Instructions for Form 1042-S

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.

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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

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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 f

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