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IRS Form 1042 is the Annual Withholding Tax Return for U.S Source Income of Foreign Persons. It can be used when reporting the tax withheld under chapter 3 on certain income of foreign person which include nonresident aliens, foreign corporations, foreign trusts, foreign partnerships, foreign estates etc. Also, tax withheld under chapter 4on withholdable payments and tax withheld pursuant to section 5000C on specific federal procurement payments can be reported using this form. Further information can be sourced from the official IRS website.
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Do you want to fill out an IRS Form 1042 and do not know what to do? Then the following step by step guide will offer the needed assistance. Just follow it through.
Step 1: The first thing is to get IRS Form 1042.You can get it by downloading it from the official website of the internal revenue service. Also download the filing instructions to help you in the process. Once this is done, open it on Wondershare PDFelement and start filling out the form.
Step 2: Before filling the form, you are required to check the box at the top if it is an amended return. This is for people who have initially filled the form but are required to amend the form due to some reasons. If not leave it blank. Write the name of the withholding agent, the employer identification number, the address which must include the number, street, suite, city, town, state, province and zip code. Then check the box below it if you do not expect to file this form in future and enter the final income paid.
Step 3: Go to Section I- Record of Federal Tax Liability. You are required to enter the tax liability for period ending date. It is divided from January all through December with each month total in between for example, January total, February total, March total all through to December total. Enter the tax liabilities for each of them and sum the total as requested. Then on line 62, get the total gross amount reported on all forms 1042-S and 1000 and enter them for each line. If you want another person to discuss the return with the Internal Revenue Service, then fill the third party Designee part by writing the name, the phone number and personal identification number of the designee. Then sign of the form and date.
Step 4: Continue filling on line 63 by entering the total tax reported as withheld or paid by withholding agent on all forms. Line 63a to e will take care of tax withheld by withholding agents, reimbursement and tax payment by withholding agents. Then add lines 63a to d to get the total tax reported as withheld or paid and enter on line 63e.
Step 5: Complete the total net tax liability on line 64 and get the total by adding all from line 64a to 64d and enter the figure on line 64e. Continue from line 65 all through to line 71 and enter the appropriate amount in each of the column. However, on line 68, add the lines 65 through line 67 to get the total payment.
Step 6: Go to Section 2- Reconciliation of Payment For U.S Source FDAP income. You are expected to enter the appropriate amount from line 1 all through to line 6. But if total variance, subtract lines 3 from line 4 and if amount other than 0, then provide your explanation on line 6.
Step 7: Proceed to Section 3- Notional Principal Contract payments and other payments on derivative contracts that reference a U.S security. If nay payments were made by the withholding agent under notional principal contracts or other derivative contracts that reference a U.S security, then you will have to check the box and see further instructions.
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