Foreign Person’s U.S. Source Income Subject to Withholding
http://www.irs.gov/pub/irs-pdf/f1042s.pdf
Type
Form
Jurisdiction
U.S.
Sponsor/Regulator
U.S. Internal Revenue Service
Description
Form 1042-S is used to report the following: the tax withheld on certain income of foreign persons, including nonresident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trust; the 2% excise tax due on specified foreign procurement payments. This usually includes investment income or capital distributions.
Key Facts
In most cases, a foreign person is subject to U.S. tax its U.S. source income. Most types of U.S. source income received by a foreign
person are subject to U.S. tax of 30 percent. A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person's country of residence and the United States. The tax is generally withheld (NRA withholding) from the payment made to the foreign person.
Who it affects
Most foreign persons earning income sourced in the U.S.
Additional Information
Form 1042-S
Information Reporting for Form 1042-S
Instructions for Form 1042-S
Withholding of Tax on Nonresident Aliens and Foreign Entities (Newsletter)