# Instructions for Form 1042-S

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## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

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
3

truncating a recipient’s U.S. TIN stated above must be
followed if truncating a recipient’s FTIN.
Note: The recipient’s TIN and FTIN must not be truncated
on Copy A filed with the IRS. The withholding agent’s EIN
cannot be truncated on any copy.
Need assistance? For additional information and
instructions on e-filing Forms 1042-S, extensions of time
to file (Form 8809), and hardship waivers (Form 8508), go
to IRS.gov/IRIS. You can also call the IRIS help desk at
866-937-4130 (toll free) or 470-769-5100 (not a toll-free
number). Do not call the IRIS help desk for tax law
questions.
If you have tax law questions pertaining to Form
1042-S, call 267-941-1000 (not a toll-free number).

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

Account-by-Account Reporting by Certain
Financial Institutions

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

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

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

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

Record Retention

Deposit Requirements

Additional Information

Combined Reporting Procedures

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

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

Substitute Forms

Definitions

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

4

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

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

cases is the person who is required under U.S. tax
principles to include the income in gross income on a tax
return. A person is not a beneficial owner of income,
however, to the extent that person is receiving the income
as a nominee, agent, or custodian, or to the extent the
person is a conduit whose participation in a transaction is
disregarded. In the case of amounts paid that do not
constitute income, beneficial ownership is determined as
if the payment were income.
Foreign partnerships, foreign simple trusts, and foreign
grantor trusts are not the beneficial owners of income paid
to the partnership or trust for chapter 3 purposes. The
beneficial owners of income paid to a foreign partnership
in most cases are the partners in the partnership, provided
that the partner is not itself a partnership, foreign simple or
grantor trust, nominee, or other agent. The beneficial
owner of income paid to a foreign simple trust (a foreign
trust that is described in section 651(a)) in most cases is
the beneficiary of the trust, if the beneficiary is not a
foreign partnership, foreign simple or grantor trust,
nominee, or other agent. The beneficial owner of a foreign
grantor trust (a foreign trust to the extent that all or a part
of the income of the trust is treated as owned by the
grantor or another person under sections 671 through
679) is the person treated as the owner of the trust. The
beneficial owner of income paid to a foreign complex trust
(a foreign trust that is not a foreign simple trust or foreign
grantor trust) is the trust itself.
The beneficial owner of income paid to a foreign estate
is the estate itself.
A payment to a U.S. partnership, trust, or estate is not
subject to withholding under chapter 3 or 4. A U.S.
partnership, trust, or estate should provide the withholding
agent with a Form W-9, Request for Taxpayer
Identification Number and Certification. In most cases,
these beneficial owner rules apply for purposes of section
1446; however, there are exceptions.
1. Chapter 3 withholding rate pool. A payment of a
single type of income, determined in accordance with the
income codes used to file Form 1042-S, that is subject to
a single rate of withholding and a single chapter 4
exemption code.
2. Chapter 4 withholding rate pool. A pool of account
holders or payees provided on an FFI withholding
statement (or a chapter 4 withholding statement) that is
described in Regulations section 1.1471-1(b)(20).
Broker. A broker is a person described in Regulations
section 1.1446(f)-1(b)(1) when referenced in connection
with a transfer of a PTP interest.
Chapter 3. Chapter 3 (Withholding of Tax on Nonresident
Aliens and Foreign Corporations), excluding sections
1445 and 1446.
Disregarded entity. A business entity that has a single
owner and is not a corporation under Regulations section
301.7701-2(b) is disregarded as an entity separate from
its owner.
Disclosing QI. For purposes of section 1446(a) or (f), a
QI that provides with its withholding statement the specific
payee documentation referenced in Regulations section
1.1446(f)-4(a)(7)(iii) (for an amount realized) or
5

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 a

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ab830522d25d7f88f. Public record. Not legal advice.