{"id":2007,"date":"2023-12-14T16:32:14","date_gmt":"2023-12-14T16:32:14","guid":{"rendered":"https:\/\/gtmtax.com\/insight\/form-1042-s-new-e-filing-requirements-for-more-than-ten-forms-due-in-q1-2024\/"},"modified":"2025-08-05T12:42:32","modified_gmt":"2025-08-05T12:42:32","slug":"form-1042-s-new-e-filing-requirements-for-more-than-ten-forms-due-in-q1-2024","status":"publish","type":"insight","link":"https:\/\/gtmtax.com\/insight\/form-1042-s-new-e-filing-requirements-for-more-than-ten-forms-due-in-q1-2024\/","title":{"rendered":"Form 1042-S: New E-Filing Requirements for More than Ten Forms Due March 15, 2024"},"content":{"rendered":"
\n\n\n\n\n
\n
\n

As year-end draws to a close and 2024 quickly approaches, please be aware of a change in the electronic filing requirements for Form 1042-S, which is due on March 15, 2024.<\/p>\n

In February 2023, the IRS passed new Treasury Regulations for calendar year 2023 requiring Form 1042-S filings in calendar year 2024, that require electronic filing of Form 1042-S if a non-financial payor has at least ten (10) 1042-S. Previously, the electronic filing threshold was 250 forms.<\/p>\n

This means that you need to determine the proper e-filing method for your organization and integrate it with your data. Potential method include the IRS’ Filing Information Returns Electronically (FIRE) system, ONESOURCE’s Modernized e-Filing (MeF) system, and others. The deadline is fast approaching, and businesses of all sizes may be impacted.<\/p>\n

Background: Form 1042<\/h2>\n

Form 1042, 1042-S, and 1042-T (if applicable) are a set of forms filed by U.S. taxpayers for all U.S. source, fixed or determinable, annual or periodic (\u201cFDAP\u201d) payments made by U.S. taxpayers to non-U.S. recipients and potentially subject to non-resident withholding and reporting. Non-resident withholding is assessed at 30% and can be reduced if the recipient is located within a tax-treaty country with the U.S. Even if no U.S. withholding tax is applicable, certain payments may still have to be reported.<\/p>\n

Withholdable payments include, but are not limited to, interest, dividends, compensation for personal services performed within the U.S. (generally excluding expense reimbursement,) royalties, rents, prizes\/awards, and scholarships\/grants. Payments incurred as cost of goods sold in the ordinary course of business are generally excluded. Statutory exceptions may apply, which require extra technical review.<\/p>\n

The payor or U.S. withholding agent is responsible for depositing the proper U.S. withholding tax to the IRS. U.S. withholding tax is applied when payment is made to the non-U.S. party, not when it is accrued.<\/p>\n

Form 1042 and its accompanying documents are filed for a calendar year, regardless of the taxpayer\u2019s fiscal year. Form 1042-S needs to be filed by income type and recipient (e.g., a non-U.S. recipient receiving service fee income and royalties will have to file two 1042-S). Form 1042 is a summary sheet that totals the income and withholding tax paid from all Form 1042-S. Form 1042-T is a transmittal sheet that accompanies paper 1042-S forms, but is not required for electronic filing.<\/p>\n

New Process for Form 1042-S<\/h2>\n

Eligible businesses should adhere to the following process in order to comply with changes in the electronic filing requirements for Form 1042-S:<\/p>\n

    \n
  • Identify whether the payment is U.S. or foreign source for calendar year 2023. Retain residency documentation from the non-U.S. recipient such as a completed Form W-8.<\/li>\n
  • Determine whether the payment is withholdable and reportable on Form 1042.<\/li>\n
  • Determine if any exceptions or tax treaty rate reductions apply.<\/li>\n
  • Deposit U.S. withholding tax as applicable.<\/li>\n
  • Compile data and prepare Form 1042, 1042-S, and 1042-T (if paper mailing) by March 15, 2024.<\/li>\n<\/ul>\n

    GTM is ready and able to assist with determining the best e-filing method for your needs, help you analyze the data, and assist with preparing and reviewing these forms in 2024. Contact us below.<\/p>\n