I Received a 1042-S. What Do I Do Next?

Receiving a Form 1042-S can be confusing, especially if you’re unfamiliar with U.S. tax rules for foreign individuals. This form reports income subject to withholding, such as scholarships, investment earnings, or payments for services. Understanding what to do next ensures accurate tax reporting and helps avoid potential IRS issues.

Before taking any action, determine your tax residency status, review the amounts reported, and assess whether you need to file a U.S. tax return.

Checking Nonresident vs. Resident Status

Your tax residency status determines how your income is taxed and whether you must file a U.S. tax return. The IRS applies two tests: the Green Card Test and the Substantial Presence Test. If you were a lawful permanent resident at any point during the tax year, you are considered a resident for tax purposes. Otherwise, the Substantial Presence Test applies.

This test requires at least 31 days of physical presence in the U.S. during the current year and a total of 183 weighted days over the past three years. The calculation includes all days in the current year, one-third of the days from the previous year, and one-sixth from two years prior. For example, if you were in the U.S. for 120 days in 2024, 180 days in 2023, and 150 days in 2022, your total would be:

120 + (180 ÷ 3) + (150 ÷ 6) = 195 days

Since this exceeds 183 days, you would be considered a resident for tax purposes.

Certain visa holders, such as students, teachers, and trainees on F, J, M, or Q visas, may be able to exclude days of presence under the “exempt individual” rule. However, this does not mean they are exempt from taxes. If you qualify, you must file Form 8843 to document your status. Additionally, tax treaties between the U.S. and other countries may override residency determinations, allowing some individuals to be treated as nonresidents even if they meet the Substantial Presence Test.

Reviewing Withheld Amounts

Check that the correct tax was deducted on your Form 1042-S. The form includes income codes specifying the type of payment received, such as dividends, royalties, or compensation for services. Each category has different withholding rates, typically ranging from 0% to 30%, depending on U.S. tax laws and applicable tax treaties.

For example, dividends paid to a nonresident from a U.S. corporation are generally withheld at 30%, unless a tax treaty reduces this rate. The withholding agent—such as an employer, financial institution, or scholarship provider—must apply the correct rate. Errors can occur if the wrong income code is used or if treaty benefits were not applied correctly.

Box 7 shows the total tax withheld, while Box 10 reports any adjustments. If the amounts seem incorrect, compare them with your pay stubs, bank statements, or other financial records. If you find an error, contact the withholding agent for a corrected form before filing your tax return.

Filing Requirements for the Form

Not everyone who receives Form 1042-S must file a U.S. tax return. Filing depends on the type of income, whether tax was withheld correctly, and if you are seeking a refund.

Nonresident aliens typically file Form 1040-NR if they earned taxable U.S. income not fully covered by withholding. Even if your income is exempt under a tax treaty, filing may be necessary to formally claim the exemption and prevent future withholding issues.

If you earned wages subject to withholding, the filing deadline is April 15, 2025. If no wages were earned, the deadline extends to June 17, 2025. Late filings can result in penalties, especially if additional tax is owed. Interest accrues on unpaid balances from the original deadline, and failure-to-file penalties can reach 5% of the unpaid tax per month, up to 25%. If you are due a refund, you generally have three years to claim it.

Attach a copy of Form 1042-S and any other relevant tax documents. If claiming a tax treaty benefit, you may need to file Form 8833. Errors or missing documentation can delay processing and may trigger IRS scrutiny. If you have multiple sources of U.S. income or foreign tax credits, consulting a tax professional may be beneficial.

Handling Refunds or Balances Due

After reviewing Form 1042-S and preparing your tax return, determine whether you are owed a refund or must pay additional tax. If the amount withheld exceeds your actual tax liability, you can reclaim the excess by filing Form 1040-NR.

Refunds are typically issued via direct deposit for those with a U.S. bank account. If you do not have one, you may receive a check or, in some cases, an international wire transfer. Electronically filed returns with direct deposit result in faster refunds than paper filings.

If you owe additional tax, payment must be made by the filing deadline to avoid interest and penalties. The IRS offers several payment options, including the Electronic Federal Tax Payment System (EFTPS), direct debit, and credit card payments through approved processors. International taxpayers without a U.S. bank account can use cross-border payment options like Wise or an international wire transfer through the IRS’s financial partners.

Late payments incur interest at the federal short-term rate plus 3%, compounded daily, along with failure-to-pay penalties of 0.5% per month, up to 25% of the unpaid amount.

Fixing Errors on the Form

Mistakes on Form 1042-S can lead to incorrect tax filings, delayed refunds, or IRS notices. Common errors include incorrect personal details, misclassified income codes, or inaccurate withholding amounts. Since the form is issued by a withholding agent, the IRS expects corrections to come from that entity rather than the taxpayer.

If you find an error, contact the withholding agent and request a corrected Form 1042-S. You may need to provide documentation, such as pay statements or tax treaty election forms, to support the correction. If the withholding agent refuses or is unresponsive, you can explain discrepancies on your tax return by attaching a statement detailing the issue. However, this may increase the likelihood of an IRS review.

If you have already filed an incorrect return, you may need to submit an amended return using Form 1040-X (for residents) or an updated Form 1040-NR (for nonresidents).

Responding to IRS Notices

After filing a tax return that includes Form 1042-S, the IRS may issue notices if there are discrepancies, missing information, or additional tax liabilities. These can range from simple requests for clarification to formal assessments of penalties or additional tax due.

If the IRS questions the withholding amounts reported or requests additional documentation, provide copies of Form 1042-S, supporting financial records, and any relevant tax treaty claims. If the IRS asserts that additional tax is owed, review the notice carefully and compare it with your filed return before making a payment or disputing the claim.

If an adjustment is incorrect, you can file a formal response with supporting evidence or request an appeal. Delayed refunds due to IRS reviews may require follow-up. In some cases, contacting the IRS directly or seeking assistance from a tax professional can help resolve the issue faster.