How to File Form 1042 Electronically
Learn the procedural requirements for electronically filing Form 1042, from obtaining credentials to successfully submitting your annual return.
Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, is used by withholding agents to report tax withheld on certain income of foreign persons, such as interest, dividends, and royalties. These agents, which can be individuals or businesses, must file this return with the Internal Revenue Service (IRS) to account for the amounts withheld and paid.
Mandatory Electronic Filing Requirements
The requirement to file Form 1042 electronically is based on the total number of all information returns a withholding agent files during a calendar year, not just the quantity of Form 1042s. IRS regulations mandate electronic filing for anyone who files 10 or more information returns in aggregate. This threshold affects a broad range of filers.
To determine if you must e-file, you combine the counts of various information returns, including Form 1042-S, Form W-2, and the Form 1099 series. For example, if a business files seven Form W-2s and three Form 1042-S returns, the total of 10 returns means they must electronically file all of them, including Form 1042. This requirement is applied per withholding agent, not per tax preparer. Failing to file electronically when required can result in penalties based on how late the return is submitted.
Preparing for Electronic Submission
Before electronically filing Form 1042, a withholding agent must obtain a Transmitter Control Code (TCC). A TCC is a five-character alphanumeric code from the IRS that identifies the electronic filer and is required to transmit files. A separate TCC is needed for filing Form 1042-S, which is often filed with Form 1042.
The TCC must be requested via the online Information Returns (IR) Application for Transmitter Control Code. The application requires business details like its legal name, Employer Identification Number (EIN), and contact information for a responsible official. The process also includes identity verification through the IRS’s secure access systems.
The IRS advises allowing up to 45 days to process a TCC application and recommends applying by November 1st of the tax year. This ensures you are prepared for the filing season that begins the following January. Once the application is approved, the TCC is assigned, and the withholding agent can establish an account on the filing system.
The Electronic Filing Process
The IRS is modernizing its e-filing platforms, but as of 2025, Form 1042 must still be filed using the Filing Information Returns Electronically (FIRE) system. The FIRE system is designed for information returns and is separate from other IRS platforms like the newer Information Returns Intake System (IRIS). Filers should verify the correct filing platform on the IRS website for the relevant tax year.
To begin, log into the FIRE system using your TCC and account credentials. The process involves uploading a file containing the Form 1042 data. This file must be formatted according to specifications in IRS Publication 1220, which requires a specific type of ASCII text file. Many filers use specialized tax software to generate this file to ensure it meets the technical requirements.
After uploading the file, the system performs an initial check for formatting errors. You can then monitor the transmission status on the FIRE website. The system will update the file’s status to “Good, Released” for processing, “Bad” if errors need correction, or “Not Yet Processed.” If a file is marked as “Bad,” the system provides error details, and you must correct and resubmit the file as a “Replacement.”
Requesting an E-Filing Waiver
A withholding agent can request a waiver from the electronic filing requirement if it would cause an undue hardship. This request is made by filing Form 8508, Request for Waiver From Filing Information Returns Electronically. The IRS defines undue hardship primarily in terms of financial cost, and a filer must provide at least two cost estimates from third-party providers to support their claim.
Form 8508 must be submitted to the IRS at least 45 days before the return’s due date. The form requires the filer’s Taxpayer Identification Number (TIN), the types of returns covered, and the total number of returns expected. A separate Form 8508 must be filed for each TIN.
If the IRS approves the waiver, the filer may submit their information returns on paper for that tax year, including any corrected returns. If the waiver is denied, the filer must comply with the electronic filing mandate.