Fixed quote after we review your payments
Form 1042 and 1042-S Filing Service for US Businesses Paying Foreign Persons
If your US business pays dividends, interest, royalties or other US-source income to foreign owners or lenders, you may be a withholding agent, and you are personally liable for tax you should have withheld. We prepare the forms each year. Work is led by Gurleen Kaur, CPA licensed in British Columbia and Washington State.
Quick answer
Who has to file Form 1042 and Form 1042-S?
A withholding agent is a US or foreign person with control, receipt, custody, disposal or payment of an item of income of a foreign person that is subject to withholding (IRS). Form 1042-S reports the amounts paid to each recipient, and Form 1042 is the annual return of the tax. Both are generally due March 15 for the prior calendar year. The usual starting rate is the statutory 30%, reduced where an exemption or treaty applies and the right documents are on file (Publication 515).
At a glance
- Due
- March 15 for the prior calendar year
- Extensions
- Form 7004 for Form 1042, which does not extend payment; Form 8809 for Form 1042-S, 30 days
- Liability
- Withholding agents are personally liable for tax required to be withheld
- Late Form 1042
- 5% of the unpaid tax a month, up to 25%
- Source
- Form 1042 instructions, checked November 1, 2026
Who this usually affects
Examples only. Whether a payment is reportable depends on the type of income, its source and the recipient.
| Your situation | Why it matters |
|---|---|
| A US corporation paying dividends to a foreign owner | Dividends to a foreign person are a common payment subject to withholding |
| A US company paying interest on a loan from a foreign owner or lender | An exemption or treaty rate may apply, but it has to be documented and reported |
| A US business paying royalties to a foreign person | Often subject to withholding, unless a treaty reduces it |
| A US partnership with foreign partners | Separate withholding rules can apply; we check which forms are required |
Canadian recipients usually give you a Form W-8. See W-8BEN for Canadians and W-8 and W-9 for businesses.
Penalties
| Failure | Penalty | Source |
|---|---|---|
| Form 1042 filed late | 5% of the unpaid tax for each month or part of a month, up to 25% | IRS |
| Tax paid late | Usually one-half of 1% of the unpaid tax a month, up to 25% | IRS |
| Form 1042-S filed late or incorrect | US$60 per form if correctly filed within 30 days, US$130 if by August 1, US$340 after that, with yearly maximums | IRS |
| Form 1042-S not furnished to the recipient | Up to US$340 per failure, with a yearly maximum | IRS |
| Tax not withheld | The withholding agent is personally liable for the tax, with interest and penalties | IRS |
Penalties on Form 1042-S do not apply where the failure was due to reasonable cause and not willful neglect. Those required to file 10 or more information returns in the year generally have to file electronically.
What we can take on
Yearly filing
Forms 1042 and 1042-S for each calendar year, including a review of the payments and of the Forms W-8 on file.
Late years
Missed years prepared and supported separately, with a reasonable-cause statement where it fits.
Set-up
A review of what you pay to foreign persons, and of what to collect before the next payment.
Each engagement starts with a written scope and a fixed quote, after we review your payments.
How it works
- Send your request. Tell us who you pay and how, using the form below.
- Review and fixed quote. We review the payments and give you a written scope and fee.
- Preparation and review. We prepare the forms and go through them with you.
- Filing. We file the forms and give you the recipient copies to furnish, or furnish them as agreed.
What we need from you
- A list of payments to foreign persons, with dates, amounts and types
- Forms W-8 from each recipient
- Loan and royalty agreements
- Records of tax withheld and deposited
- Earlier Forms 1042 and 1042-S
- Any IRS letters
Please do not send tax IDs or statements through the website form. If we work together, documents come in through our secure client portal.
Common questions
When are Forms 1042 and 1042-S due?
Form 1042 is due by the 15th day of the 3rd month after the calendar year, which is March 15, and 2026 Forms 1042-S are due March 15, 2027. If the date falls on a weekend or holiday, file by the next business day.
Can I get an extension?
Form 7004 extends the time to file Form 1042, but not the time to pay. Form 8809 gives an automatic 30-day extension for Forms 1042-S if filed by the due date.
I withheld nothing. Do I still file?
You can. The instructions say to file Form 1042 if you must file Form 1042-S, whether or not tax was withheld, to the extent reporting is required.
What rate do I withhold?
The statutory rate is 30%. Exemptions and treaty rates can reduce it where they apply and the recipient has given you the right documents.
Do payments to contractors in Canada need these forms?
It depends on the type of payment and on where the services are performed. We review this before you decide.
How much does this cost?
We give a written scope and fixed quote after reviewing your payments.
Sources
Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.
- IRS: Instructions for Form 1042 (reviewed April 30, 2026)
- IRS: Instructions for Form 1042-S
- IRS: Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated November 1, 2026. This page is general information, not tax or legal advice for your situation.
Related guides: W-8 and W-9 for businesses, W-8BEN for Canadians, US-Canada business tax, Foreign-owned Delaware C corporations.
Request a quote for Forms 1042 and 1042-S
Tell us your situation in a few lines. We confirm whether we can help, what records matter and the next step. Substantive advice begins under a paid diagnostic or signed engagement.
Prepared and signed by a licensed US CPA who can represent you before the IRS. Verify Gurleen Kaur's Washington licence (#41150) on CPAverify