The IRS today issued a release as a reminder to “withholding agents”—i.e., universities—that accurately filed Forms 1042-S help speed any refunds due to their non-U.S. citizen taxpayers. Errors on forms or returns could result in some refunds being delayed.
As part of today’s release (IR-2017-43), the IRS also reminded non-U.S. citizens who may have taxable income—international students and scholars who may be working or receiving scholarship funds—that they may have special requirements to file a U.S. tax return.
Universities acting as “withholding agents” are required to complete Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, and then provide five copies of the Form 1042-S. Copy A goes to the IRS. Copies B, C and D go to the recipient of the income. Copy E is to be retained by the withholding agent. All information—including the name of the taxpayer—must match exactly on all copies of Form 1042-S. If a university creates a substitute Form 1042-S, all five copies must be in the same physical format. The IRS reported that a common error is to have a Form 1042-S listing two or more recipients in box 13a. The 2016 instructions to Form 1042-S have been updated to clarify that in the case of joint owners, Form 1042-S can only list one of the owners in box 13a.
For more information, contact a tax professional with KPMG’s Washington National Tax practice:
Greg Goller | +1 703 286 8391 | firstname.lastname@example.org
Alexandra Mitchell | +1 202 533 6078 | email@example.com
Randall Thomas | +1 202 533 3786 | firstname.lastname@example.org
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