Definition
The IRS form a U.S. payer sends to a foreign person showing U.S.-source income paid and any U.S. tax withheld during the year.
What it means
Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, is filed by U.S. payers and withholding agents for each foreign person they paid certain U.S.-source income, such as royalties, interest, dividends or some service income. A copy goes to the recipient. It shows the type of income, the amount, the tax rate applied and the tax withheld, including any reduced treaty rate claimed on Form W-8BEN. Creators and other recipients abroad can use it to report the income in their own country and to support a claim for foreign tax credit there, if their country allows one. If too much U.S. tax was withheld, it is also the record used when filing a U.S. nonresident return to ask for a refund.
Example
A podcaster in Canada receives a Form 1042-S from a U.S. platform showing $1,200 of royalties and $180 of U.S. tax withheld at 15%.
Illustrative numbers only. Your situation will differ.
Related terms
Related on CentDaily
U.S. tax withholding calculator for creators outside the U.S.