulations
under chapter 4 without the need to enter into an FFI
agreement with the IRS. However, certain
deemed-compliant FFIs are required to register with the
IRS and obtain a global intermediary identification number
(GIIN). These FFIs are referred to as “registered
deemed-compliant FFIs.” See Regulations section
1.1471-5(f)(1). Registered deemed-compliant FFIs also
include certain FFIs that satisfy the requirements of an
applicable IGA.
Nonparticipating FFI. A nonparticipating FFI is an FFI
that is not a participating FFI, deemed-compliant FFI, or
exempt beneficial owner.
Participating FFI. A participating FFI is an FFI that has
agreed to comply with the terms of an FFI agreement with
respect to all branches of the FFI, other than a branch that
is a reporting Model 1 FFI or a U.S. branch. The term
“participating FFI” also includes a reporting Model 2 FFI
and a QI branch of a U.S. financial institution, unless such
branch is a reporting Model 1 FFI.
Foreign person. A foreign person includes a nonresident
alien individual, a foreign corporation, a foreign
partnership, a foreign trust, a foreign estate, and any other
person that is not a U.S. person. The term also includes a
foreign branch or office of a U.S. financial institution or
U.S. clearing organization if the foreign branch is a QI. A
payment to a U.S. branch of a foreign person is treated as
a payment to a foreign person for purposes of Form
1042-S.
Global intermediary identification number (GIIN).
The GIIN is the identification number that is assigned to a
participating FFI (including a reporting Model 2 FFI), a
registered deemed-compliant FFI (including a reporting
Model 1 FFI), or another entity for chapter 4 reporting
purposes.
Intermediary. An intermediary is a person that acts as a
custodian, broker, or nominee, or otherwise as an agent
for another person, regardless of whether that other

Instructions for Form 1042-S (2026)

person is the beneficial owner of the amount paid, a
flow-through entity, or another intermediary.
Qualified intermediary (QI). A QI is an intermediary
or eligible entity that is a party to a withholding agreement
with the IRS. A QI that is a financial institution must have a
chapter 4 status described in Regulations section
1.1441-1(e)(5)(ii). An entity must indicate its status as a QI
on a Form W-8IMY submitted to a withholding agent.
A branch of a financial institution may not act as a QI in
a country that does not have approved
know-your-customer (KYC) rules. Countries having
approved KYC rules are listed at IRS.gov/Businesses/
International-Businesses/List-of-Approved-KYC-Rules.
Branches that operate in non-KYC approved jurisdictions
as intermediaries are required to act as NQIs. See the
Instructions for Form W-8IMY for more information.
Nonqualified intermediary (NQI). An NQI is any
intermediary that is not a U.S. person and that is not a QI.
Private arrangement intermediary (PAI). A QI that is
an FFI may enter into a contractual agreement with
another intermediary under which the other intermediary
generally agrees to perform all of the obligations of the QI
with respect to the accounts maintained directly by the
other intermediary. See the QI agreement for the
requirements of a PAI and a QI’s agreement with a PAI.
Nonfinancial foreign entity (NFFE). An NFFE is a
foreign entity or an entity incorporated or organized under
the laws of any U.S. territory that is not a financial
institution.
Excepted NFFE. The term “excepted NFFE” means an
NFFE that is described in Regulations section 1.1472-1(c)
(1) and generally includes a publicly traded corporation,
certain affiliated entities related to a publicly traded
corporation, certain territory entities, active NFFEs, and
entities excluded from the definition of FFI (excluded FFIs)
described in Regulations section 1.1471-5(e)(5).
Nominee. See Regulations section 1.1446-4(b)(3) and
Publicly Traded Partnerships (Sections 1446(a) and (f)
Withholding Tax), later, for persons that may act as a
nominee for a PTP distribution.
Nonexempt recipient. A nonexempt recipient is any
person who is not an exempt recipient under chapter 61.
Nonresident alien individual. Any individual who is not
a citizen or resident of the United States is a nonresident
alien individual. An alien individual meeting either the
green card test or the substantial presence test for the
calendar year is a resident alien. Any person not meeting
either test is a nonresident alien individual. Additionally, an
alien individual who is treated as a nonresident alien
pursuant to Regulations section 301.7701(b)-(7) for
purposes of figuring out the individual’s U.S. tax liability, or
an alien individual who is a bona fide resident of Puerto
Rico, Guam, the Commonwealth of the Northern Mariana
Islands, the U.S. Virgin Islands, or American Samoa is a
nonresident alien individual. An individual will not be
treated as a U.S. person for a tax year or any portion of a
tax year that the individual is a dual-resident taxpayer who
is treated as a nonresident alien for purposes of figuring
their U.S. tax liability. See Pub. 519, U.S. Tax Guide for
Aliens, for more information on resident and nonresident
alien status.
Instructions for Form 1042-S (2026)

Caution: Even though a nonresident alien individual
married to a U.S. citizen or resident alien may choose to
be treated as a resident alien for certain purposes (for
example, filing a joint income tax return), such individual is
still treated as a nonresident alien for withholding tax
purposes.
Payee. Except as otherwise provided, the payee is the
person to whom a payment is made, regardless of
whether such person is the beneficial owner of the amount
or treated as the recipient of the payment for purposes of
reporting on Form 1042-S. See Regulations section
1.1471-3(a).
Presumption rules. For withholdable payments and for
amounts subject to withholding under chapter 3, the
presumption rules are those rules that a withholding agent
must follow to determine the status of a beneficial owner
or payee (for example, as a U.S. person or a foreign
person) when it cannot reliably associate a payment with
valid documentation. See, for example, Regulations
sections 1.1441-1(b)(3), 1.1441-4(a), 1.1441-5(d) and (e),
1.1441-9(b)(3), 1.1446-1(c)(3), and 1.6049-5(d). Also see
Pub. 515. See Regulations section 1.1446(f)-4(a)(2) and
(b)(2) for a broker’s requirement to treat a transferor of a
PTP interest (or broker acting for the transferor) as a
foreign person for section 1446(f) purposes absent the
broker’s receipt of a certification of non-foreign status. For
a withholdable payment (defined in Regulations section
1.1473-1(a)), the withholding agent must also follow the
presumption rules under Regulations sections 1.1471-3(f)
and, for an FFI, 1.1471-4(c)(4)(i) to determine the
chapter 4 status of the payee when it cannot reliably
associate a payment with valid documentation.
Publicly traded partnership (PTP). A PTP is an entity
that has the same meaning as in section 7704 and
Regulations sections 1.7704-1 through 1.7704-4 but does
not include a PTP treated as a corporation under that
section.
PTP distribution. A PTP distribution is a distribution
made by a PTP.
PTP interest. A PTP interest is an interest in a PTP if the
interest is publicly traded on an established securities
market or is readily tradable on a secondary market (or
the substantial equivalent thereof).
Qualified derivatives dealer (QDD). A QDD is a QI that
is an eligible entity that agrees to meet the requirements of
Regulations section 1.1441-1(e)(6)(i) and the QI
agreement. An eligible entity is defined in Regulations
section 1.1441-1(e)(6)(ii).
To act as a QDD, the home office or branch, as
applicable, must qualify and be approved for QDD status
and must represent itself as a QDD on its Form W-8IMY
and separately identify the home office or branch as the
recipient on a withholding statement (if required). Each
home office or branch that obtains QDD status is treated
as a separate QDD. See Regulations section 1.1441-1(e)
(6) and Rev. Proc. 2022-43 for more information.
Qualified securities lender (QSL). A QSL is an FFI that
satisfies all of the following.
• It is a bank, custodian, broker-dealer, or clearing
organization that is regulated by the government in its
7

home jurisdiction and that regularly borrows and lends the
securities of U.S. corporations to unrelated customers.
• It is subject to audit by the IRS under section 7602 or by
an external auditor if it is a QI.
• It provides to the withholding agent an annual
certification of its QSL status.
• It meets the requirements to qualify as a QSL provided
in Notice 2010-46 for the transition period. See Notice
2010-46 at IRS.gov/irb/2010-24_IRB#NOT-2010-46.
While Notice 2010-46 was obsoleted, Notice 2024-44
permits withholding agents to apply the QSL transition
rules described in Parts III, C-E of Notice 2010-46, for
payments made in 2025 and 2026 that, however, do not
include the credit forward provisions of the notice. See the
instructions for box 8, later.
Recalcitrant account holder. Generally, a recalcitrant
account holder is an account holder of a participating or
registered deemed-compliant FFI that failed to provide the
documentation required under chapter 4 to determine the
account holder’s status or to report the account as a U.S.
account. See Regulations section 1.1471-5(g).
Recipient. For chapter 3 purposes (including sections
1445 and 1446), a recipient includes any of the following.
• A beneficial owner of income.
• A QI other than a disclosing QI.
• A WP or WT.
• A U.S. branch that is treated as a U.S. person under
Regulations section 1.1441-1(b)(2)(iv)(A) or for section
1446 purposes.
• A foreign partnership or a foreign trust (other than a WP
or WT), but only to the extent the income is effectively
connected with its conduct of a trade or business in the
United States (except as indicated below for a grantor
trust).
• A payee who is not known to be the beneficial owner,
but who is presumed to be a foreign person under the
presumption rules.
• A PAI.
• A partner receiving a distribution of ECI from a PTP or
nominee.
• A QSL.
For chapter 3 purposes (including sections 1445 and
1446), a recipient does not include any of the following.
• An NQI or disclosing QI.
• A nonwithholding foreign partnership (NWP) if the
income is not effectively connected with its conduct of a
trade or business in the United States.
• A disregarded entity other than a hybrid entity claiming
treaty benefits.
• A foreign trust that is described in section 651(a) (a
foreign simple trust) if the income is not effectively
connected with the conduct of a trade or business in the
United States.
• A foreign trust to the extent that all or a part of the trust
is treated as owned by the grantor or other person under
sections 671 through 679 (a foreign grantor trust).
• A U.S. branch that is not treated as a U.S. person
unless the income is, or is treated as, effectively
connected with the conduct of a trade or business in the
United States.
For chapter 4 purposes, a recipient also includes any of
the following.
8

• A recalcitrant account holder not included in a chapter 4
reporting pool.
• A QI (other than a disclosing QI).
• A WP or WT.
• A PAI.
• A participating FFI or a registered deemed-compliant
FFI that is an NQI, an NWP, or a nonwithholding foreign
trust (NWT) and provides chapter 4 withholding rate pool
information to the extent permissible.
• A participating FFI or deemed-compliant FFI that is the
beneficial owner, including a nonreporting FFI under a
Model 1 or Model 2 IGA.
• A U.S. branch or territory FI treated as a U.S. person
under Regulations section 1.1441-1(b)(2)(iv)(A).
• An NFFE that is not a flow-through entity or acting as an
intermediary.
• A foreign partnership or a foreign trust (other than a WP
or WT), but only to the extent the income is effectively
connected with its conduct of a trade or business in the
United States.
• A partner or beneficiary of a flow-through entity that is
an NFFE (other than a WP or WT).
• A nonparticipating FFI that is a beneficial owner.
• An exempt beneficial owner that is not a flow-through
entity or acting as an intermediary.
Caution: In the case of a PTP distribution subject to
withholding under section 1446(a), if another partnership
or a trust (other than a grantor trust) receives the
distribution, the partnership or trust is the recipient for
chapter 3 purposes.
For chapter 4 purposes, a recipient is generally the
same person that is a recipient for chapter 3 purposes.
Specified notional principal contract (SNPC). An
SNPC is any specified notional principal contract within
the meaning of Regulations section 1.871-15(d).
Specified U.S. person. A specified U.S. person is any
U.S. person other than a person identified in Regulations
section 1.1473-1(c).
Substantial U.S. owner. A substantial U.S. owner is a
specified U.S. person described in Regulations section
1.1473-1(b). For purposes of filing this form, a reporting
Model 2 FFI reporting an account held by a passive NFFE
should substitute the term “controlling person that is a
specified U.S. person” for “substantial U.S. owner” and
refer to the applicable Model 2 IGA for the definition of
controlling person. A territory NFFE that is not an
excepted NFFE determines its substantial U.S. owners by
applying the 10% threshold in Regulations section
1.1473-1(b)(1).
Territory FI. A territory FI is a financial institution that is
incorporated or organized under the laws of any U.S.
territory and is not an investment entity. See Regulations
section 1.1471-5(e)(1)(iii) for the definition of investment
entity.
U.S. branch treated as a U.S. person. A U.S. branch
may agree to be treated as a U.S. person if it meets the
requirements described in the regulations under
chapter 3. See Regulations section 1.1441-1(b)(2)(iv)(A).
A U.S. branch may also agree to be treated as a U.S.
person for purposes of a sale subject to section 1446(f) or
Instructions for Form 1042-S (2026)

for a PTP distribution. Additionally, a territory FI may agree
to be treated as a U.S. person for any of these purposes.
The U.S. branch or territory FI must provide a Form
W-8IMY showing that it is agreeing to be treated as a U.S.
person.
Caution: A U.S. branch that is treated as a U.S. person is
treated as such solely for purposes of determining
whether a payment is subject to withholding by the
branch. The branch is, for purposes of information
reporting, a foreign person, and payments to such a
branch must be reported on Form 1042-S.
Withholdable payment. A withholdable payment is
generally any payment of U.S. source FDAP income,
subject to certain exceptions. For exceptions and
additional information, see Pub. 515 and Regulations
section 1.1473-1(a).
Withholding certificate. The term “withholding
certificate” refers to Form W-8 or Form W-9 in most cases.
Note: Throughout these instructions, a reference to or
mention of “Form W-8” is a reference to Forms W-8BEN,
W-8BEN-E, W-8ECI, W-8EXP, and/or W-8IMY.
Withholding foreign partnership (WP) or withholding
foreign trust (WT). A WP or WT is a foreign partnership
or trust that has entered into a withholding agreement with
the IRS in which it agrees to assume primary withholding
responsibility for all payments that are made to it for its
partners, beneficiaries, or owners under chapter 3 (except
for sections 1445 and 1446(a) or (f)) and under chapter 4.
For information on these withholding agreements, see
Rev. Proc. 2017-21, available at IRS.gov/irb/
2017-06_IRB#RP-2017-21, and Regulations section
1.1441-5.
Nonwithholding foreign partnership (NWP) or
nonwithholding foreign trust (NWT). An NWP or NWT
is any partnership or trust (other than a complex trust) that
is not a U.S. person and that is not a WP or WT.

Amounts Subject to Reporting on
Form 1042-S

Amounts subject to reporting on Form 1042-S are
amounts from U.S. sources paid to foreign persons
(including persons presumed to be foreign) or included in
a U.S. payee pool that are reportable under chapters 3
and 4, even if no amount is deducted and withheld from
the payment because of a treaty or Internal Revenue
Code exception to taxation or if any amount withheld was
repaid to the payee. Amounts subject to reporting are
amounts from sources within the United States that
constitute (a) FDAP income (including deposit interest);
(b) certain gains from the disposal of timber, coal, or
domestic iron ore with a retained economic interest; and
(c) gains relating to contingent payments received from
the sale or exchange of patents, copyrights, and similar
intangible property. A payment is also subject to reporting
if withholding under chapter 4 is applied (or required to be
applied) to the payment.
Amounts subject to reporting on Form 1042-S include,
but are not limited to, the following amounts to the extent
they are from U.S. sources.
Instructions for Form 1042-S (2026)

• Interest on deposits paid to certain nonresident
aliens. Withholding agents must report certain interest
described in section 871(i)(2)(A) aggregating $10 or more
paid with respect to a deposit maintained at an office
within the United States if such interest is paid to a
nonresident alien individual who is a resident of a country
identified in Rev. Proc. 2024-42, 2024-52 I.R.B. 1433,
available at IRS.gov/irb/2024-52_IRB#REVPROC-2024-42 (or any superseding revenue procedure
that is effective as of January 1, 2026). A payer may elect
to report interest described above paid to any nonresident
alien individual by reporting all such interest.
When completing Form 1042-S, use income code 29 in
box 1 and exemption code 02 in box 3a for chapter 3
purposes, and the applicable chapter 4 exemption code in
box 4a (see the instructions for boxes 3a and 4a, later).
• Interest on deposits subject to chapter 4
withholding. Interest on deposits from U.S. sources are
withholdable payments and, therefore, may be subject to
withholding under chapter 4. If payers withhold tax, they
must report the interest and tax on Form 1042-S.
• Corporate distributions. The entire amount of a
corporate distribution (whether actual or deemed) must be
reported, regardless of any estimate of the part of the
distribution that represents a taxable dividend. Any
distribution, however, that is treated as gain from the
redemption of stock is not an amount subject to
withholding. For information on distributions from the
disposition of a U.S. real property interest paid by a
publicly traded trust or a QIE, see Distributions
Attributable to Dispositions of U.S. Real Property Interests
by Publicly Traded Trusts and Qualified Investment
Entities, later.
• Interest. Interest subject to reporting includes the part
of a notional principal contract payment that is
characterized as interest.
• Rents.
• Royalties.
• Compensation for independent personal services
performed in the United States.
• Compensation for dependent personal services
performed in the United States (but only if the
beneficial owner is claiming treaty benefits).
• Annuities.
• Pension distributions and other deferred income.
• Most gambling winnings. Proceeds from a wager
placed in blackjack, baccarat, craps, roulette, or big-6
wheel are not amounts subject to reporting.
• Cancellation of indebtedness. Agents must report
income from the cancellation of indebtedness unless the
withholding agent is unrelated to the debtor and does not
have knowledge of the facts that give rise to the payment.
• Effectively connected income (ECI). ECI includes
amounts that are (or are presumed to be) effectively
connected with the conduct of a trade or business in the
United States even if no withholding certificate is required.
Note that bank deposit interest is subject to Form 1042-S
reporting if it is ECI or otherwise reportable on Form
1042-S (see Interest on deposits paid to certain
nonresident aliens in this bullet list, earlier). ECI of a PTP
distributed to a foreign partner or an amount realized
subject to reporting under Regulations section
1.1461-1(c)(2)(i)(Q) must be reported on Form 1042-S.
9

• Notional principal contract income. Income from
notional principal contracts that the payer knows, or must
presume, is effectively connected with the conduct of a
U.S. trade or business is subject to reporting using income
code 32. The amount to be reported is the amount of cash
paid on the contract during the calendar year. Any amount
of interest determined under the provisions of Regulations
section 1.446-3(g)(4) (dealing with interest in the case of a
significant nonperiodic payment) is reportable as interest
and not as notional principal contract income. See,
however, the separate reporting for dividend equivalents,
later.
• Insurance premiums. Insurance premiums from U.S.
sources that have cash value (as defined in Regulations
section 1.1471-5(b)(3)(vii)(B)) are withholdable payments
under chapter 4, regardless of whether the premium
payments are subject to the section 4371 excise tax.
Withholding agents may treat premiums for insurance
contracts that do not have cash value as excluded
nonfinancial payments under chapter 4 and, therefore, not
as withholdable payments under regulations proposed in
REG-132881-17. If the payment is actually withheld upon
or should have been withheld upon (but the withholding
agent failed to withhold), such amount must be reported
on Form 1042-S. Insurance premiums from U.S. sources
are amounts subject to chapter 3 withholding that must be
reported on Form 1042-S (excluding amounts subject to
the section 4371 excise tax that must be reported on Form
1042-S).
• Real estate mortgage investment conduit (REMIC)
excess inclusions. Excess inclusions from REMICs
(income code 02) and withheld tax must be reported on
Form 1042-S. A domestic partnership must separately
state a partner’s allocable share of REMIC taxable income
or net loss and the excess inclusion amount on
Schedule K-1 (Form 1065). If the partnership allocates all
or some part of its allocable share of REMIC taxable
income to a foreign partner, the partner must include the
partner’s allocated amount in income as if that amount
was received on the earliest to occur of (1) the date of
distribution by the partnership, (2) the date the foreign
partner disposes of its indirect interest in the REMIC
residual interest, or (3) the last day of the partnership’s tax
year.
The partnership must withhold tax on the part of the
REMIC amount that is an excess inclusion.
An excess inclusion allocated to the following foreign
persons must be included in that person’s income at the
same time as other income from the entity is included in
income.
• Shareholder of a real estate investment trust (REIT).
• Shareholder of a regulated investment company (RIC).
• Participant in a common trust fund.
• Patron of a subchapter T cooperative organization.
• Students, teachers, and researchers. Amounts paid
to foreign students, trainees, teachers, or researchers as
scholarship or fellowship income, and compensation for
personal services (whether or not exempt from tax under
an income tax treaty) must be reported. However,
amounts that are exempt from tax under section 117 are
not subject to reporting.
• Amounts paid to foreign governments, foreign
central banks of issue, and international
10

organizations. These amounts are subject to reporting
even if they are exempt from chapter 3 withholding under
section 892 or 895.
• Foreign targeted registered obligations. Interest
paid on registered obligations targeted to foreign markets
paid by a U.S. person to a foreign person other than a
financial institution or a member of a clearing organization
is an amount subject to reporting.
• OID from the redemption of an OID obligation. The
amount subject to reporting is the amount of OID actually
includible in the gross income of the foreign beneficial
owner of the income, if known. Otherwise, the withholding
agent should report the entire amount of OID as if the
recipient held the instrument from the date of original
issuance. See Pub. 1212, Guide to Original Issue
Discount (OID) Instruments.
• Certain distributions attributable to dispositions of
U.S. real property interests. See Distributions
Attributable to Dispositions of U.S. Real Property Interests
by Publicly Traded Trusts and Qualified Investment
Entities, later.
• Dividend equivalents. Dividend equivalents have
been divided into the following three income code
reporting categories.
1. Substitute dividends that are dividend equivalents
(income code 34 or 53).
2. Dividend equivalents with respect to transactions
that are section 871(m) transactions as a result of
combining transactions under Regulations section
1.871-15(n) (income code 56).
3. All other dividend equivalents (income code 40).
Note: In the case of a dividend equivalent, because the
dividend equivalent is determined on a gross basis, there
may be a payment for reporting purposes even when there
is no transfer of funds. See Regulations section
1.871-15(i).
• Guarantee of indebtedness. This includes amounts
paid, directly or indirectly, for the provision of a guarantee
of indebtedness issued after September 27, 2010. They
must be paid by a noncorporate resident or U.S.
corporation or by any foreign person if the amounts are
effectively connected with the conduct of a U.S. trade or
business. Report these amounts using income code 41.
• Specified federal procurement payments. Report
specified federal procurement payments subject to
withholding under section 5000C.
• PTPs. Certain payments of ECI attributable to PTP
interests (described earlier) are subject to reporting on
Form 1042-S. See Publicly Traded Partnerships (Sections
1446(a) and (f) Withholding Tax), later, for additional
information.

Amounts That Are Not Subject to
Reporting on Form 1042-S
Interest and OID from short-term obligations. Interest
and OID from any obligation payable 183 days or less
from the date of original issue are generally not required to
be reported on Form 1042-S. See, however, the reporting
requirements for deposit interest described in Interest on
deposits paid to certain nonresident aliens in the bullet list
under Amounts Subject to Reporting on Form 1042-S,
earlier.
Instructions for Form 1042-S (2026)

Registered obligations targeted to foreign markets.
Interest on a registered obligation that is targeted to
foreign markets and that qualifies as portfolio interest is
not subject to reporting if it is paid to a registered owner
that is a financial institution or member of a clearing
organization and you have received the required
certifications.
Caution: Reporting will be required on interest paid on
any registered obligation (regardless of whether targeted
to foreign markets) if the registered obligation is issued
after December 31, 2015.
Bearer obligations targeted to foreign markets. Do
not file Form 1042-S to report interest not subject to
withholding on bearer obligations if a Form W-8 is not
required.
Caution: Withholding is required on interest paid on any
bearer obligations targeted to foreign markets if the
obligation is issued after March 18, 2012. You must file
Form 1042-S to report this interest paid on an obligation
issued after that date.
Notional principal contract payments that are not ECI
or dividend equivalents. Do not report on Form 1042-S
amounts paid on a notional principal contract, other than
an SNPC, if the amounts are not effectively connected
with the conduct of a trade or business in the United
States. All amounts paid on an SNPC that are treated as
dividend equivalents should be reported as such on Form
1042-S.
Accrued interest and OID. Interest paid on obligations
sold between interest payment dates and the part of the
purchase price of an OID obligation that is sold or
exchanged in a transaction other than a redemption is not
subject to reporting unless the sale or exchange is part of
a plan, the principal purpose of which is to avoid tax, and
the withholding agent has actual knowledge or reason to
know of such plan.
Certain withholdable payments. Withholdable
payments not subject to reporting for chapter 3 purposes
(other than bank deposit interest paid to certain
nonresident aliens) are not required to be reported if
withholding is not applied (or required to be applied) under
chapter 4.
Certain amounts realized. An amount realized that is
excepted from withholding under Regulations section
1.1446(f)-4(b)(3) (less than 10% effectively connected
gain by partnership).

Distributions Attributable to
Dispositions of U.S. Real Property
Interests by Publicly Traded Trusts
and Qualified Investment Entities
Publicly traded trusts. In general, when a publicly
traded trust makes a distribution to a foreign person
attributable to the disposition of a U.S. real property
interest, it must withhold tax under section 1445. However,
this withholding liability is shifted to the person who pays
the distribution to a foreign person (or to the account of
Instructions for Form 1042-S (2026)

the foreign person) if the special notice requirement of
Regulations section 1.1445-8(f) and other requirements of
Regulations section 1.1445-8(b)(1) are satisfied.
The amount subject to withholding for a distribution by
a publicly traded trust is determined under the rules of
Regulations section 1.1445-5(c)(3).
QIEs. Special rules apply to QIEs. A QIE is one of the
following.
• A REIT.
• A RIC that is treated as a U.S. real property holding
corporation (after applying certain rules in section 897(h)
(4)(A)(ii)).
Look-through rule for QIEs. In most cases, any
distribution from a QIE to a nonresident alien, foreign
corporation, or other QIE that is attributable to the QIE’s
gain from the sale or exchange of a U.S. real property
interest is treated as gain recognized by the nonresident
alien, foreign corporation, or other QIE from the sale or
exchange of a U.S. real property interest.
A distribution by a QIE to a nonresident alien or foreign
corporation that is treated as gain from the sale or
exchange of a U.S. real property interest by the
shareholder is subject to withholding at 21%.
Certain exceptions apply to the look-through rule for
distributions by QIEs. Any distribution by a QIE with
respect to stock regularly traded on an established
securities market in the United States is not treated as
gain from the sale or exchange of a U.S. real property
interest if the shareholder did not own more than 5% of
that stock (or 10% of that stock in the case of REITs) at
any time during the 1-year period ending on the date of
the distribution. A distribution by a REIT is generally not
treated as gain from the sale or exchange of a U.S. real
property interest if the shareholder is a qualified
shareholder (as described in section 897(k)(3)). These
distributions may be included in the shareholder’s gross
income as a dividend (income code 06) from the QIE, not
as long-term capital gain.
In addition, a qualified foreign pension fund or an entity
all of the interests of which are held by a qualified foreign
pension fund is generally not subject to the look-through
rule for distributions by QIEs for purposes of section
897(h).
Use Forms 1042-S and 1042 to report and pay over the
withheld amounts. All other withholding required under
section 1445 is reported and paid over using Form 8288,
U.S. Withholding Tax Return for Certain Dispositions by
Foreign Persons, and Form 8288-A.
For more information on reporting income from real
property interests, see U.S. Real Property Interest in Pub.
515.

Publicly Traded Partnerships
(Sections 1446(a) and (f) Withholding
Tax)

Although a PTP is a withholding agent for a distribution it
makes to its partners, an entity receiving the distribution
and acting as a nominee for the distribution is also treated
as a withholding agent for the distribution and is required
to withhold and report on Form 1042-S with respect to the
11

amounts subject to withholding attributable to the
distribution paid to foreign partners of the PTP. A nominee
for this purpose is a person holding a PTP interest on
behalf of a foreign person and that is a domestic person, a
U.S. branch of a foreign corporation treated as a U.S.
person for the distribution, or a QI assuming primary
withholding responsibility for the distribution. See
Regulations section 1.1446-4(b)(3). If you are the
nominee for a PTP distribution, enter the PTP’s name and
other required information in boxes 16a through 16e with
respect to the PTP on a Form 1042-S to report the amount
of a distribution subject to section 1446(a) (income code
27), to report an amount realized on the distribution under
section 1446(f) (income code 57), or when income code
58 applies to the distribution (for income not determinable
by the nominee on the distribution), including when the
30% withholding rate under chapter 3 applies under
Regulations section 1.1446-4(d). For a payment reported
with income code 27 or 57, or income code 58 when
withholding is at the rate under section 1446(a), report
chapter 4 exemption code 14 (effectively connected
income). If withholding is instead applied at a 30% rate on
a payment reported with income code 58, report chapter 4
exemption code 21 (other payment not subject to
chapter 4 withholding). See Regulations section
1.1446-4(d)(1). For income attributable to the distribution
that is subject to withholding under chapter 3 or 4, report
using the income code that would otherwise apply to
report the payment to the recipient on a Form 1042-S for
the year. Thus, unlike for other payments described in this
paragraph, you need not associate the income subject to
chapter 3 or 4 withholding with the PTP making the
distribution for purposes of reporting on an additional
Form 1042-S. These reporting requirements apply to a
PTP distribution paid to a QI except that you need not
associate any income attributable to a PTP distribution
with the PTP making the distribution for reporting on Form
1042-S when you report to the QI as the recipient with
respect to a withholding rate pool.
Tip: As a result of the above reporting for PTP
distributions, in certain cases a nominee may need to
issue several Forms 1042-S with respect to a foreign
partner based on the income codes associated with PTP
distributions paid to the partner during the year and (in
certain cases) the PTP making the distribution.
For purposes of section 1446(f), a broker is generally
required to report on Form 1042-S an amount realized
from the transfer of a PTP interest that is paid to a foreign
partner that is the transferor of the interest or to an NQI
(other than when the broker agrees to report the NQI’s
account holders on Form 1042-S), a QI (other than a
disclosing QI), or a U.S. branch or territory FI that is
treated as a U.S. person for the payment. A broker should
report the aggregate of the amounts realized from sales of
PTP interests paid to each of these recipients using
income code 57 and chapter 4 exemption code 14
(effectively connected income). For the reporting of
amounts attributable to PTP distributions (including
distributions subject to section 1446(f) withholding), see
boxes 16a through 16e, later. For further information on
reporting of amounts realized and PTP distributions paid
to QIs, see Payment to QI of PTP distributions or amounts
12

realized, later. For further information on reporting of
amounts realized and PTP distributions paid to
nonqualified intermediaries, see Amounts paid to an NQI
or a flow-through entity of amounts realized and PTP
distributions, later. For when an amount realized is
reportable on Form 1042-S for section 1446(f) purposes,
see Regulations section 1.1461-1(c)(2)(i).
Tip: In a case in which a partner that is a U.S. person was
treated as a foreign partner for purposes of withholding
under section 1446(a) or (f) (including an allocation of a
payment to the person made on a withholding statement),
a Form 1042-S may be used to report the payment (and
withholding) with respect to the U.S. person. The
applicable Form 1099 must also be furnished when
otherwise required of the withholding agent with respect to
the payment but should not report the withholding that
was applied under section 1446(a) or (f). For reporting
requirements for Form 1099, see the General Instructions
for Certain Information Returns.
Partnerships (other than PTPs) that have effectively
connected gross income allocable to foreign partners
must file Form 8804, Annual Return for Partnership
Withholding Tax (Section 1446). If these partnerships
have effectively connected taxable income allocable to
foreign partners, they must also pay a withholding tax
under section 1446 and report these amounts on Form
8804 and the partners’ allocable shares of these amounts
on Form 8805.

Requirement To Withhold
Chapter 3 withholding. For purposes of sections 1441
and 1442, a withholding agent must withhold 30% of any
payment of an amount subject to withholding under
chapter 3 (defined earlier) made to a payee that is a
foreign person (or is presumed to be a foreign person)
unless it can associate the payment with documentation
to treat the payment as made to a foreign person entitled
to a reduced rate of or exemption from withholding. For
more information, see Chapter 3 Responsibilities under
Responsibilities of a Withholding Agent To Obtain Form
W-8 in the Instructions for the Requester of Forms
W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY.
Also see Pub. 515.
Chapter 4 withholding. For purposes of chapter 4, a
withholding agent must withhold 30% of a withholdable
payment (defined earlier) made to an FFI that is or is
presumed to be a nonparticipating FFI (defined earlier). It
also applies to withholdable payments made to certain
NFFEs that fail to identify their substantial U.S. owners (or
to certify that they have none) under Regulations section
1.1472-1(b). For more information, see Chapter 4
Responsibilities under Responsibilities of a Withholding
Agent To Obtain Form W-8 in the Instructions for the
Requester of Forms W-8BEN, W-8BEN-E, W-8ECI,
W-8EXP, and W-8IMY. Also see Pub. 515.
A payment will be subject to withholding under either
chapter 3 or chapter 4 but not both. If the payment is of an
amount subject to both chapter 3 and chapter 4
withholding, chapter 4 withholding takes precedence.

Instructions for Form 1042-S (2026)

Before Completing Form 1042-S

See Payments Made to Persons Who Are Not
Recipients, later, if the payment is made to a foreign
person that is not a recipient.

Step 1. Determine if you have a Form 1042-S filing
obligation. If you make a payment described under
Amounts Subject to Reporting on Form 1042-S, earlier,
you are required to file Form 1042-S for that payment.
Note that you may have a Form 1042-S reporting
obligation even if withholding is not required.

Payments to Recipients

You must complete the following steps before completing
Form 1042-S.

Step 2. Determine whether the payment is:
• A “withholdable payment” under chapter 4,
• An “amount subject to withholding under chapter 3,”
• Both a withholdable payment and an amount subject to
withholding under chapter 3, or
• Neither a withholdable payment nor an amount subject
to withholding under chapter 3.
Be sure to carefully read through the exceptions to
“withholdable payment” and the exemptions from
withholding or taxation provided under chapter 3 that are
included in Pub. 515. Note that reporting and withholding
are done either under chapter 3 or chapter 4, not both.
However, even if reporting is done under chapter 3, you
may be required to provide certain chapter 4 information.
Step 3. Determine the chapter indicator to be entered in
box 3. The chapter indicator is generally based on
whether amounts were withheld (or paid by the
withholding agent) under chapter 3 or chapter 4. For
example, if the payment is a withholdable payment and it
is subject to chapter 4 withholding (see Requirement To
Withhold, earlier), enter “4” in box 3. If no withholding was
required on the payment, enter “3” in box 3. For additional
information, see the instructions for box 3, later.
Note: You must always complete boxes 4a (chapter 4
exemption code) and 4b (chapter 4 withholding tax rate)
regardless of the chapter indicator entered in box 3.
Note: If a payment is a withholdable payment under
chapter 4, you must complete boxes 4a (chapter 4
exemption code), 4b (chapter 4 withholding tax rate), and
13k (recipient chapter 4 status code), even if the payment
is properly classified with a chapter 3 indicator in box 3.
Be sure to complete a separate Form 1042-S for:
• Each recipient of income,
• Each income type paid to the same recipient, and
• Each amount to which a separate tax rate was applied
(if you withheld at more than one tax rate for a specific
type of income that you paid to the same recipient).

Payments by U.S. Withholding Agents
In general. U.S. withholding agents making payments
described under Amounts Subject to Reporting on Form
1042-S, earlier, must file a separate Form 1042-S for each
recipient who receives the income. Furthermore,
withholding agents are not permitted to report multiple
types of income on a single Form 1042-S (or substitute
Form 1042-S) furnished to a recipient or on Copy A filed
with the IRS. These filers must use a separate Form
1042-S (or substitute form) for information reportable on a
single type of income.
Instructions for Form 1042-S (2026)

Payments directly to beneficial owners or partners.
A U.S. withholding agent making a payment subject to
withholding under chapter 3 or 4 directly to a beneficial
owner must complete Form 1042-S and treat the
beneficial owner as the recipient. Boxes 15a through 15m
should be left blank. The Form 1042-S must also include
the appropriate chapter 3 and chapter 4 exemption codes,
if applicable, in boxes 3a and 4a, as well as the
appropriate recipient codes for the chapter 3 and
chapter 4 status codes for a payment that is a
withholdable payment and an amount subject to chapter 3
withholding. A U.S. withholding agent should complete
boxes 16a through 16e only if it is completing Form
1042-S as a paying agent acting pursuant to an
agreement to act as an authorized agent for filing and
reporting Forms 1042 and 1042-S.
In the case of foreign joint owners, you may provide a
single Form 1042-S made out to the owner whose status
you relied upon to determine the applicable rate of
withholding (the owner subject to the highest rate of
withholding). If, however, any one of the owners requests
its own Form 1042-S, you must furnish a Form 1042-S to
the person who requests it. If the request is made after a
Form 1042-S was filed reporting the payment and tax
withheld to only one of the joint owners, you should
amend the originally filed Form 1042-S to allocate the
payment and tax withheld among the joint owners
accordingly and provide copies of the amended forms to
each recipient. If more than one Form 1042-S is issued for
a single payment, the aggregate amount paid and tax
withheld that is reported on all Forms 1042-S cannot
exceed the total amounts paid to joint owners and the tax
withheld on those payments. In any event, each Form
1042-S can only include the recipient information (boxes
13a through 13h) for one of the beneficial owners. Form
1042-S must not be completed with more than one of the
joint owners as the recipient.
Caution: In the case of joint owners, Form 1042-S can
only list one of the owners as the recipient in box 13a.
Example 1. WA, a U.S. withholding agent, makes a
withholdable payment of U.S. source dividends to A, a
foreign individual from whom it has received a Form
W-8BEN and who is not eligible for a reduced rate of
chapter 3 withholding under a treaty. WA must file a Form
1042-S for A, enter “3” in box 3, “06” in box 1 (income
code), “00” in box 3a (chapter 3 exemption code), “30.00”
in box 3b (chapter 3 tax rate), “15” in box 4a (payee not
subject to chapter 4 withholding), “00.00” in box 4b
(chapter 4 tax rate), “16” in box 13j (individual), and “23” in
box 13k (individual).
Tip: See Appendix C for a comprehensive analysis of this
Example 1 fact pattern, including a step-by-step guide on
how to complete Form 1042-S in its entirety.
A U.S. withholding agent making a payment directly to
a foreign partner in a PTP and that is either acting as a
nominee for a PTP distribution subject to withholding
13

under section 1446(a) or as a broker paying an amount
realized subject to reporting on Form 1042-S for section
1446(f) purposes must complete a Form 1042-S and treat
the partner as a recipient. Thus, the withholding agent
must treat a foreign upper-tier partnership in the PTP or a
foreign simple trust as a recipient for reporting of these
payments on Form 1042-S. With respect to an upper-tier
partnership, the reporting described in the preceding
sentence applies regardless of whether the withholding
agent determines its withholding on the payment based
on the statuses of the partners in the upper-tier
partnership (when permitted under applicable regulations
to section 1446(a) or (f) for determining the rate of
withholding).
Payments to a QI (including a QDD), WP, or WT under
chapter 3 or 4. A U.S. withholding agent that makes
payments to a QI subject to withholding under chapter 3
or 4 (whether or not the QI assumes primary withholding
responsibility), a QI acting as a QDD with respect to a
payment, a WP, or a WT should complete Form 1042-S in
most cases, treating the QI, QDD, WP, or WT as the
recipient.
If a payment is being made to a QI that is acting as a
QDD with respect to the payment, a U.S. withholding
agent should report the QDD as the recipient showing the
QDD as the recipient in box 13a (identifying the QDD by
the name used for the QDD on the Form W-8IMY it
provides, which should include a branch identifier, if
applicable) and using recipient code 35 (qualified
derivatives dealer) as the chapter 3 status code. See
Payments allocated, or presumed made, to U.S.
nonexempt recipients, later, for exceptions.
A QI that does not assume primary withholding
responsibility for chapters 3 and 4 purposes is required to
provide information regarding the allocations of income
subject to a particular withholding rate to the withholding
agent on the withholding statement associated with its
Form W-8IMY. In such a case, the U.S. withholding agent
must complete a separate Form 1042-S for each
withholding rate pool associated with the QI. For purposes
of chapter 4, a QI may provide a single pool of recalcitrant
account holders (rather than separate pools for each
class). In such a case, the withholding agent may use
chapter 4 pooled reporting code 49 (QI-recalcitrant
pool—general). A QI that assumes primary withholding
responsibility, a WP, or a WT is not required to provide
withholding rate pool information to a withholding agent
but will report such information directly to the IRS.
A U.S. withholding agent making a withholdable
payment to an FFI that is a QI (that assumes primary
withholding responsibility and is not acting as a QDD with
respect to the payment), a WP, or a WT must use recipient
code 12 (qualified intermediary), 09 (withholding foreign
partnership), or 11 (withholding foreign trust) as the
chapter 3 status code and must use recipient code 05
(participating FFI—other), 06 (participating FFI—reporting
Model 2 FFI), 07 (registered deemed-compliant
FFI—reporting Model 1 FFI), 09 (registered
deemed-compliant FFI—other) for an FFI treated as
deemed-compliant under an IGA, 31 (nonreporting IGA
FFI), or, for a payment to a QI, 27 (exempt beneficial
owner) as the chapter 4 status code. A U.S. withholding
14

agent must use chapter 4 recipient code 48 (U.S. payees
pool) when reporting a reportable amount allocated to a
chapter 4 withholding rate pool of U.S. payees of a QI and
report the chapter 3 recipient code 12 (qualified
intermediary). A U.S. withholding agent must not use any
chapter 3 pooled reporting code (codes 27 through 32),
as such codes are only to be used by a withholding agent
that is a QI, WP, or WT. See Amounts Paid by QIs, later,
and the instructions for boxes 13j and 13k, later. Use of an
inappropriate recipient code may cause a notice to be
generated.
Caution: A QI is generally required to act in such
capacity only for designated accounts for purposes of
chapters 3, 4, and 61. Therefore, such an entity may also
provide a Form W-8IMY in which it certifies that it is acting
as an NQI for other accounts and, if it is an FFI that is
receiving a withholdable payment, that it is a participating
FFI, a registered deemed-compliant FFI, or an FFI treated
as deemed-compliant under an IGA. A U.S. withholding
agent that receives a Form W-8IMY on which the foreign
person providing the form indicates that it is not acting as
a QI may not treat the foreign person as a recipient except
as otherwise provided in these instructions. A withholding
agent must not use the EIN that a QI provides in its
capacity as such to report payments that are treated as
made to an entity in its capacity as an NQI. In that case,
use the GIIN, if any, and EIN that is provided by the entity
on its Form W-8IMY in which it claims that it is acting as
an NQI or a flow-through entity.
Note: A withholding agent is required to use chapter 4
reporting pool codes as the chapter 4 status code in the
case of withholdable payments made to:
• A QI that does not assume primary withholding
responsibility;
• A participating FFI or registered deemed-compliant FFI
that is an NQI, NWP, or NWT; or
• An NQI, NWP, or NWT (other than a nonparticipating
FFI) that provides a pool of nonparticipating FFIs,
if the QI, NQI, NWP, or NWT provides chapter 4
withholding rate pool information in the withholding
statement associated with its Form W-8IMY. See Amounts
paid to an NQI or a flow-through entity of withholdable
payments, later, and the presumption rules under
Regulations section 1.1471-3(f) when such information is
not provided for a withholdable payment made to an entity.
Example 2. WA, a U.S. withholding agent, makes a
withholdable payment of U.S. source dividends to QI, a
qualified intermediary that does not assume primary
chapters 3 and 4 withholding responsibility and that is a
participating FFI. QI provides WA with a valid Form
W-8IMY with which it associates a withholding statement
that allocates 95% of the payment to a chapter 3, 15%
withholding rate pool with a single chapter 4 exemption
code, and 5% of the payment to a chapter 4, 30%
withholding rate pool of recalcitrant account holders. WA
must complete a Form 1042-S for the dividends allocated
to the chapter 3, 15% withholding rate pool, showing “3” in
box 3, “04” 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), and QI as the
recipient in box 13a along with recipient code 12 (qualified
Instructions for Form 1042-S (2026)

intermediary) as the chapter 3 status code, and recipient
code 05 (participating FFI—other) as the chapter 4 status
code. WA must also complete a Form 1042-S for the
dividends allocated to the chapter 4, 30% withholding rate
pool, showing “4” in box 3, chapter 3 exemption code 12
(payee subjected to chapter 4 withholding) in box 3a,
“00.00” in box 3b (chapter 3 tax rate), “00” in box 4a
(chapter 4 exemption code), and “30.00” in box 4b with QI
as the recipient in box 13a, and recipient code 12
(qualified intermediary) as the chapter 3 status code, and
recipient code 49 (QI-recalcitrant pool—general) as the
chapter 4 status code.
Payments allocated by QIs, or presumed made, to
U.S. nonexempt recipients. A QI may provide Forms
W-9 or other information regarding U.S. nonexempt
recipients that the QI (or other entity maintaining the
account) is required to report under chapter 61 and for
which the QI does not assume primary Form 1099
reporting responsibility. A QI may also provide information
regarding U.S. nonexempt recipients on whom the QI
elects to backup withhold under section 3406 instead of
withholding under chapter 4 on payments made to an
account holder. If Forms W-9 or other information is
provided together with information allocating all or a part
of the payment to U.S. nonexempt recipients, you must
report income allocable to the U.S. nonexempt recipients
on the appropriate Form 1099 and not on Form 1042-S
even though you are paying that income to a QI. The QI
may also provide information regarding U.S. nonexempt
recipients in a chapter 4 withholding rate pool that the
withholding agent must report on Form 1042-S.
You may also be required under the presumption rules
to treat a payment made to a QI as made to a payee that is
a U.S. nonexempt recipient from which you must withhold
on the payment under the backup withholding provisions.
In this case, you must report the payment on the
appropriate Form 1099. See the General Instructions for
Certain Information Returns, available at IRS.gov/
1099GeneralInstructions.
Example 3. WA, a U.S. withholding agent, makes a
withholdable payment of U.S. source dividends to QI, a
qualified intermediary and registered deemed-compliant
FFI that is a local FFI described in Regulations section
1.1471-5(f)(1)(i)(A). QI provides WA with a valid Form
W-8IMY certifying that it is transmitting Forms W-9 for U.S.
nonexempt recipients and with which it associates a
withholding statement that allocates 95% of the payment
to a chapter 3, 15% withholding rate pool with a single
chapter 4 exemption code, and 5% of the payment to C, a
U.S. individual. QI also provides WA with C’s Form W-9. C
is a direct account holder of QI and a U.S. citizen that is a
resident of QI’s local jurisdiction that QI is not required to
report under chapter 4 (see Regulations section
1.1471-5(f)(1)(i)(A)) and thus cannot be included in a
chapter 4 withholding rate pool of U.S. payees. See
Regulations section 1.6049-4(c)(4). WA must complete a
Form 1042-S, showing QI as the recipient in box 13a, and
WA should use recipient code 12 (qualified intermediary)
as the chapter 3 status code and recipient code 09
(registered deemed-compliant FFI—other) as the
chapter 4 status code for the dividends allocated to the
15% withholding rate pool. WA must also complete a
Instructions for Form 1042-S (2026)

Form 1099-DIV issued to C reporting the part of the
dividend allocated to C.
Example 4. WA, a withholding agent, makes a
withholdable payment of U.S. source dividends to QI, a
qualified intermediary that is a reporting Model 1 FFI. QI
provides WA with a valid Form W-8IMY with which it
associates a withholding statement that allocates 40% of
the payment to a chapter 3, 15% withholding rate pool and
40% to a chapter 3, 30% withholding rate pool. QI does
not provide any withholding rate pool information
regarding the remaining 20% of the payment. WA must
apply the presumption rule to the part of the payment
(20%) that has not been allocated. Under the presumption
rules of Regulations section 1.1471-3(f) for a withholdable
payment made to an entity, 20% of the payment is treated
as paid to a nonparticipating FFI. WA must complete three
Forms 1042-S. First, a Form 1042-S for dividends subject
to 15% withholding, showing “3” in box 3, “04” 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), QI as the recipient in box 13a,
recipient code 12 (qualified intermediary) as the chapter 3
status code, and recipient code 07 (registered
deemed-compliant FFI—reporting Model 1 FFI) as the
chapter 4 status code (because the payment is a
withholdable payment). Second, a Form 1042-S for
dividends subject to 30% withholding, showing “3” in
box 3, “00” in box 3a (chapter 3 exemption code), “30.00”
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), QI as the recipient in
box 13a, recipient code 12 (qualified intermediary) as the
chapter 3 status code, and recipient code 07 (registered
deemed-compliant FFI—reporting Model 1 FFI) as the
chapter 4 status code. Third, a Form 1042-S for dividends
subject to 30% withholding, showing “4” in box 3,
chapter 3 exemption code 12 (payee subjected to
chapter 4 withholding) in box 3a, “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), “Unknown
Recipient” as the recipient name in box 13a, recipient
code 21 (unknown recipient) as the chapter 3 status code,
and recipient code 29 (unknown recipient) as the
chapter 4 status code. Also, QI’s name, status codes,
country code, address, GIIN, and QI-EIN must be entered
in boxes 15a through 15m.
Payment to QI of PTP distributions or amounts realized. A U.S. withholding agent making a payment to a QI
that is subject to withholding on a PTP distribution or an
amount realized subject to reporting for section 1446(f)
purposes should generally treat the QI as the recipient
and report as described directly above for a U.S.
withholding agent making payments to a QI for chapters 3
and 4 purposes (including when the QI does not assume
primary withholding responsibility and provides
withholding rate pool information). In a case of a QI acting
as a disclosing QI for a payment of a PTP distribution or
an amount realized subject to reporting under section
1446(f), however, a U.S. withholding agent should report
the account holder of the QI as the recipient and the QI as
a disclosing QI (using chapter 3 status code 39 and
reporting the QI’s information in boxes 15a through 15m,
15

including its QI-EIN). In a case in which a U.S withholding
agent makes a payment of a PTP distribution or amount
realized through multiple QIs acting as disclosing QIs, the
withholding agent should report in boxes 15a through 15m
with respect to the disclosing QI maintaining a direct
account for the partner in the PTP. For payments of PTP
distributions made to a QI, the U.S. withholding agent
should report these payments with respect to the PTP
making the distribution to the extent required, as
discussed in Publicly Traded Partnerships (Sections
1446(a) and (f) Withholding Tax), earlier.
Tip: Although a payment to a disclosing QI is reported as
made to a specified account holder of the QI (as the
recipient), a U.S. withholding agent is required to provide
a recipient copy of the Form 1042-S to the disclosing QI
maintaining the direct account for the partner in the PTP
(in addition to the recipient copy issued to the account
holder of the QI receiving the payment).
Substitute dividends paid to qualified securities
lenders (QSLs). A withholding agent that makes
payments of substitute dividends to a QSL should
complete Form 1042-S treating the QSL as the recipient.
Use income code 34 or 53. Use recipient code 13
(qualified securities lender—qualified intermediary) or 14
(qualified securities lender—other) as the chapter 3 status
code and include the applicable chapter 4 status code of
the QSL.
The withholding agent is not required to withhold on a
substitute dividend payment if it receives, at least
annually, a certificate from the QSL that includes a
statement with the following information.
• The recipient of the substitute dividend is a QSL.
• With respect to the substitute dividend it receives from
the withholding agent, the QSL states that it will withhold
and remit or pay the proper amount of U.S. gross-basis
tax.
If the withholding agent receives a certificate from the
QSL that includes a statement that contains the above
information, use chapter 3 exemption code 11.
If the QSL is also a QI with primary withholding
responsibility, use chapter 3 exemption code 11 and not
exemption code 06 for chapter 3 purposes.
Amounts paid to certain U.S. branches or territory
FIs. A U.S. withholding agent making a payment to a U.S.
branch of an FFI or NFFE completes Form 1042-S as
follows.
• If a withholding agent makes a payment to a U.S.
branch that has provided the withholding agent with a
Form W-8IMY stating that it has agreed to be treated as a
U.S. person, the U.S. withholding agent treats the U.S.
branch as the recipient using chapter 3 recipient code 05
(U.S. branch—treated as U.S. person) and chapter 4
recipient code 17 (U.S. branch—treated as U.S. person).
• If a withholding agent makes a payment to a U.S.
branch that has provided a Form W-8IMY to transmit
information regarding its chapter 4 reporting pools when
the payment is a withholdable payment or the branch
provides a chapter 4 withholding rate pool of U.S. payees
and, to the extent applicable, recipient specific information
for chapter 3 purposes, the U.S. withholding agent must
complete a separate Form 1042-S for each chapter 4
16

reporting pool treating the U.S. branch as the recipient or,
for chapter 3 purposes, for each recipient that is a foreign
person whose documentation is associated with the U.S.
branch’s Form W-8IMY. If a payment cannot be reliably
associated with recipient documentation, the U.S.
withholding agent must complete Form 1042-S in
accordance with the presumption rules. If a U.S. branch
not treated as a U.S. person fails to certify that it will meet
the requirements under Regulations section 1.1471-4(d)
(2)(iii)(C), a withholding agent must report the branch as a
nonparticipating FFI.
• If a withholding agent cannot reliably associate a
payment with a Form W-8IMY from a U.S. branch, and if a
withholding agent has an EIN for the branch, then the
payment may be reported on a single Form 1042-S
treating the U.S. branch as the recipient and reporting the
income as ECI.
• If a withholding agent makes a payment to a territory FI
acting as an intermediary or that is a flow-through entity,
the withholding agent should report on Form 1042-S using
the chapter 3 status codes for payments to U.S. branches
(with the code used depending on whether the territory FI
agrees to be treated as a U.S. person). If the territory FI
agrees to be treated as a U.S. person, the withholding
agent should similarly use the chapter 3 exemption code
for a U.S. branch treated as a U.S. person. For chapter 4
purposes, the withholding agent should use the applicable
chapter 4 status code for a territory FI (with the code used
depending on whether the territory FI agrees to be treated
as a U.S. person). In any case in which a payment is made
to a territory FI described in this paragraph, the
withholding agent should report the applicable territory in
which the FI is resident for purposes of box 13b
(recipient’s country code).
Amounts paid to a foreign estate. If a U.S. withholding
agent makes a payment to a foreign estate, a Form
1042-S must be completed showing the estate as the
recipient. Use recipient code 17 (estate) as the chapter 3
status code and the applicable recipient code for the
chapter 4 status code.
Dual claims. A U.S. withholding agent may make a
payment to a foreign entity (for example, a hybrid entity)
that is simultaneously claiming an exemption from
chapter 4 withholding and a reduced rate of tax under
chapter 3 on its own behalf for a part of the payment and
an exemption from chapter 4 withholding and a reduced
rate of tax under chapter 3 on behalf of persons in their
capacity as interest holders in that entity on the remaining
part. If the claims are consistent and the withholding agent
has accepted the multiple claims, a separate Form 1042-S
must be filed for the entity for those payments for which
the entity is treated as claiming a reduced rate of
withholding, and separate Forms 1042-S must be filed for
each of the interest holders for those payments for which
the interest holders are claiming a reduced rate of
withholding. The Forms 1042-S must include the
chapter 4 status of the payee (including the applicable
chapter 4 exemption). If the claims are consistent but the
withholding agent has not chosen to accept the multiple
claims, or if the claims are inconsistent, a separate Form
1042-S must be filed for the person(s) being treated as
the recipient(s).
Instructions for Form 1042-S (2026)

Special instructions for U.S. trusts and estates.
Report the entire amount of income subject to reporting,
regardless of estimates of distributable net income.

Payments Made to Persons Who Are Not
Recipients
Disregarded entities and hybrid entities. If a U.S.
withholding agent makes a payment to a disregarded
entity that is not a hybrid entity making a treaty claim, and
receives a valid Form W-8BEN-E or W-8ECI from a
foreign person that is the single owner of the disregarded
entity, the withholding agent must file a Form 1042-S in
the name of the foreign single owner. The TIN on the Form
1042-S, if required, must be the foreign single owner’s
TIN. However, in box 13l, include the GIIN of the
disregarded entity provided in Part II of Form W-8BEN-E if
the owner is an FFI.
Example 5. WA, a withholding agent, makes a
withholdable payment of interest to LLC, a foreign limited
liability company that is not an FFI. LLC is wholly owned
by FC, a foreign corporation that is an excepted
nonfinancial foreign entity. LLC is treated as a disregarded
entity. WA has a Form W-8BEN-E from FC on which it
states that it is the beneficial owner of the income paid to
LLC. WA reports the interest payment on Form 1042-S
showing FC as the recipient. The result would be the
same if LLC was a domestic entity.
A disregarded entity can, however, claim to be the
beneficial owner of a payment if it is a hybrid entity
claiming treaty benefits. See Form W-8BEN and its
instructions for more information. If a disregarded entity
claims on a valid Form W-8BEN-E to be the beneficial
owner, the U.S. withholding agent must complete a Form
1042-S treating the disregarded entity as a recipient and
using recipient code 26 (hybrid entity making treaty claim)
as the chapter 3 status code and the applicable recipient
code for the chapter 4 status code of the single owner
when the payment is a withholdable payment and
chapter 4 withholding does not apply.
A hybrid entity with multiple owners may also claim
treaty benefits. See Form W-8BEN-E and its instructions
for more information on documentation requirements that
apply in such cases. If a hybrid entity treated as a resident
of a treaty country claims treaty benefits on a valid Form
W-8BEN-E associated with a withholdable payment (and
chapter 4 withholding does not apply with respect to any
of its owners to such payment or portion of such
payment), the U.S. withholding agent should complete a
Form 1042-S treating the hybrid entity as a recipient, use
code 26 (hybrid entity making treaty claim) as the
chapter 3 recipient status code, and leave blank the
chapter 4 recipient status code. To the extent, however,
that a portion of a withholdable payment is allocated to an
owner of the hybrid entity for which chapter 4 withholding
must be applied, the U.S. withholding agent must issue a
separate Form 1042-S to such owner using the applicable
recipient codes for the owner’s chapters 3 and 4 status
codes and report the hybrid entity as the intermediary. The
withholding agent must do so for each such owner for
which chapter 4 withholding applies and must exclude
amounts allocable to such owners from the Form 1042-S
issued to the hybrid entity.
Instructions for Form 1042-S (2026)

If an owner of a reverse hybrid entity claims treaty
benefits on a valid Form W-8BEN-E or W-8BEN (and
chapter 4 withholding does not apply with respect to the
payment to the reverse hybrid entity), the U.S. withholding
agent should issue a Form 1042-S for the portion of the
payment allocable to each such owner treating the owner
as the recipient, using the applicable recipient codes for
the chapters 3 and 4 status codes, and report the reverse
hybrid entity as the intermediary in boxes 15a through
15m. In such a case, the U.S. withholding agent must
issue a Form 1042-S to the reverse hybrid entity for the
remainder of the payment treating such entity as the
recipient and using the applicable chapters 3 and 4 status
codes. However, if chapter 4 withholding applies with
respect to the payment to the reverse hybrid entity, the
U.S. withholding agent must instead issue a Form 1042-S
to the reverse hybrid entity for the entire payment and
withhold accordingly.
Example 6. WA, a withholding agent, makes a
withholdable payment of interest to FP, a hybrid entity
organized in Country X. FP is treated as a partnership
under the Internal Revenue Code but is treated as a
company resident in Country X for Country X purposes.
WA has a Form W-8BEN-E from FP on which it claims
treaty benefits. WA also has a Form W-8IMY from FP that
includes its chapters 3 and 4 statuses and a W-8BEN-E
from each of FP’s owners, FC1 and FC2, which certify that
FC1 is a participating FFI and FC2 is a nonparticipating
FFI. The attached withholding statement allocates 80% of
the payment to FC1 and 20% of the payment to FC2. WA
must issue a Form 1042-S for 80% of the payment to FP
as the recipient using recipient code 26 (hybrid entity
making treaty claim) as the chapter 3 status code, and
leaving blank the recipient code for the chapter 4 status
code. WA must withhold under chapter 4 on the remaining
20% of the payment allocated to FC2 and issue a Form
1042-S to FC2 as the recipient using recipient code 15
(corporation) as the chapter 3 status code and recipient
code 15 (nonparticipating FFI) as the chapter 4 status
code and must report FP as the intermediary in boxes 15a
through 15m.
Amounts paid to an NQI or a flow-through entity of
withholdable payments. If a U.S. withholding agent
makes a payment to an NQI or a flow-through entity (other
than a nonparticipating FFI) with respect to a withholdable
payment, it must complete a separate Form 1042-S for
each recipient on whose behalf the NQI or flow-through
entity acts as indicated by its withholding statement and
the documentation associated with its Form W-8IMY. If a
payment is made through tiers of NQIs or flow-through
entities, the withholding agent must nevertheless
complete Form 1042-S for the recipients to which the
payments are remitted. A withholding agent completing
Form 1042-S for a recipient that receives a payment
through an NQI or a flow-through entity must include in
boxes 15a through 15m of Form 1042-S the name,
country code, address, TIN (if any), GIIN (if any), and
status codes of the NQI or flow-through entity from whom
the recipient directly receives the payment.
If, however, a U.S. withholding agent makes
withholdable payments to an NQI or a flow-through entity
that is a participating FFI or registered deemed-compliant
17

FFI that is allocable to a chapter 4 withholding rate pool as
indicated by the FFI’s withholding statement, the U.S.
withholding agent should complete a separate Form
1042-S for each chapter 4 reporting pool (that is, pool of
recalcitrant account holders, pool of nonparticipating FFIs,
or pool of payees that are U.S. persons) treating the
participating FFI or registered deemed-compliant FFI as
the recipient and must include the GIIN and chapter 3
status code of the FFI and the applicable chapter 4
reporting pool code as the chapter 4 status code. If a
payment is made through tiers of NQIs or flow-through
entities that are participating FFIs or registered
deemed-compliant FFIs, the withholding agent must
nevertheless complete Form 1042-S for each chapter 4
reporting pool to which the payments are allocated and
must report, as the recipient, the FFI from whom the
recipients included in the chapter 4 reporting pool directly
receive the payment.
Example 7. WA, a withholding agent, makes a
withholdable payment of interest to FFI1, a reporting
Model 1 FFI. FFI1 provides WA with a valid Form W-8IMY
with which it associates a withholding statement that
allocates 80% of the payment to FFI2, a participating FFI,
and 20% of the payment to a pool of nonparticipating
FFIs. FFI1 also provides WA with FFI2’s Form W-8IMY
with which it associates a withholding statement that
allocates 100% of the payment to recalcitrant pool-no U.S.
indicia. WA must complete a Form 1042-S for the interest
allocated to a pool of nonparticipating FFIs with FFI1 as
the recipient and must complete another Form 1042-S for
the interest allocated to a pool of recalcitrant account
holders—no U.S. indicia with FFI2 as the recipient.
If a U.S. withholding agent makes a withholdable
payment to an NQI or a flow-through entity that is a
participating FFI or deemed-compliant FFI, and cannot
reliably associate the payment, or any part of the
payment, with a withholding statement, or to the extent
required, a valid withholding certificate (Form W-8 or W-9)
or other valid appropriate documentation from a recipient,
the withholding agent must follow the appropriate
presumption rules for that payment which, if the payment
is a withholdable payment, will generally require the
withholding agent to withhold 30% under chapter 4
because such payment is presumed made to a
nonparticipating FFI. See Regulations section 1.1471-3(f)
(5). For this purpose, if the allocation information provided
to the withholding agent indicates an allocation of more
than 100% of the payment, then no part of the payment
should be considered to be associated with a Form W-8,
Form W-9, or other appropriate documentation. The Form
1042-S should be completed by entering “Unknown
Recipient” in box 13a and recipient code 21 (unknown
recipient) as the chapter 3 status code and recipient code
29 (unknown recipient) as the chapter 4 status code. Also,
the name, country code, address, TIN (if any), GIIN (if
any), and status codes of the FFI should be entered in
boxes 15a through 15m.
If a U.S. withholding agent makes a withholdable
payment to an NQI or a flow-through entity that is a
nonparticipating FFI, the withholding agent must treat the
payments as made to an unknown recipient regardless of
whether it can reliably associate the payment, or any part
18

of the payment, with a valid withholding certificate (Form
W-8 or W-9) or other valid appropriate documentation
from a recipient (see Regulations section 1.1471-3(d)(8)).
The withholding agent should complete a Form 1042-S
showing “Unknown Recipient” in box 13a and recipient
code 21 (unknown recipient) as the chapter 3 status code
and recipient code 29 (unknown recipient) as the
chapter 4 status code. Also, the name, country code,
address, chapter 4 status code, and TIN (if any) of the
nonparticipating FFI should be entered on Form 1042-S in
boxes 15a through 15m.
If, however, an NQI or a flow-through entity that is a
nonparticipating FFI provides documentation described in
Regulations section 1.1471-3(d)(8)(ii) to establish that the
withholdable payment or a portion of the payment is
beneficially owned by an exempt beneficial owner, then
the withholding agent should complete a Form 1042-S for
each exempt beneficial owner showing chapter 4
exemption code 15 (payee not subject to chapter 4
withholding); the exempt beneficial owner as the recipient
in box 13a; and the name, country code, address,
chapter 4 status code, and TIN (if any) of the
nonparticipating FFI in boxes 15a through 15m. For any
remaining portion of the payment, the withholding agent
should complete a Form 1042-S to an unknown recipient
as described directly above.
Pro-rata reporting to NQI. If the withholding agent
has agreed that an NQI (other than a nonparticipating FFI)
may provide information allocating a payment to its
account holders under the alternative procedure of
Regulations section 1.1441-1(e)(3)(iv)(D) (no later than
February 14, 2026) and the NQI fails to allocate more than
10% of the payment in a withholding rate pool to the
specific recipients in the pool or an applicable chapter 4
withholding rate pool, the withholding agent must file a
Form 1042-S for each recipient in the pool on a pro-rata
basis. The withholding agent must check box 15 (pro-rata
basis reporting) on each Form 1042-S. For example, if
there are four account holders in a withholding rate pool
that receives a $100 payment and the NQI fails to allocate
more than $10 of the payment, the withholding agent must
file four Forms 1042-S, one for each account holder in the
pool, showing $25 of the income to each and box 15
checked. If, instead, the NQI fails to timely allocate 10% or
less of the payment in a withholding rate pool to the
specific recipients in a pool, the withholding agent must
file a Form 1042-S for each recipient for which it has
allocation information and report the unallocated part of
the payment on a Form 1042-S as made to an “unknown
recipient.” In this case, the withholding agent does not
check box 15 on any of the Forms 1042-S.
Payments allocated, or presumed made, to U.S.
nonexempt recipients. You may be given Forms W-9 or
other information regarding U.S. nonexempt recipients
from an NQI or a flow-through entity together with
information allocating all or a part of the payment to U.S.
nonexempt recipients. You must report income allocable
to a U.S. nonexempt recipient on the appropriate Form
1099 and not on Form 1042-S, even though you are
paying that income to an NQI or a flow-through entity. If,
however, a participating FFI or registered
deemed-compliant FFI provides a withholding statement
allocating all or part of the payment to a chapter 4
Instructions for Form 1042-S (2026)

withholding rate pool of U.S. payees along with the
certification provided on Form W-8IMY required for
reporting such pool (as described in Regulations section
1.1471-3(c)(3)(iii)(B)), you must report the income
allocable to such pool on Form 1042-S.
Example 8. FP is an NWP (flow-through entity) that is
a certified deemed-compliant FFI. FP receives from WA, a
U.S. withholding agent, a withholdable payment of interest
described by income code 01 (interest paid by U.S.
obligors—general). FP has three partners, A, B, and C, all
of whom are individuals. FP provides WA with a Form
W-8IMY certifying that it is transmitting Forms W-9 for U.S.
nonexempt recipients and Forms W-8BEN from A and B
and a Form W-9 from C, a U.S. nonexempt recipient. 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. WA must file two
Forms 1042-S, one each for A and B, treating FP as the
intermediary in boxes 15a through 15m. WA should also
file a Form 1099-INT for C.
Example 9. The facts are the same as in Example 8,
except that FP does not provide any documentation from
its partners. Because WA cannot reliably associate the
withholdable payment of interest with documentation from
a payee, it must apply the presumption rules of
Regulations section 1.1471-3(f) to treat the interest as
paid to a nonparticipating FFI. A Form 1042-S should be
completed by entering “4” in box 3, “Unknown Recipient”
in box 13a, recipient code 21 (unknown recipient) as the
chapter 3 status code, and recipient code 29 (unknown
recipient) as the chapter 4 status code. Also, the name,
country code, address, status codes, and TIN (if any) of
FP should be entered in boxes 15a through 15m.
Example 10. The facts are the same as in Example 9,
except that FP is a participating FFI and provides WA with
a Form W-8IMY certifying that it is reporting its U.S.
accounts under chapter 4 and a withholding statement
allocating 33% of the payment to a pool of U.S. payees.
With respect to the U.S. pool of payees, WA must file a
Form 1042-S showing FP as the recipient in box 13a and
include FP’s GIIN, recipient code 08 as the chapter 3
status code (partnership other than withholding foreign
partnership, publicly traded partnership, or partnership
QDD), and recipient code 48 (U.S. payees pool) as the
chapter 4 status code. WA should enter “3” in box 3 as the
chapter indicator, leave boxes 3a and 3b blank, and enter
exemption code 18 (U.S. payees of a participating FFI or
registered deemed-compliant FFI) in box 4a, and “00.00”
in box 4b.
Amounts paid to an NQI or a flow-through entity of
amounts realized and PTP distributions. A U.S.
withholding agent making a payment to an NQI that is
subject to withholding on a PTP distribution other than
under section 1446 should generally report the NQI and
the recipient of the distribution on Form 1042-S in
accordance with the requirements applicable to
withholdable payments made to NQIs (described earlier).
In the case, of a PTP distribution paid to a flow-through
entity, however, the withholding agent should report the
flow-through entity as the recipient for an amount subject
to section 1446(a) unless it is a grantor trust (with the trust
grantors or owners treated as the recipients). In either
Instructions for Form 1042-S (2026)

case, the U.S. withholding agent must provide a Form
1042-S that is associated with the PTP distribution to the
extent that PTP information is required to be included on
Form 1042-S in accordance with Boxes 16a Through 16e,
later, and as described under Publicly Traded
Partnerships (Sections 1446(a) and (f) Withholding Tax),
earlier.
A U.S. withholding agent making a payment to an NQI
of an amount realized subject to reporting for purposes of
section 1446(f) (including on a PTP distribution) should
generally treat the recipient as an unknown recipient
because section 1446(f) withholding applies to an NQI
without regard to the statuses of its account holders
receiving the amount realized. A single Form 1042-S may
be issued to the NQI in this case regardless of the number
of NQI account holders. If the withholding agent agrees to
report the NQI account holders on Form 1042-S, however,
it may report the amount realized and withholding applied
under section 1446(f) with respect to each NQI account
holder on Form 1042-S. See the instructions for Form
W-8IMY for the requirements for such an agreement
(including that the withholding agent issue a recipient
copy of the Form 1042-S to the NQI with respect to each
Form 1042-S issued to an NQI account holder for an
amount realized).
A U.S. withholding agent making a payment to a
flow-through entity of an amount realized reportable on
Form 1042-S must report the flow-through entity as the
recipient except to the extent it is treated as a grantor trust
(in which case the trust’s grantor or owner is the recipient).

Amounts Paid by QIs
In general. 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
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 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. A
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
it must provide 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 subject to chapter 3
withholding 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
19

reporting pools in the circumstances described under
Recipient-by-Recipient Reporting by QIs, 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 Internal Revenue Code
section). 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.
Example 11. 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, “04” 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 must also 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).
Example 12. 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 or reduced withholding under IRC) 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
20

28 (withholding rate pool—exempt organization) in
box 13j, and a blank chapter 4 status code in box 13k. 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 13k, and a blank chapter 3 status code in box 13j.
Caution: Under the terms of its QI agreement with the
IRS, a QI that is an FFI may be required to report the
amounts paid to U.S. nonexempt 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.
A QI acting as a QDD must separately report on Forms
1042-S payments that it makes in its QDD capacity. The
QI should report the name of the QDD that makes the
payment as the withholding agent in box 12d (following
the naming protocol used for applying to be a QDD) and
should use withholding agent code 35 as the chapter 3
status code.
Similarly, if the QDD is a partnership or branch of a
partnership, that QDD must separately report allocations
to its partners of QDD items on Forms 1042-S, entering
the name of the QDD as the withholding agent in box 12d
(following the naming protocol).
Caution: A QI acting as a QDD with respect to a payment
may only use chapter 3 pooled reporting codes 27 and 28.

Amounts Paid to PAIs

In most cases, a QI must report payments subject to
withholding under chapter 3 or 4 made to each PAI
(defined under Definitions, earlier) as if the PAI’s direct
account holders were its own. For purposes of chapter 4,
a QI that is a participating FFI, a 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
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 QI
may not, however, report on a pooled basis as described
in the preceding sentence when acting as a QDD
because, under the QI agreement, a QI may not enter into
a private arrangement with any account holder for which it
acts as a QDD. A separate Form 1042-S is required for
each withholding rate pool of each PAI (unless the QI is
acting as a QDD with respect to the payment). However,
the QI must include the name and address of the PAI and
use pooled reporting code 29 (PAI withholding rate
Instructions for Form 1042-S (2026)

pool—general) or 30 (PAI withholding rate pool—exempt
organization) as the chapter 3 status code. If the PAI is
providing recipient information from an NQI or a
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 a flow-through entity.
Example 13. 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 PAIs 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 must also
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.

Amounts Paid by QIs to Certain Partnerships
and Trusts

A QI that is applying the special pool reporting allowance
provided in the QI agreement for certain partnerships or
trusts (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. A QDD cannot use the Agency Option. For
purposes of chapter 4, a QI that is an FFI may use
chapter 4 reporting pool code 47 to allocate payments
made to the partnership’s or trust’s payees that are
nonparticipating FFIs and should report 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) or 32 (agency withholding rate
pool—exempt organization) as the chapter 3 status code
(unless the QI is acting as a QDD with respect to the
payment). 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.

Recipient-by-Recipient Reporting by QIs

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
Instructions for Form 1042-S (2026)

appropriate recipient and must provide the applicable
chapter 4 exemption code.
Payments made by QIs to another QI, QDD, QSL, WP,
or WT. The QI must complete a Form 1042-S treating the
other QI, QDD (when a QI is acting as a QDD with respect
to a payment), QSL, WP, or WT as the recipient. A QI must
not treat a QI as a recipient, however, when the other QI is
acting as a disclosing QI. See Payment to QI of PTP
distributions or amounts realized, earlier, for information
on reporting of PTP distributions and amounts realized
paid to disclosing QIs.
Payments made to an NQI (including an NQI that is
an account holder of a PAI). 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 15m 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 chapter 4 status code 29 (unknown
recipient) and must include the NQI’s information in boxes
15a through 15m.
Example 14. 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.
Example 15. 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 nonconsenting
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
21

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 15m, chapter 4
exemption code 19 (exempt from withholding under IGA),
chapter 4 status code 34 (nonconsenting 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.
Payments made by QIs to a flow-through entity. The
QI must complete a Form 1042-S for each recipient who
receives the payment from the flow-through entity for
purposes of chapters 3 and 4. 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 15m 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.
Example 16. 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 15m along with the chapters 3
and 4 status codes and chapter 4 exemption code 15
(payee not subject to chapter 4 withholding) for A, B, and
C.
Tip: See section 8 of the 2023 QI agreement in Rev. Proc.
2022-43 for information on Form 1042-S reporting
requirements when QIs make payments of PTP
distributions or amounts realized, or when a QI acting as a
QDD is a partnership required to report on Form 1042-S
with respect to its foreign partners. For when a QI pays a
PTP distribution or amount realized to a partner through
more than one disclosing QI and the QI is required to
issue a Form 1042-S under section 8 of the 2023 QI
agreement to report the payment, see Payment to QI of
PTP distributions or amounts realized, earlier, for the
22

disclosing QI to which the QI is required to issue a
recipient copy of Form 1042-S.

Amounts Paid by WPs and WTs
In general. For chapter 4 purposes, payments that are
made by a WP or 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, a beneficiary, or an owner. See section 9 of the
WP or WT agreement.

Amounts Paid by NQIs and
Flow-Through Entities

An NQI and a flow-through entity are withholding agents
and must file Forms 1042-S for amounts paid to
recipients. However, an NQI or a flow-through entity is not
required to file Form 1042-S if it is not required to file Form
1042-S under the Multiple Withholding Agent Rule, later.
An NQI or a flow-through entity may report payments
made to recipients to the extent it has failed to provide to
another withholding agent the appropriate documentation
and complete withholding statement for either chapter 3 or
4 purposes or when an NQI receives a payment of an
amount realized subject to section 1446(f) withholding
from a broker that does not agree to report on Form
1042-S the NQI account holders receiving the payment.
Instructions for Form 1042-S (2026)

See the instructions for Form W-8IMY for the requirements
for such an agreement. If the NQI or flow-through entity
chooses to or must file Form 1042-S, as described above,
the NQI or flow-through entity must also file Form 1042
and, if applicable, attach the Form 1042-S it received from
the withholding agent to establish any credit for amounts
withheld by the withholding agent. See the Instructions for
Form 1042.
If another withholding agent has withheld tax on an
amount that should have been exempt (for example,
where the withholding agent applied the presumption
rules because it did not receive proper documentation or
other required information from the NQI or flow-through
entity), and the payee or beneficial owner will make a
claim for refund, the NQI or flow-through entity must report
on Form 1042-S the correct tax rate and the combined
amount of U.S. federal tax withheld with respect to all
recipients and should enter the applicable chapters 3 and
4 exemption codes.
If another withholding agent underwithholds, regardless
of whether it received proper documentation from the NQI
or flow-through entity, the NQI or flow-through entity must
withhold additional amounts to bring the total withholding
to the correct amount.
Tip: If an NQI receives an amount realized withheld on
under section 1446(f), it may issue Forms 1042-S to report
the payment and withholding even if the account holder is
a U.S person.

Specified Federal Procurement Payments Made
to Foreign Persons

Section 5000C imposes a 2% tax on any foreign person
that receives a specified federal procurement payment. A
specified federal procurement payment is a payment
made to a foreign person pursuant to a contract with the
U.S. Government for (1) the provision of goods that are
manufactured or produced in a country that does not have
an international procurement agreement with the United
States, or (2) the provision of services in a country that
does not have an international procurement agreement
with the United States.
For purposes of section 5000C, a payer of a specified
federal procurement payment to a foreign person must
complete a Form 1042-S for payments withheld upon in
the name of the foreign person. Use income code 44 to
report payments subject to withholding under section
5000C. Box 2 should include the amount of the specified
federal procurement payments subject to withholding, and
box 7 should include the amount of tax withheld under
section 5000C.
If you are reporting tax withheld under section 5000C,
enter “3” in box 3 as if the tax were a chapter 3 tax, enter
“00” in box 3a, and report the tax withheld in box 7. You do
not need to complete box 4a, box 4b, or any box for a
chapter 3 or 4 status code. In boxes 13a through 13h,
include the name and the address of the foreign person
withheld upon. If known, include the TIN (if any) in box 13i.

Multiple Withholding Agent Rule

A withholding agent is not required to file Form 1042-S if a
return is filed by another withholding agent reporting the
Instructions for Form 1042-S (2026)

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.

• Any withholding agent making a payment to a QI, QSL,
WP, or WT must report that payment as made to the QI,
QSL, WP, or WT.
• Any withholding agent making a payment to a U.S.
branch treated as a U.S. person must report the payment
as made to that branch.
• Any withholding agent that withholds an amount from a
payment under chapter 3 or 4 must report that amount to
the recipient from whom it was withheld.
Furthermore, the multiple withholding agent rule does
not relieve the following from Form 1042-S reporting
responsibility.
• Any QI, WP, or WT required to report an amount to a
chapter 4 withholding rate pool or chapter 3 withholding
rate pool.
• An NQI or a flow-through entity that knows, or has
reason to know, that the correct amount has not been
withheld by another withholding agent.
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
the instructions for boxes 14a and 14b, later.
Example 17. 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 with 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 15m 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)).
23

Example 18. 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
must then 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 must also 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.

Penalties

The following penalties apply to the person required to file
Form 1042-S. The penalties apply to both paper filers and
electronic filers.
Late filing of correct Form 1042-S. A penalty may be
imposed for failure to file each correct and complete Form
1042-S when due (including extensions), unless you can
show that the failure was due to reasonable cause and not
willful neglect. The penalty, based on when you file a
correct Form 1042-S, is the following.
• $60 per Form 1042-S if you correctly file within 30 days
after the required filing date; the maximum penalty is
$698,500 per year ($244,500 for a small business). A
small business, for this purpose, is defined as having
average annual gross receipts of $5 million or less for the
3 most recent tax years (or for the period of its existence, if
shorter) ending before the calendar year in which the
Forms 1042-S are due.
• $130 per Form 1042-S if you correctly file more than 30
days after the due date but by August 1; the maximum
penalty is $2,095,500 per year ($698,500 for a small
business).
24

• $340 per Form 1042-S if you file after August 1 or you
do not file correct Forms 1042-S; the maximum penalty is
$4,191,500 per year ($1,397,000 for a small business).
If you intentionally disregard the requirement to report
correct information, the penalty per Form 1042-S is
increased to the greater of $690 or 10% of the total
amount of items required to be reported, with no
maximum penalty.
Failure to furnish correct Form 1042-S to recipient. If
you fail to provide Forms 1042-S to recipients and cannot
show reasonable cause, a penalty of up to $340 may be
imposed for each failure to furnish Form 1042-S to the
recipient when due. The penalty may also be imposed for
failure to include all required information or for furnishing
incorrect information on Form 1042-S. The maximum
penalty is $4,191,500 ($1,397,000 for a small business)
for all failures to furnish correct recipient statements
during a calendar year. If you provide the correct
statement on or before August 1, reduced penalties
similar to those for failing to file a correct Form 1042-S
with the IRS may be imposed. See Late filing of correct
Form 1042-S, earlier. If you intentionally disregard the
requirement to report correct information, each $340
penalty is increased to the greater of $690 or 10% of the
total amount of items required to be reported, with no
maximum penalty.
Failure to file electronically. If you are required to file
electronically but fail to do so, and you do not have an
approved waiver on record, penalties may apply unless
you establish reasonable cause for your failure.

Avoid Common Errors

To ensure that your Forms 1042-S can be correctly
processed, be sure that you do the following.
• Carefully read the information provided in Pub. 515 and
these instructions.
• Complete all required fields. At a minimum, you must
provide your unique form identifier at the top of the form as
well as the information requested in boxes 1, 2, 3, 7a, 12a
through 12m, and 13a through 13h. Other boxes must be
completed if the nature of the payment requires it.
• If the amount reported in box 2 is a withholdable
payment, you must also enter information in boxes 4a, 4b,
and 13k. If the amount reported in box 2 is an amount
subject to chapter 3 withholding, you must enter
information in boxes 3a, 3b, and 13j.
• If the amount reported in box 2 is not subject to
chapter 4 withholding or is not a withholdable payment,
you must enter “00.00” in box 4b and provide the
applicable exemption code in box 4a.
• If the amount reported in box 2 is a withholdable
payment and an amount subject to chapter 3 withholding
and the tax rate in box 4b is 00.00, you must enter
information in boxes 3a and 3b. If the rate entered in
box 4b is 30.00, you may enter information in boxes 3a
and 3b.
• If you are a QI, WP, or WT that is pool reporting for its
direct account holders only, either a chapter 3 status code
(box 13j) or chapter 4 status code (box 13k) is required.
• If the recipient in box 13 or the entity in box 15 is a
participating FFI, registered deemed-compliant FFI,
sponsored FFI, direct reporting NFFE, or sponsored direct
Instructions for Form 1042-S (2026)

reporting NFFE, you must enter the entity’s GIIN or the
GIIN of the sponsoring entity in box 13l or 15e (to the
extent that you may rely on a sponsored entity’s GIIN
under the chapter 4 regulations or an applicable IGA for
withholding purposes).
• Use only income, status, and exemption codes
specifically listed in these instructions.
• Use only tax rates that are allowed by statute,
regulations, or treaty. Do not attempt to “blend” rates.
Instead, if necessary, submit multiple Forms 1042-S to
show changes in tax rate. See the Valid Tax Rate Table.
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.
Also, note the following.

• The gross income you report in box 2 cannot be zero

(unless amending Form 1042-S to zero out gross income
previously reported).
• The income code you report in box 1 must correctly
reflect the type of income you pay to the recipient.
• The withholding agent’s name, address, chapters 3 and
4 status codes, EIN, QI-EIN, WP-EIN, WT-EIN, and GIIN
(if any) must be reported in boxes 12a through 12m.
• The recipient’s name, country code, address, U.S. TIN
(if any), and GIIN (if any) must be reported in boxes 13a
through 13i and 13l. In most cases, you must report a
foreign address. See the instructions for box 13, later.
• In the case of joint owners, Form 1042-S can only list
one of the owners as the recipient in box 13a. Form
1042-S must not be completed with more than one of the
joint owners as the recipient.
• For direct account holders, you must report the
recipient’s account number in box 13o. You may also be
required to report the recipient’s FTIN in box 13m, a
limitation on benefits (LOB) code (for an entity claiming
treaty benefits) in box 13n, and the recipient’s date of birth
in box 13p (see the instructions for box 13n and box 13p,
later).
• The exemption code you report in box 3a must correctly
identify the proper tax status for the type of income you
pay to the recipient. The exemption code you report in
box 4a must correctly identify the proper tax status for the
type of income you pay to the recipient or if exemption
code 15 is used (payee not subject to chapter 4
withholding), the chapter 4 status code of the recipient
must correctly reflect this exemption.
• When reporting to Unknown Recipients, ensure that
30% tax is withheld for amounts subject to chapter 3 or 4
withholding, remitted to the IRS, and correctly reported on
Form 1042-S. In such cases, the recipient’s name should
be “Unknown Recipient”. The recipient’s chapter 3 and 4
status codes should also reflect “Unknown Recipient”, and
the recipient country should be left blank. Do not use
country code “UC” to indicate unknown country. Only use
country code “UC” when the recipient country is Curacao.
• Foreign source income is generally not required to be
reported on Form 1042-S. As a result, exemption code 03
(income is not from U.S. sources) should be used for
reporting income only in limited circumstances (for
example, when withholding is applied in error). See
Instructions for Form 1042-S (2026)

Regulations section 1.1461-1(c)(2) for when reporting on
Form 1042-S is required.
Note: If you use exemption code 04 (exempt or reduced
withholding under tax treaty), the country code that you
report in box 13b must be a valid treaty country. Countries
with which the United States has a tax treaty are listed at
IRS.gov/Businesses/International-Businesses/UnitedStates-Income-Tax-Treaties-A-to-Z.
Caution: You, the withholding agent, are liable for the tax
if you know, or should have known, that underwithholding
on a payment has occurred.

Specific Instructions for
Withholding Agents
Caution: All amounts must be reported in U.S. dollars.

Rounding Off to Whole Dollars

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.

Unique Form Identifier

A withholding agent must provide a unique form identifier
on each Form 1042-S that it files in the box provided at the
top of the form. The unique form identifier must:
• Be numeric (for example, 1234567891),
• Be exactly 10 digits, and
• Not be the recipient’s U.S. TIN or FTIN.
If a withholding agent is filing an amended Form
1042-S, it must include the same unique form identifier
that was reported by the withholding agent on the original
Form 1042-S that is being amended. The unique form
identifier will be used to identify which information return is
being corrected or amended when multiple information
returns are filed by a withholding agent with respect to the
same recipient. The identifying number must be unique to
each original Form 1042-S filed for the current year. The
identifying number can be used on a new original form in a
subsequent year.

Amended Checkbox
See Amended Forms, later.

Amendment Number

If you are filing an amended Form 1042-S, you must
provide an amendment number. The amendment number
must be numeric and the length must be exactly one digit.
Each time that you amend the same form (as determined
by the unique form identifier), you must provide the
amendment number in the box provided on the form
(using “1” for the first amendment and increasing
sequentially for each subsequent amendment).

Box 1—Income Code

All filers must enter the appropriate two-digit income code
from the list in Appendix A, later. Use the income code
that is the most specific. See Pub. 515 for further
25

explanation of the income codes. Below are examples on
how to use some of the income codes.
1. Use code 06 for dividends, including any deemed
dividends (such as deemed dividends arising under
section 305(c)). However, use other codes for dividends
(including deemed dividends) paid on actively traded
securities and for dividend equivalents.
2. Use code 09 for the following types of capital gain.
a. Gains on disposal of timber, coal, or domestic iron
ore with a retained economic interest, unless an election
is made to treat those gains as income effectively
connected with a U.S. trade or business.
b. Gains on contingent payments received from the
sale or exchange after October 4, 1966, of patents,
copyrights, secret processes and formulas, goodwill,
trademarks, trade brands, franchises, and other like
property.
c. Gains on certain transfers of all substantial rights to,
or an undivided interest in, patents if the transfers were
made before October 5, 1966.
d. Certain gains from the sale or exchange of OID
obligations issued after March 31, 1972.
3. Use code 17 for payments for independent personal
services performed by a foreign person (including
payments made to an entity). This includes payments that
are subject to the business profits article of a treaty.
4. Use code 29 (deposit interest) if you are paying
bank deposit interest, not code 01 (interest paid by U.S.
obligors—general).
5. Use code 24 (qualified investment entity (QIE)
distributions of capital gains) for distributions of capital
gains from a QIE. Use code 36 (capital gains distributions)
for capital gain distributions (dividends) paid or credited
by mutual funds (or other RICs). Include long-term and
short-term capital gain dividends (use exemption code 02
(exempt or reduced withholding under IRC) in box 3a).
Note: Exempt-interest dividends and interest-related
dividends should be reported under income code 01
(interest paid by U.S. obligors—general) (use exemption
code 02 (exempt or reduced withholding under IRC) in
box 3a).
6. Use code 28 for gambling winnings. These are
proceeds from a game other than blackjack, baccarat,
craps, roulette, or big-6 wheel. For more information, see
Pub. 515.
7. Use code 33, 34, 35, 53, or 54 for all substitute
payment transactions. For more information, see
Regulations sections 1.861-2(a)(7) and 1.861-3(a)(6). For
payments of interest or substitute interest made by a
withholding agent to a QI that assumes primary
withholding responsibilities for substitute interest, the
withholding agent and the QI should use code 33 or 54.
For payments of substitute dividends, a withholding agent
should use code 34 or 53. See Rev. Proc. 2022-43 for
more information on when a QI assumes primary
withholding responsibilities for substitute interest or
dividend equivalents.
8. Use code 37 (return of capital) for a nondividend
distribution. This is a distribution that is not paid out of the
26

earnings and profits of a corporation. It represents a
distribution in part or full payment in exchange for stock.
9. Use codes 38 and 39 for payments to covered
expatriates. Use code 38 for a payment of eligible
deferred compensation subject to section 877A(d)(1) and
use code 39 for a distribution from a nongrantor trust
subject to section 877A(f)(1). For more information, see
Notice 2009-85, 2009-45 I.R.B. 598, available at
IRS.gov/irb/2009-45_IRB#NOT-2009-85.
10. There are three categories of dividend equivalent
codes. For substitute dividends, use code 34 or 53. See
example 7 of this list for additional instructions related to
substitute dividends. For dividend equivalents with
respect to a transaction that is a section 871(m)
transaction as a result of combining transactions under
Regulations section 1.871-15(n) (including as modified by
transition relief under Notice 2024-44, when applicable) (a
“combined transaction”), use code 56 (dividend
equivalents under IRC section 871(m) as a result of
applying the combined transaction rules). For all other
dividend equivalents, use code 40 (other dividend
equivalents under IRC section 871(m)).
11. Use code 41 (guarantee of indebtedness) for
certain guarantee of indebtedness payments. These are
amounts paid for the provision of a guarantee of
indebtedness that was issued after September 27, 2010.
12. Use either code 42 (earnings as an artist or
athlete—no central withholding agreement) or 43
(earnings as an artist or athlete—central withholding
agreement) for payments to an artist or athlete. A central
withholding agreement is Form 13930, Application for
Central Withholding Agreement, plus additional
information specified in the instructions for such form, that
is entered into by the artist or athlete, a designated
withholding agent, and the IRS. For more details, see Pub.
515.
13. Use code 50 (income previously reported under
escrow procedure) with respect to a recalcitrant account
holder of a dormant account for which a participating FFI
reported the income on Form 1042-S in a prior calendar
year but for which the participating FFI was not required to
deposit the tax withheld or determined that withholding
was not required until the current calendar year under an
applicable escrow procedure. For additional information
on the escrow procedure for dormant accounts, see
Regulations section 1.1471-4(b)(6). Also use code 50 for
income reported on a Form 1042-S in a prior calendar
year for which tax withheld was not deposited pursuant to
the escrow procedure for undetermined amounts of
income and such withheld tax is now required to be
deposited in the current calendar year. For additional
information on the escrow procedure for undetermined
amounts of income, see Regulations section 1.1441-3(d)
(1). For instructions on reporting amounts withheld during
the current calendar year that you are not depositing
pursuant to the escrow procedure, see the instructions for
box 7, later.
14. Use code 52 (dividends paid on certain actively
traded or publicly offered securities), 53 (substitute
payments—dividends from certain actively traded or
publicly offered securities), 51 (interest paid on certain
actively traded or publicly offered securities), 54
Instructions for Form 1042-S (2026)

(substitute payments—interest from certain actively traded
or publicly offered securities), and 13 (royalties paid on
certain publicly offered securities) if the income paid is
described in Regulations section 1.1441-6(c)(2) and you
have reduced the rate of withholding under an income tax
treaty without the recipient providing a U.S. TIN or an
FTIN. See codes 40 and 56 for dividend equivalents other
than substitute dividends and example 10 of this list for
additional information.
15. Use code 55 (taxable death benefits on life
insurance contracts) to report taxable death benefits, such
as benefits paid on an insurance contract that was
acquired on a transfer for valuable consideration. See
section 101 for when death benefits are taxable.
16. Use income code 57 to report an amount realized
under section 1446(f) (regardless of whether paid on a
sale or PTP distribution).
17. Use income code 58 to the extent you cannot
determine the income attributable to a PTP distribution
and apply Regulations section 1.1446-4(d)(1) to
determine the withholding absent a qualified notice
indicating the amount.
18. Use income code 59 (consent fees), 60 (loan
syndication fees), or 61 (settlement payments) for
payments described by one of those codes that a
withholding agent concludes does not fit under another
income code, excluding code 23 (other income).
Note: For tax year 2026, the use of income codes 59, 60,
and 61 is optional.
19. Income code 23 (other income) should be used only
to report U.S. source FDAP income that is not reportable
under any other available income code.
If you paid more than one type of income to or on
behalf of the same recipient, you must complete a
separate Form 1042-S for each income type.
Note: Although income codes are provided for short-term
OID and notional principal contract income, those items
are not always subject to reporting on Form 1042-S. For
example, short-term OID may need to be reported by an
NQI or a flow-through entity if those amounts are paid to
foreign persons and another withholding agent backup
withheld on those amounts under the presumption rules.
Notional principal contract income is reportable if it is
effectively connected with the conduct of a trade or
business in the United States or results in the payment of
interest under Regulations section 1.446-3(g)(4) or a
dividend equivalent under section 871(m) and the
regulations thereunder (for which a Form 1042-S is
required). For more information, see the regulations under
chapter 3 and Pub. 515.

Box 2—Gross Income

For each income type, enter the gross amount you paid (in
whole dollars) to or on behalf of the recipient during the
calendar year, including withheld tax. See, however, the
instructions for boxes 16a through 16e, later, for when you
must issue a separate Form 1042-S (or several Forms
1042-S) for income attributable to a PTP distribution. The
following other special procedures apply to the reporting
of gross income.
Instructions for Form 1042-S (2026)

• You must report the entire amount of a corporate
distribution made with respect to stock even if you elect to
reduce the amount of withholding on the distribution
because all or a part of the distribution is nontaxable or
represents a capital gain dividend.
• You must report the entire amount of a payment if you
do not know at the time of payment the amount that is
subject to withholding because the determination of the
source of the income or the calculation of the amount of
income subject to tax depends upon facts that are not
known at the time of payment.
• If you applied the escrow procedure under chapters 3
and 4, report the entire amount of a payment that you
previously reported in a prior calendar year for which you
withheld tax but did not deposit such tax under the escrow
procedure if the liability is due in the current calendar year.
• You must report the entire amount of gains relating to
the disposal of timber, coal, or domestic iron ore with a
retained economic interest, and gains relating to
contingent payments received from the sale or exchange
of patents, copyrights, and similar intangible property.
• You must report only the amount of cash paid on
notional principal contracts.
• If reporting payments to artists or athletes who have
signed a central withholding agreement (income code 43),
you must report the gross amount paid to the artist or
athlete in box 2 (without any consideration to the
expenses to be taken into account for purposes of
determining the amount of withholding tax pursuant to the
central withholding agreement).
• You must report the entire amount of any dividend
equivalent as determined under Regulations sections
1.871-15(i) and (j).

Box 3
Chapter indicator. If you are reporting amounts in boxes
7 through 9, enter either “3” or “4” to indicate whether the
amounts were withheld (or paid by the withholding agent)
pursuant to chapter 3 or chapter 4. If you are reporting tax
withheld under section 5000C, or backup withholding was
applied under the presumption rules, enter “3” as if the tax
were a chapter 3 tax.
Note: Either “3” or “4” (but not both) must be entered on
each Form 1042-S. If you are not reporting amounts in
boxes 7 through 9 because you did not withhold under
chapter 3 or 4, you should enter “3.”
If you are reporting payments to U.S. payees, enter “3”
and leave boxes 3a and 3b blank.

Boxes 3a and 4a—Chapter 3 and Chapter 4
Exemption Codes

The applicable chapter 3 or 4 exemption code (01 through
24) from Appendix B, later, may be required to be entered
if:
• The tax rate you entered in box 3b is applied at a
reduced rate or if the payment is exempt from withholding,
or
• The tax rate you entered in box 4b is 00.00.
In certain cases, more than one exemption code will apply.
See the instructions below for the applicable codes to
determine which code to use.
27

If an amount was withheld under chapter 4 (the tax rate
you entered in box 4b is greater than zero and is not due
to backup withholding), enter “00” in box 4a. If the tax rate
you entered in box 4b is 00.00, you must enter the
applicable exemption code (13 through 21) in box 4a. If an
amount was withheld under chapter 3 (the tax rate you
entered in box 3b is 30.00 and is not due to backup
withholding), enter “00” in box 3a. If the tax rate you
entered in box 3b is due to backup withholding, leave
box 3a blank.
If chapter 3 exemption code 01 or chapter 4 exemption
code 14 (effectively connected income) applies, you must
enter the recipient’s U.S. TIN in box 13i if you report the
income as effectively connected with a U.S. trade or
business. If the recipient’s U.S. TIN is unknown or
unavailable, you must withhold tax at the rate of 30%
(30.00) and enter “00” in boxes 3a and 4a.

Chapter 3 Exemption Codes
Note: A withholding agent should use the chapter 3
exemption code that most closely applies.
A withholding agent should use chapter 3 exemption
code 02 (exempt or reduced withholding under IRC) only if
none of the other chapter 3 exemption codes apply.
A withholding agent should use exemption code 04
(exempt or reduced withholding under tax treaty) only if
withholding at a reduced rate of withholding or if income is
exempt from withholding pursuant to an income tax treaty.
Note that if reporting exemption code 04, the country code
entered in box 13b must be a country with which the
United States has entered into an income tax treaty.
A withholding agent should use exemption code 06 (QI
that assumes primary withholding responsibility) only if it
is making a payment to a QI that has represented on its
Form W-8IMY that it is assuming primary withholding
responsibility under chapters 3 and 4. However, if the
payment is made to a QI that is acting as a QDD with
respect to the payment, the withholding agent should
instead use exemption code 22 (QDD that assumes
primary withholding responsibility).
A withholding agent should use exemption code 07
(withholding foreign partnership or withholding foreign
trust) only if it is making a payment to a foreign partnership
or trust that has represented on its Form W-8IMY that it is
a WP or WT.
A withholding agent should use exemption code 08
(U.S. branch treated as U.S. person) for chapter 3
purposes only if it is making a payment to a U.S. branch or
to a territory FI and it has represented on its Form W-8IMY
that it agrees to be treated as a U.S. person.
A withholding agent should use exemption code 10 (QI
represents that income is exempt) for chapter 3 purposes
only if it makes a payment to a QI that has not assumed
primary withholding responsibility under chapters 3 and 4
or primary backup withholding responsibility, but has
represented on a withholding statement associated with
its Form W-8IMY that the income is exempt from
withholding.
28

A withholding agent should use exemption code 11
(QSL that assumes primary withholding responsibility) for
chapter 3 purposes only if the withholding agent makes a
substitute dividend payment to a financial institution
(including a QI) that represented on its Form W-8IMY that
it is acting as a QSL for the account associated with the
form.
A withholding agent should use exemption code 12
(payee subjected to chapter 4 withholding) for chapter 3
purposes if the recipient has been withheld upon under
chapter 4 and thus chapter 3 withholding does not apply.
When reporting a payment subject to chapter 4
withholding, ensure that 30% tax is withheld, remitted to
the IRS, and correctly reported on Form 1042-S. See
Special instructions for use of chapter 3 exemption codes,
later.
A withholding agent should use chapter 3 exemption
code 23 for distributions made by a QIE to a qualified
foreign pension fund (or an entity all of the interests of
which are held by a qualified foreign pension fund) that
are exempt under section 897(l).
A withholding agent should use chapter 3 exemption
code 24 for income paid to a foreign government or an
international organization that is exempt under section
892.

Chapter 4 Exemption Codes
A withholding agent should use exemption code 13
(grandfathered payment) for chapter 4 purposes only if the
withholding agent makes a payment under a
grandfathered obligation (as defined in Regulations
section 1.1471-2(b)(2)) and exemption code 13 is the only
exemption code that applies. If another exemption code
applies, it should be used instead of exemption code 13.
A withholding agent should use exemption code 15
(payee not subject to chapter 4 withholding) for chapter 4
purposes if the payment is a withholdable payment (as
defined in Regulations section 1.1473-1(a)) but has not
been withheld upon under chapter 4 because of the
payee’s chapter 4 status. Also, use exemption code 15 if
the withholding agent applies the 90-day grace period for
a withholdable payment following a change in
circumstances.
A withholding agent should use exemption code 16
(excluded nonfinancial payment) for chapter 4 purposes
for payments described in Regulations section
1.1473-1(a)(4)(iii). However, the withholding agent should
only use exemption code 16 if it is the only exemption
code that applies. If another exemption code applies, it
should be used instead of exemption code 16.
A withholding agent should use exemption code 17
(foreign entity that assumes primary withholding
responsibility) for chapter 4 purposes only if it makes a
payment to a QI that assumes primary withholding
responsibility, a WP, or a WT.
A withholding agent should use exemption code 18
(U.S. payees of participating FFI or registered
Instructions for Form 1042-S (2026)

deemed-compliant FFI) for chapter 4 purposes only if it
makes a payment to a participating FFI or registered
deemed-compliant FFI and only to the extent represented
on such FFI’s withholding statement associated with its
Form W-8IMY that the payment is allocable to a chapter 4
withholding rate pool of U.S. payees and the FFI certifies
on its withholding certificate that the FFI meets the
requirements to include the account holder in a
withholding rate pool of U.S. payees.
A withholding agent should use exemption code 20
(dormant account) for chapter 4 purposes only if it makes
a withholdable payment to a participating FFI or registered
deemed-compliant FFI that represented on its withholding
statement associated with its Form W-8IMY that the
payment is allocable to a dormant account holder for
which the escrow procedure of Regulations section
1.1471-4(b)(6) applies.
A withholding agent should use exemption code 21
(other payment not subject to chapter 4 withholding) for
chapter 4 purposes if the payment is exempt from
chapter 4 withholding and no other chapter 4 exemption
code applies. A withholding agent should also use
exemption code 21 when using income code 37 (return of
capital) to report nondividend payments.
If you have failed to provide a withholding agent with
appropriate information regarding the status of the person
to whom you are making a payment, the other withholding
agent may be required to withhold on the payment based
on the presumption rules. If the income is in fact exempt
from withholding or subject to a reduced rate of
withholding, and the account holder requests a corrected
form, you must submit a Form 1042-S providing the
correct information. In this situation, you must:
• Indicate the correct rate of withholding that should have
been applied to the income in boxes 3b or 4b;
• Enter the appropriate exemption codes, if any, in boxes
3a and 4a;
• Enter the actual amount of U.S. federal tax withheld by
the other withholding agent in box 8;
• Provide the name and address of the actual recipient in
boxes 13a through 13h along with the other required
information for the recipient;
• Provide the name and EIN of the other withholding
agent that actually withheld and deposited the tax
(primary withholding agent) in boxes 14a and 14b; and
• Report the account holder’s U.S. TIN, if provided.
Caution: If you submit Form 1042-S as described above,
you must also submit Form 1042 and issue a Form 1042-S
to each recipient (including any unknown recipient or U.S.
payee) of the income to which withholding was applied.
Special instructions for use of chapter 3 exemption
codes. If an amount was withheld under chapter 4, you
may also include a chapter 3 exemption code and tax rate
in boxes 3a and 3b to show the rate that would otherwise
apply as if the payment had been later determined to be
exempt from withholding under chapter 4. This may be
done, for example, to assist the beneficial owner in
pursuing a claim for refund. In such a case, enter “4” as
the chapter indicator in box 3 to show that withholding was
applied under chapter 4.
Instructions for Form 1042-S (2026)

Boxes 3b and 4b—Chapter 3 and Chapter 4 Tax
Rates

Enter the correct rate of withholding that applies to the
income in box 2 (gross income) or box 6 (net income), as
appropriate. In the case of a payment subject to chapter 4
withholding, the correct rate of withholding is “30.00.” If the
amount reported in box 2 is not subject to chapter 4
withholding or is not a withholdable payment, you must
enter “00.00” in box 4b and provide the applicable
exemption code in box 4a. For purposes of chapter 3
withholding, see Valid Tax Rate Table. The correct tax rate
should be included even if you withheld at a different rate.
For example, if an NQI that is a participating FFI is
reporting dividends paid to a beneficial owner who is
exempt from withholding under chapter 4 and a resident of
a country with which the United States does not have a
tax treaty and a U.S. withholding agent paid the dividend
and incorrectly withheld only 15% under chapter 3 (rather
than the required 30%) and the NQI withholds an
additional 15% under chapter 3, the NQI should report
“30.00” in box 3b. See Example 18, earlier, under Multiple
Withholding Agent Rule. The tax rate on dividends paid to
a corporation created or organized in, or under the law of,
the Commonwealth of Puerto Rico may be 10%, rather
than 30%. See Pub. 515 for more information.
In the case of a specified federal procurement payment
subject to section 5000C withholding, the correct rate of
withholding is 2% or “02.00.” For Form 1042-S purposes,
report tax withheld under section 5000C in box 3b as if the
tax were a chapter 3 tax.
Enter the tax rate using the following format: two digits,
a decimal point, and two digits (for example, “30.00” for
30%). However, if the income is exempt from tax under a
U.S. tax treaty or the Internal Revenue Code, enter
“00.00.” If the tax rate is less than 10%, enter a zero before
the tax rate (for example, “04.00” for 4%).
Caution: If you withheld at more than one tax rate for a
specific type of income that you paid to the same
recipient, you must file a separate Form 1042-S for each
amount to which a separate rate was applied.

Valid Tax Rate Table
00.00

10.00

24.00

02.00

12.00

25.00

04.00

12.50

27.50

04.90

14.00

28.00

04.95

15.00

30.00

05.00

17.50

37.00

07.00

20.00

08.00

21.00

Exception for central withholding agreements. If you
are the designated withholding agent who has entered
into a central withholding agreement and you report an
amount in box 2 using income code 43 (earnings as an
artist or athlete—central withholding agreement), you
must enter a tax rate in box 3b and you must include
29

chapter 4 exemption code 16 (excluded nonfinancial
payment) in box 4a.

Box 5—Withholding Allowance

This box should be completed only if the income code
reported in box 1 is 16 (scholarship or fellowship grants),
17 (compensation for independent personal services), 18
(compensation for dependent personal services), 19
(compensation for teaching), 20 (compensation during
studying and training), or 42 (earnings as an artist or
athlete—no central withholding agreement), and there is a
valid treaty claim that provides an exemption from
withholding up to a specific amount. Report the amount
exempt from withholding here. This box should not be
used for reporting a personal exemption. If you are a
designated withholding agent that has entered into a
central withholding agreement with the IRS, leave this box
blank and report the gross amount paid to the recipient in
box 2. See Pub. 515 for more information.

Box 6—Net Income

Complete this box only if you entered an amount in box 5.
Otherwise, leave it blank.

Boxes 7a Through 11—Federal Tax
Withheld
Box 7a. Enter the total amount of U.S. federal tax you
actually withheld in box 7a under chapter 3 or 4. If you did
not withhold any tax, enter “-0-.”
Caution: Box 7a must be completed in all cases, even if
no tax has been deposited.
Box 7b. A withholding agent that withheld tax during the
calendar year and that was not required to deposit with
the IRS the tax withheld during the calendar year pursuant
to the escrow procedure under Regulations sections
1.1471-2(a)(5)(ii) and/or 1.1441-3(d) must check box 7b.
A withholding agent reporting payments pursuant to the
escrow procedure must report such payments on
separate Forms 1042-S. Box 7b must only be checked
when using the escrow procedures as specified above.
If you are a participating FFI or registered
deemed-compliant FFI that, for chapter 4 purposes,
applied the escrow procedure for dormant accounts, if the
payment is also an amount subject to chapter 3
withholding and tax is withheld and deposited under
chapter 3, do not check box 7b. Instead, enter “3” in box 3
and complete box 3b to report the tax withheld under
chapter 3.
Box 7c. Check box 7c if you are a partnership that
received an amount subject to withholding during the
2026 calendar year (preceding year) and you are
withholding on the amount includible in a foreign partner’s
share after March 15 of the subsequent year (2027). Only
check this box if you designated the deposit as
attributable to the preceding year (2026). In such a case,
the partnership will be required to report the associated
income and tax withheld on Forms 1042 and 1042-S for
the preceding year. If a partnership withholds on a foreign
partner’s share of income after March 15 of the
subsequent year, the due date for filing and furnishing the
applicable Form(s) 1042-S is September 15 of the
30

subsequent year (2027). For example, if a partnership
withholds on April 1, 2027, with respect to a foreign
partner’s share of undistributed income for the 2026
calendar year, the partnership may designate the deposit
as made for 2026 and report the liability and tax withheld
on the 2026 Form 1042 and the 2026 Form 1042-S for the
partner. The partnership must also ensure that its
chapter 3 status code on such forms properly reflects its
status as a partnership (including as a WP). The extended
deadline of September 15, 2026, is also applicable when
a partnership is reporting on Form 1042-S an allocation of
income made after March 15 of the subsequent year to a
foreign partner for the prior year, but no withholding is
required on the income. In such a case, box 7c must also
be checked even if there is no withholding. For more
information, see proposed regulations issued on
December 18, 2018 (REG-132881-17).
Box 7d. Check this box only if you are a QI, WP, or WT
that originally filed a Form 1042-S to report an amount
subject to withholding in a withholding rate pool and you
are revising the amounts reported to report to a specific
recipient in accordance with the provisions of the QI
agreement (Rev. Proc. 2022-43)or the WP/WT agreement
(Rev. Proc. 2017-21).
Note: This box should be checked on both the new Form
1042-S that is issued to a specific recipient and the
amended Form 1042-S that is filed to revise the amounts
reported to a withholding rate pool.
Note: When filing Forms 1042-S to revise reporting to
withholding rate pools and report to a specific recipient
after a Form 1042 has been filed, the Form 1042 must be
amended to reflect the changes to the total Forms 1042-S
filed on lines 61a or 61b.
Box 8. If you are a withholding agent filing a Form 1042-S
to report income that has already been subject to
withholding by another withholding agent, enter the
amount actually withheld by the other agent(s) in box 8.
However, a withholding agent (including a QSL) may
not claim in box 8 a credit for prior withholding by another
withholding agent on substitute dividends paid in a series
of stock loans or stock repurchase agreements. See FAQ
26 under the General compliance section of FATCA FAQs general.
Box 9—Overwithheld tax repaid to recipient pursuant
to adjustment procedures. This box should be
completed only if you repaid a recipient under the
reimbursement or set-off procedure during the 2027
calendar year in accordance with the requirements of
Regulations section 1.1461-2(a)(2) or (3) (for withholding
under chapter 3), or Regulations section 1.1474-2(a)(3) or
(4) (for withholding under chapter 4).
If you repaid the recipient under the reimbursement or
set-off procedure during the 2026 calendar year, do not
complete box 9. Instead, reduce the amount of
withholding reported in box 7a.
In most cases, an intermediary or a flow-through entity
should not enter an amount in box 9 unless it is a QI that
represented on its Form W-8IMY that it is assuming
primary withholding responsibility or is a WP or WT.
Instructions for Form 1042-S (2026)

Caution: The adjustment for amounts overwithheld
applies to partnerships, brokers, or nominees required to
withhold under sections 1446(a) and (f) starting in 2023.
Note: If the withholding agent meets the above
requirements, the withholding agent may make
adjustments to overwithholding using either the
reimbursement or set-off procedure until the extended due
date for filing Form 1042-S (or, if earlier, the date on which
the Form 1042-S is either filed or furnished). Additionally,
a withholding agent may use the extended due date for
filing a Form 1042 to claim a credit for any adjustments
made to overwithholding.
Box 10. Enter in box 10 the combined amounts reported
in box 7a (federal tax withheld), box 8 (tax withheld by
other agents), and box 9 (overwithheld tax repaid to
recipient pursuant to adjustment procedures).
Example. If the box 7a amount is $600, the box 8
amount is $120, and the box 9 amount is ($50), the box 10
amount will equal $670.
Caution: Box 10 must be completed in all cases, even if
no tax has been deposited.
Box 11—Tax paid by withholding agent (amounts not
withheld). Enter the total amount of tax paid by you and
not withheld from the payment to the recipient. The
amounts reported in box 11 should be the amounts paid
by the withholding agent from its own funds rather than
through withholding from the payment to the recipient. Any
amount reported in this box must not be included in
box 10.

Box 12a—Withholding Agent’s EIN

You are required to enter your EIN. However, if you are
filing Form 1042-S as a QI, WP, or WT, enter your QI-EIN,
WP-EIN, or WT-EIN. The withholding agent’s EIN
cannot be truncated.
If you don’t have an EIN, you may apply for one online
by going to IRS.gov/EIN. If you are outside the United
States, you may also apply for an EIN by calling
267-941-1099 (not a toll-free number). You may also apply
for an EIN by faxing or mailing Form SS-4 to the IRS. File
amended Forms 1042-S when you receive your EIN.
To get a QI-EIN, WP-EIN, or WT-EIN, submit Form
SS-4 with your application for that status. (See the
definitions for qualified intermediary (QI) and withholding
foreign partnership (WP) or withholding foreign trust (WT)
under Definitions, earlier, for more information.)

Boxes 12b and 12c—Withholding
Agent’s Chapter 3 and Chapter 4
Status Codes

Enter the withholding agent status code(s) from the list of
Recipient Status Codes in Appendix B, later. You must
enter both a chapter 3 and a chapter 4 withholding agent
status code regardless of the type of payment being
made. If you are a U.S. financial institution, indicate your
chapter 4 status code as 01, except when a foreign
branch of a U.S. financial institution issues Form 1042-S
(in such a case, indicate the chapter 4 status code as 50).
Instructions for Form 1042-S (2026)

Note: Withholding agents that are U.S. governmental
entities or U.S. tax-exempt entities, including colleges and
universities, and other U.S. tax-exempt entities under the
Internal Revenue Code other than under section 501(c),
may use chapter 3 status code 41 (U.S. government entity
or tax exempt entity (other than section 501(c) entities))
for box 12b.
Note: A withholding agent should in general select the
chapter 3 status code that most closely applies with its
status based on the available codes. For example, if a
U.S. financial institution (which checks chapter 4 status
code 01, as such, unless it is a foreign branch) is a
corporation, it should use chapter 3 status code 15
(corporation).
Note: A withholding agent that is a partnership and is
reporting allocations of QDD items to its partners should
use chapter 3 status code 40 (partnership QDD).

Boxes 12d Through
12m—Withholding Agent’s Name,
GIIN, Country Code, FTIN (if any), and
Address

Enter your name and address in the appropriate boxes. If
your post office does not deliver mail to the street address
and you have a P.O. box, show the box number instead of
the street address.
Note: On statements furnished to individual recipients of
U.S. source deposit interest, in addition to your name and
address, you must include the telephone number of a
person to contact. This number must provide direct
access to an individual who can answer questions about
the statement. The telephone number is not required on
Copy A of paper forms or on electronically filed forms.
Box 12e—Withholding agent’s GIIN. The GIIN
provided, if any, should be the GIIN issued to the branch
of, or disregarded entity owned by, the participating FFI or
registered deemed-compliant FFI that is making the
payment.

Box 12f—Country code. You must enter the code (from
the list at IRS.gov/CountryCodes) for the country for which
you are resident under that country’s tax laws. Enter “OC”
(other country) only when the country of residence does
not appear on the list.
Note: If the withholding agent is a U.S. person or a
foreign branch of a U.S. person, enter “US” in box 12f.

Boxes 13a Through 13h—Recipient’s
Name, Country Code, and Address
Box 13a—Recipient’s name. Enter the complete name
of the recipient in box 13a.
• If you do not know the name of the recipient, or are
required to use the recipient status codes for an unknown
recipient, enter “Unknown Recipient.” Also enter
“Unknown Recipient” if you pay an amount realized
subject to section 1446(f) withholding to an NQI and you
do not agree with the NQI to report the NQI’s account
holders on Form 1042-S.
31

• If Form 1042-S is being completed by a QI, WP, or WT
for a chapter 3 withholding rate pool or chapter 4
withholding pool, enter “Withholding rate pool” if
withholding under chapter 3 was applied, or, if chapter 4
withholding was applied, a description of the chapter 4
reporting pool (for example, “Nonparticipating FFI Pool”) in
box 13a.
• A withholding agent reporting payments made to a
participating FFI or registered deemed-compliant FFI with
respect to a chapter 4 reporting pool must include the
name and address of the FFI in boxes 13a through 13k as
well as the FFI’s GIIN and country code. The GIIN
reported must be the GIIN of the branch to whom the
withholding agent is making the payment.
• A QI reporting payments made to a PAI on a withholding
rate pool basis must include the name and address of the
PAI in boxes 13a through 13k.
• In the case of foreign joint owners, Form 1042-S can
only list one of the owners as the recipient in box 13a.
Form 1042-S must not be completed with more than one
of the joint owners as the recipient.
• If the recipient is a QI acting as a QDD with respect to
the payment, enter the name of the QDD (identifying the
QDD by the name used for the QDD on the Form W-8IMY
it provides, which should include a branch identifier, if
applicable).
• If a disregarded entity (or a branch) that is required to
provide a TIN on Form W-8IMY is identified in Part II of the
Form W-8BEN-E, include the name of the disregarded
entity (or the jurisdiction of the branch) in parentheses
after the name of the recipient.
Box 13b—Recipient’s country code. You must enter
the code (from the list at IRS.gov/CountryCodes) for the
country of which the recipient claims residency under that
country’s tax laws. Enter “OC” (other country) only when
the country of residence does not appear on the list or the
payment is made to an international organization (for
example, the United Nations). If the recipient is unknown,
leave box 13b blank and enter “Unknown Recipient” in
box 13a. If you are making a payment to a QI, QSL, WP, or
WT, or if you are a QI, QSL, WP, or WT and are making a
payment to a QI, WP, or WT withholding rate pool, enter
the country code of the QI, QSL, WP, or WT. Also, if you
are making a payment to a participating FFI or registered
deemed-compliant FFI’s chapter 4 reporting pool, enter
the country code of the participating FFI or registered
deemed-compliant FFI or branch of or disregarded entity
owned by such FFI receiving the withholdable payment
and that was listed on Part II of either the Form W-8BEN-E
or W-8IMY.
Note: If you are reporting a payment to a U.S. person on
Form 1042-S, enter “US” as the country code.
Caution: If exemption code 04 (exempt or reduced
withholding under tax treaty) appears in box 3a or if a
reduced rate of withholding based on a tax treaty is
entered in box 3b, the country code entered in box 13b
must be a country with which the United States has
entered into an income tax treaty.
Boxes 13c through 13h—Recipient’s address. In most
cases, you must enter a foreign address in boxes 13c
through 13h. However, there are limited exceptions. For
32

example, you may enter a U.S. address when reporting
payments of scholarship or fellowship grants (income
code 16).
For addresses outside the United States or its
commonwealths and territories, follow the foreign
country’s practice for entering the postal code.
For addresses within the United States, use the U.S.
Postal Service two-letter abbreviation for the state name.
If you want to enter the recipient’s account number, use
box 13o.

Boxes 13i and 13l—Recipient’s U.S.
TIN and GIIN

You must obtain and enter a U.S. TIN for any of the
following recipients.
• Any recipient whose income is effectively connected
with the conduct of a trade or business in the United
States. For these recipients (excluding a recipient
receiving a payment subject to section 1446(a) or (f)
withholding), enter exemption code 01 in box 3a or
exemption code 14 in box 4a.
• Any foreign person claiming a reduced rate of, or
exemption from, tax under a tax treaty between a foreign
country and the United States, unless the recipient
provides an FTIN (in such case, use box 13m), or unless
the income is an unexpected payment (as described in
Regulations section 1.1441-6(g)) or consists of dividends
and interest from stocks and debt obligations that are
actively traded; dividends from any redeemable security
issued by an investment company registered under the
Investment Company Act of 1940 (mutual fund);
dividends, interest, or royalties from units of beneficial
interest in a unit investment trust that are (or were, upon
issuance) publicly offered and are registered with the
Securities and Exchange Commission under the
Securities Act of 1933; and amounts paid with respect to
loans of any of the above securities. In the latter case, you
must use income code 13, 51, 52, 53, or 54.
• Any nonresident alien individual claiming exemption
from tax under section 871(f) for certain annuities received
under qualified plans.
• A foreign organization claiming an exemption from tax
solely because of its status as a tax-exempt organization
under section 501(c) or as a private foundation.
• Any QI other than a disclosing QI (which is not a
recipient).
• Any WP or WT.
• Any nonresident alien individual claiming exemption
from withholding on compensation for independent
personal services.
• Any U.S. branch of an FFI or territory FI that is treated
as a U.S. person.
• Any QSL that was paid a substitute dividend.
In all other cases, if you know the recipient’s TIN or if a
foreign person provides a TIN on Form W-8, but is not
required to do so, you must include the TIN on Form
1042-S. A U.S. TIN is also required on a Form 1042-S
used by a recipient to claim credit for (or a refund of) the
withholding.
You must include a GIIN if you are required to collect a
GIIN for the recipient under the requirements documenting
Instructions for Form 1042-S (2026)

the payee under chapter 4. If you make a payment to a
disregarded entity or branch that is identified in Part II of
Form W-8BEN-E, then report the GIIN of the disregarded
entity or branch provided in that section.

Boxes 13j and 13k—Recipient’s
Chapter 3 and Chapter 4 Status
Codes

Enter the recipient status code from the list of Recipient
Status Codes in Appendix B, later. The following special
instructions apply for chapter 3 status codes.
• If income code 42 (earnings as an artist or athlete—no
central withholding agreement) or 43 (earnings as an artist
or athlete—central withholding agreement) is used in
box 1, use recipient code 22 (artist or athlete) instead of
recipient code 16 (individual), 15 (corporation), or 08
(partnership other than withholding foreign partnership,
publicly traded partnership, or partnership QDD).
• If you are making a payment to an NQI or a flow-through
entity, in most cases you must use the recipient code that
applies to the type of recipient who receives the income
from the NQI or flow-through entity.
• Use recipient code 08 (partnership other than
withholding foreign partnership, publicly traded
partnership, or partnership QDD) only if you are reporting
a payment of income that is effectively connected with the
conduct of a trade or business of an NWP in the United
States or that is subject to reporting under section 1446(f).
You may, however, use recipient code 08 as the chapter 3
status code if you are using a chapter 4 pooled reporting
code with respect to a payment made to an NWP. See the
instructions later for use of recipient codes when reporting
pools. Otherwise, follow the rules that apply to payments
to flow-through entities.
• Use recipient code 21 (unknown recipient) only if you
have not received a withholding certificate or other
documentation for a recipient or you cannot determine
how much of a payment is reliably associated with a
specific recipient, or you pay an amount realized subject
to section 1446(f) withholding to an NQI and you do not
agree with the NQI to report the NQI’s account holders on
Form 1042-S. Do not use this code because you cannot
determine the recipient’s status as an individual, a
corporation, etc. The regulations under chapter 3 provide
rules on how to determine a recipient’s status when a
withholding agent does not have the necessary
information.
• Use recipient code 13 (qualified securities
lender—qualified intermediary) or 14 (qualified securities
lender—other) if you make a payment to a QSL.
• Only a QI may use recipient codes 29 (PAI withholding
rate pool—general) and 30 (PAI withholding rate
pool—exempt organization). Only a QI, WP, or WT that
made a pooled reporting election for chapter 3 purposes
may use recipient codes 31 (agency withholding rate
pool—general), 32 (agency withholding rate
pool—exempt organization), 27 (withholding rate
pool—general), and 28 (withholding rate pool—exempt
organization) for chapter 3 purposes. Recipient code 28 or
30 should be used only for pooled account holders that
have claimed an exemption based on their tax-exempt
status and not some other exemption (for example, treaty
Instructions for Form 1042-S (2026)

or other Internal Revenue Code exception). A QI acting as
a QDD may use only pooled reporting codes 27 and 28. If
you are a QI (including a QI acting as a QDD), WP, WT, or
QSL using a chapter 3 pooled reporting code with respect
to a payment, do not include a chapter 4 status code
unless making such payment to a PAI or certain
partnerships or trusts. See Amounts Paid to PAIs and
Amounts Paid by QIs to Certain Partnerships and Trusts,
earlier.
• Use recipient code 35 (qualified derivatives dealer) if
you make a payment to a QI that is acting as a QDD with
respect to the payment.
• A U.S. withholding agent making a payment to any
other QI (other than a disclosing QI) should use recipient
code 12 and recipient code 09 or 11 if it is making a
payment to a WP or WT, respectively.
• Use recipient code 05 (U.S. branch—treated as U.S.
person) if you make a payment to a U.S. branch or territory
FI treated as a U.S. person.
A chapter 4 status code is required only if the
payment is a withholdable payment or when a
participating FFI or registered deemed-compliant FFI
provides a chapter 4 withholding rate pool of U.S. payees.
The chapter 4 status code may be determined under the
applicable IGA by a withholding agent that is an FFI
subject to such an agreement. The following special
instructions apply for chapter 4 status codes.
• If you are making a withholdable payment to a U.S.
branch of an FFI, use the applicable chapter 4 status code
for the country of residence for an entity that is a
participating FFI or registered deemed-compliant FFI.
Otherwise, use the chapter 4 status code for any other
foreign branch of the entity that is a participating FFI or
registered deemed-compliant FFI.
• Only use recipient code 15 (nonparticipating FFI) or 30
(recalcitrant account holder) if you are reporting directly to
the recipient. See Amounts paid to an NQI or a
flow-through entity of withholdable payments, earlier. If
you are reporting the chapter 4 reporting pools of
recalcitrant account holders of a participating FFI,
registered deemed-compliant FFI, or QI, use codes 42
through 49. Only use chapter 4 reporting pool code 48
(U.S. payees pool) if a participating FFI or registered
deemed-compliant FFI has provided a Form W-8IMY
certifying that it meets the requirements to include the
account holder in a withholding rate pool of U.S. payees
and that is associated with a withholding statement
allocating the payment or a portion of the payment to a
chapter 4 withholding rate pool of U.S. payees. Only use
chapter 4 reporting pool code 49 (QI-recalcitrant
pool—general) if you are reporting recalcitrant account
holders of a QI.
• Use recipient code 17 (U.S. branch—treated as U.S.
person) if you are making a payment to a U.S branch
treated as a U.S. person (or recipient code 04 for a
territory FI treated as a U.S. person).
• Use recipient code 26 (excepted NFFE—other) if you
are reporting to an NFFE treated as a U.S. person.
• Only use recipient code 29 (unknown recipient) if you
have not received a withholding certificate or other
documentation with respect to a withholdable payment
from an intermediary or a flow-through entity. Only use this
code if you also used recipient code 21 (unknown
33

recipient) as the chapter 3 status code. If you have not
received a withholding certificate or other documentation
from an intermediary or a flow-through entity, you must
include the entity’s information in boxes 15a through 15m.
You may also use recipient code 29 if you are reporting a
withholdable payment to a recipient that is not subject to
withholding under the terms of an IGA and the recipient’s
account is not required to be reported as a U.S. account
or nonconsenting U.S. account (for example, an
undocumented individual with no U.S. indicia).
• Use recipient code 33 (U.S. reportable account) if you
are reporting the recipient’s account as a U.S. reportable
account under the terms of a Model 1 IGA and the
recipient does not meet the applicable requirements to be
included in a pool of U.S. payees because the account
holder is subject to chapter 3 withholding.
• Use recipient code 34 (nonconsenting U.S. account) if
you are reporting the recipient’s account as a
nonconsenting U.S. account under the terms of a Model 2
IGA and the recipient does not meet the applicable
requirements to be included in a pool of U.S. payees
because the account holder is subject to chapter 3
withholding.
• Use recipient code 37 (undocumented preexisting
obligation) for an obligation that a withholding agent has
not documented and the payment being reported was
made before the expiration of the time period allowed for
documenting the obligation and thus the withholding
agent was not required to apply the presumption rules to
determine the payee’s chapter 4 status.
• Use recipient code 39 (account holder of excluded
financial account) if you are reporting amounts paid with
respect to an obligation that is excluded from the definition
of financial account for chapter 4 purposes (see
Regulations section 1.1471-5(b)(2)).
• Use recipient code 41 (NFFE subject to 1472
withholding) if you are reporting amounts paid to a specific
recipient that is an NFFE that you (or another withholding
agent) withheld upon under section 1472 (that is, you are
reporting amounts in boxes 7 through 9) unless the NFFE
is treated as a recalcitrant account holder under
Regulations section 1.1471-5(g), in which case, use code
30 (recalcitrant account holder).
• If you received a withholding certificate or other
documentation with respect to a withholdable payment
from an intermediary or a flow-through entity that is a
participating FFI or deemed-compliant FFI (other than a
WP, WT, or QI that assumes primary withholding
responsibility) and cannot reliably associate the payment
with documentation to determine the payee’s chapter 4
status (or with a chapter 4 withholding rate pool), you must
report the recipient as “Unknown Recipient” and include
the entity’s information in boxes 15a through 15m (to the
extent provided).
• If you are reporting a chapter 4 pooled reporting code
with respect to a withholdable payment to an intermediary
or a flow-through entity, use the chapter 3 status code for
the intermediary or flow-through entity as the recipient
code.
• If you are a QI, WP, or WT reporting direct account
holders, do not include a chapter 3 status code for the
recipient if you are using a chapter 4 reporting pool code
as the recipient’s chapter 4 status code.
34

• If you are making a withholdable payment to a recipient
that is a restricted distributor (as defined in Regulations
section 1.1471-5(f)(4)), use recipient code 10 (certified
deemed-compliant FFI—other).

Box 13m—Recipient’s FTIN

Use box 13m to enter the recipient’s identification number
used in the recipient’s country of residence for tax
purposes.
You must obtain and enter an FTIN for any of the
following recipients.
• Any foreign person claiming a reduced rate of, or
exemption from, tax under a tax treaty between a foreign
country and the United States if such person did not
provide a U.S. TIN and the income is not the type for
which an exemption from the TIN requirement applies
(see the instructions for boxes 13i and 13l, earlier).
• Any recipient of a payment made with respect to a
financial account (as defined in Regulations section
1.1471-5(b)) maintained at your U.S. office or branch, if
you are a financial institution, to the extent that such
recipient has furnished a withholding certificate that
provides an FTIN, or you obtain the FTIN under the
alternative procedures described in Regulations section
1.1441-1(e)(2)(ii)(B), or the recipient’s FTIN is identified in
any of your electronically searchable information. See
Regulations section 1.1441-1(e)(2)(ii) for more information
regarding a withholding agent’s obligation to obtain and
report a recipient’s FTIN.

Box 13n—LOB Code

If you are making a payment for which a beneficial owner
that is an entity has claimed a reduced rate of withholding
under an income tax treaty and has provided
documentation that establishes the LOB article under
which the beneficial owner qualifies, enter the applicable
LOB code from Appendix B, later. See the Instructions for
Form W-8BEN-E for a description of each of the LOB
codes. If you are a QI, WP, or WT reporting a chapter 3
pool for which a reduced rate of withholding under an
income tax treaty applies, do not include an LOB code.

Box 13o—Recipient’s Account
Number

If you are a financial institution reporting amounts paid to
your direct account holder with respect to an account
maintained by you at your U.S. office or U.S. branch, you
must report the recipient’s account number in box 13o. If
the amount is paid through an NQI or a flow-through entity,
you are not required to use this box.
Note: A U.S. financial institution or a U.S. branch of an
FFI is required to report payments of the same type of
income (as determined by the income code in box 1)
made to multiple financial accounts held by the same
beneficial owner at a U.S. office of such institution on a
separate Form 1042-S for each account. For this purpose,
a financial account is an account described in Regulations
section 1.1471-5(b)(1). Report the identifying number
assigned to such account (or its functional equivalent in
the absence of an account number for the recipient).

Instructions for Form 1042-S (2026)

Box 13p—Recipient’s Date of Birth

Use box 13p to enter the recipient’s date of birth. The
correct format if entered is YYYYMMDD (for example,
enter “20001205” for a date of birth of December 5, 2000).
A financial institution making a payment with respect to a
financial account (as defined in Regulations section
1.1471-5(b)) maintained at its U.S. office or U.S. branch
must report the recipient’s date of birth (if the recipient is
an individual) to the extent that such recipient has
furnished documentation that provides a date of birth or
the recipient’s date of birth is identified in any of the
withholding agent’s files. See Regulations section
1.1441-1(e)(2)(ii)(B) for more information regarding a
withholding agent’s obligation to obtain and report a
recipient’s date of birth.

Boxes 14a and 14b—Primary
Withholding Agent’s Name and EIN

If you are an intermediary or a flow-through entity
reporting amounts withheld by another withholding agent
(the primary withholding agent) in box 8, you must
provide the name and EIN of the withholding agent that
withheld the tax. If multiple withholding agents withheld
amounts reported on the same Form 1042-S, report the
name of any one of the withholding agents that withheld
amounts. Otherwise, leave blank.

Box 15—Pro-Rata Basis Reporting
Checkbox

18 (U.S. branch—not treated as U.S. person (reporting
under section 1471)).
Note: A withholding agent that is an intermediary or a
flow-through entity will leave these boxes blank unless it is
making the payment to an intermediary or a flow-through
entity.
Box 15f—Country code. You must enter the country
code (from the list at IRS.gov/CountryCodes) for the
country where the intermediary or flow-through entity is
located.
Box 15g—Intermediary or flow-through entity’s FTIN.
Use box 15g to enter the intermediary or a flow-through
entity’s identifying number used in the country of
residence for tax purposes. Box 15g is optional.

Boxes 16a Through 16e—Payer’s
Name, TIN, GIIN, and Status Code

See the definition of authorized agent, earlier, under
Definitions. Include the payer’s name, TIN, and GIIN if
different from the withholding agent shown in boxes 12a,
12d, and 12e.
If payment is being made by a transfer agent or a
paying agent acting as a withholding agent on behalf of a
payer, enter the chapters 3 and 4 status codes applicable
to the status of the payer in boxes 16d and 16e.

Boxes 15a Through
15m—Intermediary/Flow-Through
Entity’s Name, Status Code, Country
Code, Address, EIN, GIIN, and FTIN

If you are a nominee that is the withholding agent for
the amount of a PTP distribution subject to withholding
under section 1446(a) (reporting income code 27), enter
the PTP’s information in boxes 16a through 16e. However,
you must enter the PTP’s EIN, GIIN (if any), and chapter 4
status only if included in your records for the PTP interest
that relates to the distribution. This includes information in
your securities master file (or similar document), or that is
reported in a qualified notice issued by the PTP during the
year of the distribution. A nominee should also enter the
PTP information when using income code 58 (publicly
traded partnership distributions—undetermined) to report
a PTP distribution or when using income code 57 to report
an amount realized attributable to a PTP distribution.

You must also include the intermediary or flow-through
entity’s chapter 3 and chapter 4 status codes and, if any,
the TIN and GIIN of the intermediary or flow-through entity
when provided or required to be collected by the
withholding agent. If the intermediary or flow-through
entity completed Part II of Form W-8IMY, then report the
GIIN provided in that section. If you are making a payment
to a U.S. branch not treated as a U.S. person that has
certified that it is applying the rules in Regulations section
1.1471-4(d)(2)(iii)(C) (in order to avoid being withheld
upon under chapter 4), use chapter 4 intermediary code

Note: You must issue a separate Form 1042-S to
complete boxes 16a through 16e with respect to each
PTP that makes a distribution of any of these types of
income to the recipient. This requirement does not apply
to a withholding agent that reports to a QI as a recipient
with respect to a withholding rate pool or to a QI that
reports using withholding rate pools.
A PTP may be required to report the same amount of a
PTP distribution on a qualified notice as subject to both
section 1446(f) withholding and other chapter 3 or 4
withholding (such as under section 1446(a)). See
Regulations sections 1.1446-4(b)(4) and 1.1446(f)-4(c)(2)
(iii). In this case, you must report the same amount on
separate Forms 1042-S, with the appropriate income code
and associated amount of withholding included on each
form. Therefore, the total amounts reported on Forms
1042-S in box 2 (gross income) resulting from the
distribution may, in some cases, exceed the actual amount
of the distribution.

Withholding agents must check box 15 to notify the IRS
that an NQI that used the alternative procedures of
Regulations section 1.1441-1(e)(3)(iv)(D) failed to
properly comply with those procedures. See Pro-rata
reporting to NQI, earlier, for additional information.

If you are reporting amounts subject to reporting for
chapter 3 or 4 purposes paid to a recipient whose
withholding certificates or other documentation has been
submitted to you (or should have been submitted to you)
with a Form W-8IMY provided by an intermediary or a
flow-through entity, you must include the name and
address of the intermediary or flow-through entity with
whose Form W-8IMY the recipient’s Form W-8 or other
documentation is associated.

Instructions for Form 1042-S (2026)

35

Boxes 17a Through 17c—State
Income Tax Withheld and Related
Information

IRS. You must provide statements to recipients showing
the corrections as soon as possible regardless of the
change to the Form 1042-S.

Amended Forms

Caution: If you fail to correct Form(s) 1042-S, you may be
subject to a penalty. See Penalties, earlier.

Include in these boxes information relating to any state
income tax withheld.
If you file a Form 1042-S with the IRS and later discover
you made an error on it, you must correct it as soon as
possible. To correct a previously filed Form 1042-S, you
will need to file an amended Form 1042-S. The amended
form must have the same unique form identifier as the
original form that is being amended. You must check the
“Amended” box and provide the amendment number. The
amendment number must be numeric and the length must
be exactly one digit. Each time that you amend the same
form (as determined by the unique form identifier), you
must provide the amendment number in the box provided
on the form (using “1” for the first amendment and
increasing sequentially for each subsequent amendment).
Caution: If you provide an amended Form 1042-S to a
recipient, you must also file the amended form with the
IRS.
Do not file an amended return if you provided Form
1042-S to the recipient (Copies B, C, and D) and need to
make corrections to such form prior to filing with the IRS.
In such a case, you should file an original Form 1042-S
with the correct information. Do not check the “Amended”
box or indicate any amendment number. Provide a copy of
the corrected Form 1042-S to the recipient. Note that the
copies of the Form 1042-S provided to the recipients
(Copies B, C, and D) must match the copy of the Form
1042-S that is filed with the IRS.
If any information you correct on Form(s) 1042-S
changes the information you previously reported on Form
1042, you must also correct the Form 1042 by filing an
amended return. To do this, see the Form 1042
instructions.
If you are not e-filing, follow these steps to amend a
previously filed Form 1042-S.

Step 1. Prepare a paper Form 1042-S.
• Enter all the correct information on the form, including
the recipient name and address, money amounts, and
codes.
• Enter an “X” in the “Amended” box at the top of the form
and enter the amendment number.
Amended checkbox. Enter an “X” in the “Amended”
checkbox of Copies A, B, C, and D only if you are
amending a Form 1042-S you previously filed with the

36

Step 2. File the amended paper Form 1042-S with a
Form 1042-T. See the Form 1042-T instructions for
information on filing these forms.

Privacy Act and Paperwork Reduction Act Notice. We
ask for the information on this form to carry out the Internal
Revenue laws of the United States. Sections 1441, 1442,
1446 (for PTPs), 1471, and 1472 require withholding
agents to report and pay over to the IRS taxes withheld
from certain U.S. source income. Form 1042-S is used to
report the amount of income and withholding to the payee.
Form 1042 is used to report the amount of withholding that
must be paid over to the IRS. Section 6109 requires you to
provide your identification number. Routine uses of this
information include giving it to the Department of Justice
for civil and criminal litigation, and to cities, states, the
District of Columbia, and U.S. commonwealths and
territories for use in administering their tax laws. We may
also disclose this information to other countries under a
tax treaty, to federal and state agencies to enforce federal
nontax criminal laws, or to federal law enforcement and
intelligence agencies to combat terrorism. If you fail to
provide this information in a timely manner, you may be
liable for penalties and interest.
You are not required to provide the information
requested on a form that is subject to the Paperwork
Reduction Act unless the form displays a valid OMB
control number. Books or records relating to a form or its
instructions must be retained as long as their contents
may become material in the administration of any Internal
Revenue law. Generally, tax returns and return information
are confidential, as required by section 6103.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
average time is 34 minutes.
If you have comments concerning the accuracy of this
time estimate or suggestions for making this form simpler,
we would be happy to hear from you. You can send us
comments through IRS.gov/FormComments. Or you can
write to Internal Revenue Service, Tax Forms and
Publications, 1111 Constitution Ave. NW, IR-6526,
Washington, DC 20224. Do not send the form to this
address. Instead, see Where, When, and How To File,
earlier.

Instructions for Form 1042-S (2026)

Index

A

Account holder 5
Account number 34
Account-by-account reporting 4
Additional information 4
Amended checkbox 25, 36
Amendment number 25
Amount realized 5
Amount subject to withholding 5
Amounts not subject to
reporting 10
Amounts paid by QIs 19
Amounts paid by QIs to certain
partnerships and trusts 21
Amounts paid to PAIs 20
Amounts subject to reporting 9
Assistance 4
Authorized agent 5

B

Before completing Form
1042-S 13
Beneficial owner 5

C

Chapter 3 or 4 status code 31, 33
Chapter indicator 27
Combined reporting 4
Common errors 24
Country code 32, 35

D

Deemed-compliant FFI 6
Definitions 4
Deposit requirements 4
Disregarded entity 5
Dividend equivalent 6

E

Electronic filing 3
Electronic reporting 3
Hardship waiver 3
Excepted nonfinancial foreign
entity 7
Exempt beneficial owner 6
Exempt recipient 6
Exemption code 27
Expatriate 6
Extension of time to file 3

F

Federal tax withheld 30
Financial institution 6
Fiscally transparent entity 6
Flow-through entity 6
Foreign Account Tax Compliance
Act 2

Foreign country codes 2
Foreign financial institution 6
Foreign person 6
Future developments 1

G

Global intermediary identification
number 6
Gross income 27

I

Income code 25
Instructions for withholding
agents 25
Intermediary 6

L

LOB code 34

M

Multiple withholding agent
rule 23

N

Net income 30
Non-exempt recipient 7
Nonfinancial foreign entity 7
Nonparticipating FFI 6
Nonqualified intermediaries and
flow-through entities 22
Nonqualified intermediary 7
Nonresident alien 7
Nonwithholding foreign
partnership or nonwithholding
foreign trust 9

P

Participating FFI 6
Payee 7
Payments by U.S. withholding
agents 13
Payments made to
non-recipients 17
Payments to recipients 13
Penalties 24
Failure to file electronically 24
Failure to furnish to recipient 24
Late filing 24
Presumption rules 7
Privacy Act and Paperwork
Reduction Act Notice 36
Private arrangement
intermediary 7
Pro-rata basis reporting
checkbox 35
PTP distribution 7
PTP interest 7
Publicly traded partnership 7, 11

Publicly traded trusts 11
Purpose of form 2

Q

Qualified derivatives dealer 1, 7
Qualified intermediary 7
Qualified investment entities 11
Qualified securities lender 7

R

Recalcitrant account holder 8
Recipient 8
Recipient copies 3
Recipient-by-recipient
reporting 21
Record retention 4
Reminders 1
Requirement to withhold 12
Chapter 3 withholding 12
Chapter 4 withholding 12
Rounding off to whole dollars 25

S

Specified federal procurement
payments made to foreign
persons 23
Specified notional principal
contract 8
Specified U.S. person 8
Substantial U.S. owner 8
Substitute forms 4
Penalty for filing incorrect
substitute form 4

T

Tax rates 29
Territory FI 8
Truncation of TIN rules 3

U

U.S. branch treated as a U.S.
person 8
Unique form identifier 2, 25

V

Valid tax rate table 29

W

Where, when, and how to file 3
Who must file 2
Withholdable payment 9
Withholding agent 4
Withholding agent’s EIN 31
Withholding allowance 30
Withholding certificate 9
Withholding foreign partnership
or withholding foreign trust 9,
22
37

Withholding rates 1

38

Appendix A
Box 1 Income Codes
Code
01
02
03
04
05
22
29
30
31
33
51
54

Interest Income
Interest paid by U.S. obligors—general
Interest paid on real property mortgages
Interest paid to controlling foreign corporations
Interest paid by foreign corporations
Interest on tax-free covenant bonds
Interest paid on deposit with a foreign branch of a
domestic corporation or partnership
Deposit interest
Original issue discount (OID)
Short-term OID
Substitute payment—interest

14
15
16
17
18
19
20

Real property income and natural resources royalties
Pensions, annuities, alimony, and/or insurance premiums
Scholarship or fellowship grants
Compensation for independent personal services2
Compensation for dependent personal services2
Compensation for teaching2
Compensation during studying and training2

23
24
25
26

Interest paid on certain actively traded or publicly offered
securities1
Substitute payments—interest from certain actively
traded or publicly offered securities1

27

Other income
Qualified investment entity (QIE) distributions of capital gains
Trust distributions subject to IRC section 1445
Unsevered growing crops and timber distributions by a trust
subject to IRC section 1445
Publicly traded partnership distributions subject to IRC section
1446(a)
Gambling winnings3

28

Code
06
07
08

Dividend Income
Dividends paid by U.S. corporations—general
Dividends qualifying for direct dividend rate
Dividends paid by foreign corporations

32
35
36
37
38

34

Substitute payment—dividends

39

40
52

Other dividend equivalents under IRC section 871(m)
Dividends paid on certain actively traded or publicly
offered securities1
Substitute payments—dividends from certain actively
traded or publicly offered securities1
Dividend equivalents under IRC section 871(m) as a
result of applying the combined transaction rules

41
42

53
56
Code
09
10
11
12
13

Other Income

Capital gains
Industrial royalties
Motion picture or television copyright royalties
Other royalties (for example, copyright, software,
broadcasting, endorsement payments)
Royalties paid on certain publicly offered securities1

43

Notional principal contract income4
Substitute payment—other
Capital gains distributions
Return of capital
Eligible deferred compensation items subject to IRC section
877A(d)(1)
Distributions from a nongrantor trust subject to IRC section 877A(f)
(1)
Guarantee of indebtedness
Earnings as an artist or athlete—no central withholding
agreement5
Earnings as an artist or athlete—central withholding agreement5

44

Specified federal procurement payments

50
55
57
58
59
60

Income previously reported under escrow procedure6
Taxable death benefits on life insurance contracts
Amount realized under IRC section 1446(f)
Publicly traded partnership distributions—undetermined
Consent fees
Loan syndication fees

61

Settlement payments

1
This code should only be used if the income paid is described in Regulations section 1.1441-6(c)(2) and the withholding agent has reduced the
rate of withholding under an income tax treaty without the recipient providing a U.S. TIN or an FTIN.

If compensation that would otherwise 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 interest from a notional principal contract where nonperiodic payment(s) is treated as a loan.
5
Income Code 43 should only be used if Letter 4492, Venue Notification, has been issued by the IRS (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, publicly traded partnership, or partnership QDD).
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 for this form for further explanation.
2

39

Appendix B
Exemption Codes, Recipient Status Codes, and Box 13n LOB Codes
Box 3a. Exemption code (applies if withholding is applied at a
reduced rate or if payment is exempt from withholding).
Code
Chapter 3
01
02
03
04
05
06
07
08
10
11
12
22
23
24

Authority for Exemption or Reduced Rate of
Withholding
Effectively connected income
Exempt or reduced withholding under IRC7
Income is not from U.S. sources
Exempt or reduced withholding under tax treaty
Portfolio interest exempt under IRC
QI that assumes primary withholding responsibility
Withholding foreign partnership or withholding foreign
trust
U.S. branch treated as U.S. person
QI represents that income is exempt
QSL that assumes primary withholding responsibility
Payee subjected to chapter 4 withholding
QDD that assumes primary withholding responsibility
Exempt under section 897(l)
Exempt under section 892

Box 4a. Exemption code (applies if the tax rate entered in 4b is
00.00).
Chapter 4
13
14
15
16
17
18
19
20
21

Authority for Exemption
Grandfathered payment
Effectively connected income
Payee not subject to chapter 4 withholding
Excluded nonfinancial payment
Foreign Entity that assumes primary withholding
responsibility
U.S. payees of participating FFI or registered
deemed-compliant FFI
Exempt from withholding under IGA8
Dormant account9
Other payment not subject to chapter 4 withholding

Boxes 12b, 12c, 13j, 13k, 15b, 15c, 16d, and 16e. Chapter 3 and
Chapter 4 Status Codes (used to identify the type of Withholding
Agent, Recipient, Intermediary, or Payer).
Chapter 3
05

Status Codes
U.S. branch—treated as U.S. person10

06
07
08
09
10
11

U.S. branch—not treated as U.S. person11
U.S. branch—ECI presumption applied
Partnership other than withholding foreign partnership,
publicly traded partnership, or partnership QDD
Withholding foreign partnership
Trust other than withholding foreign trust
Withholding foreign trust

12
13
14
15
16
17
18
19
20
21

Qualified intermediary
Qualified securities lender—qualified intermediary
Qualified securities lender—other
Corporation
Individual
Estate
Private foundation
International organization
Tax exempt organization (section 501(c) entities)
Unknown recipient

22
23
24
25
26
35

Artist or athlete
Pension
Foreign central bank of issue
Nonqualified intermediary
Hybrid entity making treaty claim
Qualified derivatives dealer

36
37

Foreign government—integral part
Foreign government—controlled entity

38
39
40
41

Publicly traded partnership
Disclosing qualified intermediary
Partnership QDD12
U.S. government entity or tax exempt entity (other than
section 501(c) entities)13

27
28
29
30
31
32

Pooled Reporting Codes14
Withholding rate pool—general
Withholding rate pool—exempt organization
PAI withholding rate pool—general
PAI withholding rate pool—exempt organization
Agency withholding rate pool—general
Agency withholding rate pool—exempt organization

7

This code should only be used if no other specific chapter 3 exemption code applies.

8

Use only to report a U.S. reportable account or nonconsenting U.S. account that is receiving a payment subject to chapter 3 withholding.

9

Use only if applying the escrow procedure for dormant accounts under Regulations section 1.1471-4(b)(6).

10

This code can be used by a territory FI that is treated as a U.S. person.

11

This code can be used by a territory FI that is not treated as a U.S. person.

12

Status code 40 should only be used for the partnership’s allocations to its partners with respect to its (or its branch’s) QDD’s activities. The
partnership should report all other allocations with respect to its partners using status code 8, 9, or 38, as applicable. When the partnership is
transacting in its QDD capacity, it should use status code 35.

13

This includes a college, a university, or another U.S entity exempt from tax under an Internal Revenue Code section other than section 501(c). This
code is only applicable for reporting the chapter 3 status of a withholding agent (box 12b).

14

Codes 27 through 32 should only be used by a QI, QSL, WP, or WT. A QI acting as a QDD may use only code 27 or 28.

40

Appendix B (continued)
Exemption Codes, Recipient Status Codes, and Box 13n LOB Codes (continued)
Boxes 12b, 12c, 13j, 13k, 15b, 15c, 16d, and 16e. Chapter 3 and
Chapter 4 Status Codes (continued).
Chapter 4 Status Codes
01
U.S. withholding agent—FI
02
U.S. withholding agent—other
03
Territory FI—not treated as U.S. person
04
Territory FI—treated as U.S. person
05
Participating FFI—other
06
Participating FFI—reporting Model 2 FFI
07
Registered deemed-compliant FFI—reporting Model 1
FFI
08
Registered deemed-compliant FFI—sponsored entity
09
Registered deemed-compliant FFI—other
10
Certified deemed-compliant FFI—other
11
Certified deemed-compliant FFI—FFI with low value
accounts
12
Certified deemed-compliant FFI—nonregistering local
bank
13
Certified deemed-compliant FFI—sponsored entity
14
Certified deemed-compliant FFI—investment entity that
does not maintain financial accounts
15
Nonparticipating FFI
16
Owner-documented FFI
17
U.S. branch—treated as U.S. person
18
U.S. branch—not treated as U.S. person (reporting
under section 1471)

34

Nonconsenting U.S. account

35
36
37
38
39
40
41
50

Sponsored direct reporting NFFE
Excepted inter-affiliate FFI
Undocumented preexisting obligation
U.S. branch—ECI presumption applied
Account holder of excluded financial account15
Passive NFFE reported by FFI16
NFFE subject to 1472 withholding
U.S. withholding agent—foreign branch of FI

42
43
44

Pooled Reporting Codes
Recalcitrant pool—no U.S. indicia
Recalcitrant pool—U.S. indicia
Recalcitrant pool—dormant account

45

Recalcitrant pool—U.S. persons

46
47

Recalcitrant pool—passive NFFEs
Nonparticipating FFI pool

48
49

U.S. payees pool
QI-recalcitrant pool—general17

Box 13n. LOB Code (enter the code that best describes the
applicable limitation on benefits (LOB) category that
qualifies the taxpayer for the requested treaty benefits).

19
20
21

Passive NFFE identifying substantial U.S. owners
Passive NFFE with no substantial U.S. owners
Publicly traded NFFE or affiliate of publicly traded NFFE

22
23
24
25
26
27
28

Active NFFE
Individual
Section 501(c) entities
Excepted territory NFFE
Excepted NFFE—other
Exempt beneficial owner
Entity wholly owned by exempt beneficial owners

03
04
05
06
07
08
09

29
30
31
32
33

Unknown recipient
Recalcitrant account holder
Nonreporting IGA FFI
Direct reporting NFFE
U.S. reportable account

10
11
12

Code
02

LOB Treaty Category
Government—contracting state/political subdivision/local
authority
Tax exempt pension trust/pension fund
Tax exempt/charitable organization
Publicly traded corporation
Subsidiary of publicly traded corporation
Company that meets the ownership and base erosion test
Company that meets the derivative benefits test
Company with an item of income that meets the active trade or
business test
Discretionary determination
Other
No LOB article in treaty

15
This code should only be used if income is paid to an account that is excluded from the definition of financial account under Regulations section
1.1471-5(b)(2) or under Annex II of the applicable Model 1 IGA or Model 2 IGA.
16
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.
17
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.

41

Appendix C
Comprehensive analysis of Example 1 under Payments directly to beneficial owners or partners, earlier.
DIRECT PAYMENT TO BENEFICIAL OWNER

WA, a U.S. corporate withholding agent who is an issuer of stock and not a financial institution, makes a $1,000 payment of U.S. source dividends to
A, a foreign individual who has provided a Form W-8BEN to WA and who is not eligible for a reduced rate of chapter 3 withholding under a treaty.
Before completing Form 1042-S, WA takes the following steps.
Step 1:

Because the payment is a payment described under Amounts Subject to Reporting on Form 1042-S, earlier, WA determines it has a
Form 1042-S filing obligation.

Step 2:

Because WA is making a payment of U.S. source FDAP income, WA determines the payment meets the definition of both a “withholdable
payment” under chapter 4 and “an amount subject to withholding” under chapter 3.

Step 3:

Because the payment is being made to an individual (and not a nonparticipating FFI or an NFFE that is not an excepted NFFE that has
failed to disclose its substantial U.S. owners (or certify that it has no substantial U.S. owners) (see definitions of these terms)), WA
determines that the payment is not subject to chapter 4 withholding. Because the payment is not subject to chapter 4 withholding but is
an amount subject to withholding under chapter 3, WA determines that chapter 3 is the correct chapter indicator. WA will thus enter “3” in
box 3 (chapter indicator).

Note: Although the payment is properly classified as a chapter 3 payment, WA must complete certain boxes on Form 1042-S that pertain to
chapter 4 (see explanations for boxes 4a, 4b, and 13k below).
WA must file a Form 1042-S for A and complete it as follows.
Caution: Be sure to read the instructions for each box or field in its entirety before completing a box or field on Form 1042-S.
WA must provide a unique form identifier in the applicable entry field at the top of Form 1042-S. For additional information, including unique form
identifier requirements, see Unique Form Identifier, earlier.
Box

Description

Required Entry

Comments

1

Income code

“06”

WA enters “06” (dividends paid by U.S. corporations—general), which is the appropriate
two-digit code from the list of Income Codes provided in Appendix A.

2

Gross income

“1000”

WA enters the gross amount paid (in whole dollars), including withheld tax.

3

Chapter indicator

“3”

WA enters “3” to indicate that amounts were withheld pursuant to chapter 3.

3a

Chapter 3 exemption
code

“00”

WA enters “00” because an amount was withheld under chapter 3 and the tax rate is greater
than zero and is not due to backup withholding (see the instructions for boxes 3a and 4a,
earlier).

3b

Chapter 3 tax rate

“30.00”

WA enters “30.00” consistent with the formatting specified in the instructions for boxes 3b
and 4b, earlier.

4a

Chapter 4 exemption
code

“15”

WA enters “15” (payee not subject to chapter 4 withholding), which is the appropriate
two-digit code from the list of Exemption Codes provided in these instructions.
Note: WA uses exemption code 15 because the payment is a withholdable payment, but
has not been withheld upon under chapter 4 because of the payee’s chapter 4 status (an
individual and not a person subject to chapter 4 withholding as explained in the instructions
for boxes 3a and 4a, earlier).

4b

Chapter 4 tax rate

“00.00”

WA enters “00.00” because the amount reported in box 2 is not subject to chapter 4
withholding. See the instructions for boxes 3b and 4b, earlier.

5

Withholding allowance

WA leaves box 5 blank because the income code it is reporting in box 1 is not one of the
codes specified in the instructions for which box 5 reporting is required. See the instructions
for box 5, earlier.

6

Net income

7a

Federal tax withheld

7b

Check if federal tax
withheld was not
deposited with the IRS
because escrow
procedures were applied

WA does not check the box because it is not using an escrow procedure.

7c

Check if withholding
occurred in subsequent
year with respect to a
partnership interest

WA does not check the box because it did not withhold in a subsequent year.

8

Tax withheld by other
agents

WA leaves box 8 blank because tax was not withheld by other withholding agents.

9

Overwithheld tax repaid
to recipient pursuant to
adjustment procedures

WA leaves box 9 blank because it did not repay overwithheld tax to the recipient under the
reimbursement procedure or the set-off procedure. For more information, see the
instructions for box 9, earlier.

10

Total withholding credit

11

Tax paid by withholding
agent (amounts not
withheld)

12a

Withholding agent’s EIN

42

WA leaves box 6 blank because it did not enter an amount in box 5.
“300”

“300”

WA enters “300” (30% of $1,000).

WA enters “300” (combining boxes 7a, 8, and 9).
WA leaves box 11 blank because it withheld on the payment to the recipient (as opposed to
paying the tax from its own funds). For more information, see the instructions for box 11,
earlier.

Specific
information
required

Although WA’s EIN is not specified in this example, this is a required field that WA must
complete.

Appendix C (continued)
Box

Description

Required Entry

Comments
WA enters “15” in box 12b and “02” in box 12c because it is a U.S. corporate withholding
agent that is not a financial institution.
Note: WA must enter both a chapter 3 and a chapter 4 withholding agent status code
regardless of the type of payment being reported.

12b–c

Withholding agent’s
chapter 3 and chapter 4
status codes

“15” and “02”

12d

Withholding agent’s
name

“WA”

12e

Withholding agent’s
GIIN

12f

Withholding agent’s
country code

12g

Withholding agent’s
FTIN, if any

12h–m

Withholding agent’s
address

13a

Recipient’s name

“A”

Recipient’s country
code

Specific
information
required

Although the recipient’s country of residency is not specified in this example, this is a
required field that WA must complete. See the instructions for box 13b, earlier, for
requirements.

Recipient’s address

Specific
information
required

Although the recipient’s address is not specified in this example, this is a required field that
WA must complete. See Boxes 13c through 13h, earlier, for requirements.

13b
13c–h

13i

13j

WA leaves this box blank because a U.S. withholding agent is generally not required to
obtain a GIIN. See Global intermediary identification number and Box 12e, earlier, for details.
“US”

WA enters “US” as the country code because it is a U.S. withholding agent. See the
instructions for box 12f, earlier.
WA leaves this box blank because it is a U.S. withholding agent and it does not have an FTIN
or a country of residence other than the United States.

Specific
information
required

Although WA’s address is not specified in this example, this is a required field that WA must
complete. See Boxes 12d Through 12m, earlier, for requirements.
WA enters the recipient’s name.

Recipient’s U.S. TIN, if
any

The recipient’s U.S. TIN is not specified in this example. However, given the facts used in this
example, the recipient’s U.S. TIN is generally not required because A is not a type of
recipient described in the instructions for boxes 13i and 13l, earlier, for which this TIN is
required (for example, A is not claiming a reduced rate of, or exemption from, tax under a tax
treaty between the recipient’s country of residence and the United States). However, WA
must enter the recipient’s U.S. TIN if WA knows it or if it was provided to WA on a Form W-8.

Recipient’s chapter 3
status code

“16”

WA enters chapter 3 status code “16” (individual), which is the appropriate two-digit code
from the list of chapter 3 status codes provided in Appendix B.
Note: A withholding agent must enter a chapter 3 status code for all “amounts subject to
reporting under chapter 3.”

“23”

WA enters chapter 4 status code “23” (individual), which is the appropriate two-digit code
from the list of chapter 4 status codes provided in Appendix B.
Note: A withholding agent must enter a chapter 4 status code for the recipient only if the
payment is a withholdable payment (as is the case in this example) or when a participating
FFI or registered deemed-compliant FFI is reporting a chapter 4 withholding rate pool of U.S.
payees.

13k

Recipient’s chapter 4
status code

13l

Recipient’s GIIN

13m

WA must enter its complete name.

Recipient’s FTIN, if any

WA leaves box 13l blank because it only applies for chapter 4 reporting purposes. See
Global intermediary identification number and the instructions for boxes 13i and 13l, earlier.
The recipient’s FTIN is not required because A is not a type of recipient described in the
instructions for box 13m, earlier, for which the FTIN is required.

13n

LOB code

13o

Recipient’s account
number

WA leaves box 13n blank because the recipient is an individual (not an entity).
WA leaves box 13o blank because WA is not a financial institution.

13p

Recipient’s date of birth

WA leaves box 13p blank because WA is not a financial institution.

14a–b

Primary withholding
agent’s information

WA leaves these boxes blank because tax was not withheld by other withholding agents.

15a–m

Intermediary information

WA leaves these boxes blank because WA is making a direct payment to the recipient and
there are no other withholding agents.

16a–e

Payer’s information

WA leaves these boxes blank because WA is making a direct payment to the recipient and
there are no other payers involved.

17a–c

State income taxes

Although not specified in this example, WA enters in these boxes any information relating to
any state income tax withheld.

43

Appendix D
Comprehensive example of how to complete Form 1042-S for gambling winnings.
DIRECT PAYMENT TO BENEFICIAL OWNER
ABC Casino (“WA”), a U.S. corporate withholding agent that is not a financial institution, makes a $10,000 payment of gambling winnings to A, a
foreign individual who has provided a Form W-8BEN to WA establishing foreign status. The gambling winnings are subject to 30% withholding as
there is no exemption available under the Internal Revenue Code or applicable treaty. Before completing Form 1042-S, WA takes the following steps.
Step 1: Because the payment is a payment described under Amounts Subject to Reporting on Form 1042-S, earlier, WA determines it has a Form
1042-S filing obligation.
Step 2: Because WA is making a payment of U.S. source FDAP income, WA determines the payment meets the definition of “an amount subject to
withholding” under chapter 3. Because gambling winnings are not treated as a “withholdable payment” under chapter 4, as it is an excluded
nonfinancial payment under Regulations section 1.1473-1(a)(4)(iii), WA determines that the payment is not subject to chapter 4 withholding.
Step 3: Because the payment is not subject to chapter 4 withholding but is an amount subject to withholding under chapter 3, WA determines that
chapter 3 is the correct chapter indicator. WA will thus enter “3” in box 3 (chapter indicator).
Note: Although the payment is properly classified as a chapter 3 payment, WA must complete certain boxes on Form 1042-S that pertain to
chapter 4 (see explanations for boxes 4a, 4b, and 13k below).
WA must file a Form 1042-S for A and complete it as follows.
Caution: Be sure to read the instructions for each box or field in its entirety before completing a box or field on Form 1042-S.
WA must provide a unique form identifier in the applicable entry field at the top of Form 1042-S. For additional information, including unique form
identifier requirements, see Unique Form Identifier, earlier.
Box

Description

Required Entry

Comments
WA enters “28” (Gambling winnings), which is the
appropriate two-digit code from the list of income codes
provided in Appendix A.

1

Income code

“28”

2

Gross income

“10,000”

WA enters the gross amount paid (in whole dollars),
including withheld tax.

3

Chapter indicator

“3”

WA enters “3” to indicate that amounts were withheld
pursuant to chapter 3.

3a

Chapter 3 exemption code

“00”

WA enters “00” because an amount was withheld under
chapter 3 and the tax rate is greater than zero and is
not due to backup withholding (see the instructions for
boxes 3a and 4a, earlier).

3b

Chapter 3 tax rate

“30.00”

WA enters “30.00” consistent with the formatting
specified in the instructions for boxes 3b and 4b, earlier.

4a

Chapter 4 exemption code

“16”

WA enters “16” (excluded nonfinancial payment), which
is the appropriate two-digit code from the list of
Exemption Codes provided in Appendix B.

4b

Chapter 4 tax rate

“00.00”

WA enters “00.00” because the amount reported in
box 2 is not subject to chapter 4 withholding. See the
instructions for boxes 3b and 4b, earlier.

5

Withholding allowance

6

Net income

WA leaves box 5 blank because the income code it is
reporting in box 1 is not one of the codes specified in
the instructions for which box 5 reporting is required.
See the instructions for box 5, earlier.
WA leaves box 6 blank because it did not enter an
amount in box 5.

7a

Federal tax withheld

7b

Check if federal tax withheld was not
deposited with the IRS because escrow
procedures were applied

WA does not check the box because it is not using the
escrow procedure.

7c

Check if withholding occurred in
subsequent year with respect to a
partnership interest

WA does not check the box because it did not withhold
in a subsequent year.

8

Tax withheld by other agents

WA leaves box 8 blank because tax was not withheld
by other withholding agents.

9

Overwithheld tax repaid to recipient
pursuant to adjustment procedures

WA leaves box 9 blank because it did not repay
overwithheld tax to the recipient under the
reimbursement procedure or the set-off procedure. For
more information, see the instructions for box 9, earlier.

10

Total withholding credit

11

Tax paid by withholding agent (amounts
not withheld)

12a

Withholding agent’s EIN

Withholding agent’s chapter 3 and
chapter 4 status codes

12b–c

44

“3,000”

“3,000”

WA enters “3,000” (30% of $10,000).

WA enters “3,000” (combining boxes 7a, 8, and 9).
WA leaves box 11 blank because it withheld on the
payment to the recipient (as opposed to paying the tax
from its own funds). For more information, see the
instructions for box 11, earlier.

Although WA’s EIN is not specified in this example, this
Specific information required is a required field that WA must complete.

“15” and “02”

WA enters “15” in box 12b and “02” in box 12c because
it is a U.S. corporate withholding agent that is not a
financial institution.
Note: WA must enter both a chapter 3 and a chapter 4
withholding agent status code regardless of the type of
payment being reported.

Appendix D (continued)
Box

Description

Required Entry

12d

Withholding agent’s name

“ABC Casino”

Comments

12e

Withholding agent’s GIIN

12f

Withholding agent’s
country code

12g

Withholding agent’s
FTIN, if any

12h–m

Withholding agent’s
address

13a

Recipient’s name

“A”

13b

Recipient’s country code

Specific
information
required

Although the recipient’s country of residency is not specified in this example, this is a
required field that WA must complete. See the instructions for box 13b, earlier, for
requirements.

13c–h

Recipient’s address

Specific
information
required

Although the recipient’s address is not specified in this example, this is a required field
that WA must complete. See Boxes 13c through 13h, earlier, for requirements.

WA must enter its complete name.
WA leaves this box blank because a U.S. withholding agent is generally not required to
obtain a GIIN. See Global intermediary identification number and Box 12e, earlier, for
details.

“US”

WA enters “US” as the country code because it is a U.S. withholding agent. See the
instructions for box 12f, earlier.
WA leaves this box blank because it is a U.S. withholding agent and it does not have an
FTIN or a country of residence other than the United States.

Specific
information
required

Although WA’s address is not specified in this example, this is a required field that WA
must complete. See Boxes 12d Through 12m, earlier, for requirements.
WA enters the recipient’s name.

13i

Recipient’s U.S. TIN, if
any

The recipient’s U.S. TIN is not specified in this example. However, given the facts used in
this example, the recipient’s U.S. TIN is generally not required because A is not a type of
recipient described in the instructions for boxes 13i and 13l, earlier, for which this TIN is
required (for example, A is not claiming a reduced rate of, or exemption from, tax under a
tax treaty between the recipient’s country of residence and the United States). However,
WA must enter the recipient’s U.S. TIN if WA knows it or if it was provided to WA on a
Form W-8.

13j

Recipient’s chapter 3
status code

WA enters chapter 3 status code “16” (individual), which is the appropriate two-digit code
from the list of chapter 3 status codes provided in Appendix B.
Note: A withholding agent must enter a chapter 3 status code for all “amounts subject to
reporting under chapter 3.”

“16”

Recipient’s chapter 4
status code

WA is not required to provide the chapter 4 status code of the recipient, given that the
payment being reported is not a withholdable payment.
Note: A withholding agent must enter a chapter 4 status code for the recipient only if the
payment is a withholdable payment or when a participating FFI or registered
deemed-compliant FFI is reporting a chapter 4 withholding rate pool of U.S. payees.

13l

Recipient’s GIIN

WA leaves box 13l blank because it only applies for chapter 4 reporting purposes. See
Global intermediary identification number and the instructions for boxes 13i and 13l,
earlier.

13m

Recipient’s FTIN, if any

The recipient’s FTIN is not required because A is not a type of recipient described in the
instructions for box 13m, earlier, for which the FTIN is required.

13k

13n

LOB code

13o

Recipient’s account
number

WA leaves box 13n blank because the recipient is an individual (not an entity).
WA leaves box 13o blank because WA is not a financial institution.

13p

Recipient’s date of birth

WA leaves box 13p blank because WA is not a financial institution.

14a–b

Primary withholding
agent’s information

WA leaves these boxes blank because tax was not withheld by other withholding agents.

15a–m

Intermediary information

WA leaves these boxes blank because WA is making a direct payment to the recipient
and there are no other withholding agents.

16a–e

Payer’s information

WA leaves these boxes blank because WA is making a direct payment to the recipient
and there are no other payers involved.

17a–c

State income taxes

Although not specified in this example, WA enters in these boxes any information relating
to any state income tax withheld.

45