A 1042-S is a US tax withholding form issued to non-residents of the US who have reportable income. The amounts on the form are reported to the IRS by the US payor of that income.
Why have I received a 1042-S?
If you have received income of any type (there are dozens of categories), you will have received the form advising you of what gross amount you received in the US calendar year (January to December).
I had tax withheld - do I need to file a US 1040NR tax return?
It depends. If too much tax was withheld, you can file and reclaim any over payment of US tax withheld. This is obviously beneficial and required, if you owe tax in your home country on the same income. Most countries only allow a foreign tax credit of the US tax paid, for the actual amount owed, not what was held.
If however, the correct tax has been held, then you don't need to do anything. An example would be a reduced rate of tax under the US/UK tax treaty, which allows for 15% tax on dividends, instead of the flat non resident rate of 30%. So if the form has only 15%, you are fine and nothing needs to be filed with the IRS (nor would they expect it).
If however, no tax or too much tax was held, you can then file to declare and to pay any tax owed or file for a refund.
How can I ensure that the correct tax is withheld?
Ensuring the payor has a valid W-8BEN in place should do this. The W-8BEN is valid for 3 years and you need to ensure an up to date version is on file with the payor.
If you forgot to update it, you may then have excess tax withheld. In this instance, file a new W-8BEN immediately. The US payor may reverse the error or they may issue 2 x 1042-S forms to you the following year. One for the correct tax and one showing the 30% tax.
If that happens, you would need to weigh up the cost of filing, with claiming back the refund due to the error.
How can Just Breve help with obtaining a tax refund?
Just Breve is an Enrolled Agent and Certifying Acceptance Agent (CAA) for the IRS. We prepare tax refund claims all the time for clients who have excess tax taken from them. You will need to ensure you keep and then provide the Form 1042-S, without it, you cannot obtain the refund of tax. This is because, the IRS need to locate the tax in their suspense accounts and the reported figures are on the 1042-S.
As a certifying acceptance agent for ITIN applications, we also assist with obtaining a US tax number, as this is required before any refund is paid out to you.
You can make a claim for a refund of US tax immediately (after the tax year has closed) or up to a maximum of 3 years. Else the refund is lost. The last date to make a claim for a refund of the 2019 tax year, is April 2023 (or June 2023 with a 2 month extension).
I already have an ITIN but have not filed a tax return in more than 3 years. Do I have to renew my ITIN?
In short, yes you will need to renew the ITIN. The reason as above; the IRS will not issue the refund on an expired ITIN. Therefore we would advise renewing and filing the tax return at the same time. Just Breve is an ITIN expert and specialist. We will work to renew the ITIN for you, as we do regularly for many clients.
Contact Just Breve for more information:
Just Breve - is a US tax accounting firm, assisting non US persons with their US tax filing requirements. This includes applying for a new ITIN or renewing an existing ITIN. We are a certifying acceptance agent and have a contract with the IRS to help with Form W-7 ITIN applications.
T: 0208 1444632
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