If you are an employer that hires non-US citizens, you are required under the Internal Revenue Code to report any income received by that employee as well as any federal tax withheld from the foreign employee’s wages. To report a non-US citizen’s wages earned from sources in the United States for a citizen that is claiming tax treaty benefits, an employer must file Form 1042-S with the Internal Revenue Service.
Download Form 1042-S from the IRS website. The IRS publishes a PDF version of Form 1042-S, which can be printed, filled out and filed. Form 1042-S consists of five identical copies, all of which must be filled out.
Provide an income code and exemption code for the employee’s income. The income code is a two-digit number that indicates the type of income received by the non-US citizen, while the exemption code is a two-digit number indicating the type of tax exemption claimed by the employee. A list of income codes and exemption codes can be found on the Instruction Sheet for Form 1042-S.
Provide information about the employee’s income. Indicate the employee’s gross income, withholding allowances and net income. Provide the applicable tax rate if the employee is claiming benefits from a tax treaty, the amount of federal tax withheld, amount withheld by other agents and the total amount of withholding credit. Provide the total amount of funds paid to the recipient. Indicate the amount of state income tax withheld.
Provide contact information. Provide a tax identification number for the employee and the withholding agent. If the employee has a foreign tax identification code, provide it. Provide the name and address for the withholding agent and the employee.
File copy A with the IRS by mail. Send copy B, C and D of Form 1042-S to the employee and copy E to the withholding agent.