Filing updates for Form 1042 returns
What you need to know now for
tax reporting year 2023
How will new Form 1042 e-Filing requirements impact your business? What can you do now to ensure compliance? How can you simplify the process?
There are several key things to keep in mind for electronically submitting returns in the upcoming filing season (and beyond). As one of only a small number of approved providers, Sovos can answer your questions and help you easily transition to e-Filing.
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What is Form 1042?
Form 1042 (different from Form 1042-S) is an “Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.” The form is used to report tax withheld on certain income of foreign persons. Unlike Form 1042-S, this form only needs to be submitted to the IRS, not to payees. Form 1042 is required to be reported anytime a 1042-S form is issued, regardless of if taxes were withheld.
Historically, the IRS did not allow electronic filings of Form 1042. However, starting with tax year 2023 reporting, the IRS now requires financial institutions to file Form 1042 electronically through the IRS’ Modernized e-File (MeF) system.
Additionally, when a withholding agent files at least 10 information returns for the 2023 calendar year, they will also need to file Form 1042.
Pay attention to Form 1042 changes now
What exposure will your organization have if you continue to file Form 1042 via paper? We break down the importance of understanding that the IRS made changes to the reporting requirements for Form 1042 by no longer accepting paper filings starting with tax year 2023 filings.
Learn more about why Form 1042 changes are a big deal.
Evaluating your provider’s electronic 1042 filing readiness
Businesses must ensure that they are working with a provider that is prepared to handle the IRS updating the filing requirements for Form 1042 to be electronic. There are several things to keep top of mind when evaluating your provider’s electronic 1042 filing readiness.
Learn more about ensuring your provider is approved for MeF.