Form 1042

Form 1042

A form that one files with the IRS to report withholding of taxes from the U.S. income earned by a foreign person. It is also used to report the 2% excise tax on certain payments of foreign procurements. The form is filed annually. See also Form 1042-S.
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Chapter 3 reporting is made via Form 1042, Annual Withholding Tax Return for U.
50 units each producing $10,000 in gross revenue a year: PENALTY 30% of gross rental withholding penalty $150,000 Failure to deposit taxes within 15 days $15,000 Failure to file Form 1042-S $15,000 Late filing penalty of Form 1042 $37,500 Risk Total $217,500 Estimated annual management fee income at 10% of gross rent Potential penalties do not include interest at applicable rates Note: If convicted of felony, the fine is no more than $10,000 and five years in prison.
Potential Property Manager's Penalty: 50 units each producing $10,000 in gross revenue a year: Potential penalties do not include interest at applicable rates PENALTY: 30 percent of gross rental withholding penalty $150,000 Failure to deposit taxes within 15 days $15,000 Failure to file Form 1042-S $15,000 Late filing penalty of Form 1042 $37,500 Risk Total $217,500 Estimated annual management fee income at 10 percent of gross rent Note: If convicted of felony, the fine is no more than $10,000 and five years in prison
The new rules apply to any form in the 940 series; Form 1042, Annual Withholding Tax Return for U.
The draft Form 1042 (12) (released a few days later) requires a reconciliation of all of a withholding agent's U.
Persons will cover these challenges: -- Determining which documentation to obtain from foreign payees before paying them; -- How to know if the identifying documentation on a Form W-8 is sufficient; -- Which types of payments are subject to Form 1042 tax rules; -- Knowing when mandatory 30 percent withholding applies and when to withhold at a different rate; and -- Dealing with tax deposit deadlines and filing of year-end Forms 1042-S and 1042.
Source Income Subject to Withholding, and Form 1042, Annual Withholding Tax Return for U.
98) Form 1042 and 1042-S are meant to provide the Service with information regarding income of foreign persons that are subject to withholding.
Withholding agents must file Form 1042 by March IS, though the filing deadline can be extended to Sept.
Persons With Respect to Certain Foreign Corporations," and Form 1042, "Annual Withholding Tax Return for U.
They must also file Form 1042, Annual Withholding Tax Return for U.