Deadline for submitting form 1042 ends in March

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Does your company in the USA do business with foreigners? Stay tuned! Any individual or legal resident of the United States who makes payments to foreign individuals or entities is subject to taxation exclusively at the source. To keep up with the American tax authorities, it is necessary to fill out Form 1042 and submit it to the Internal Revenue Service (IRS).

The paying source, as the one who makes the payment is called, needs to report to the United States Treasury payments such as wages, dividends, interest, pension, alimony,  royalties and commissions. For each type of payment there is a specific form to fill out.

Companies in the United States that hire foreign service providers should be aware of the deadline for submitting Form 1042.

The deadline for fulfilling the obligation ends two and a half months after the end of the fiscal year — which means that usually that date corresponds to March 15 of each year. If it falls on a Saturday, Sunday, or official US holiday, the next business day becomes the deadline.

It is worth remembering that this deadline can be extended by up to six months, by filling out and submitting form 7004.

The rate applied on payments made by withholding agents — those that are subject to withholding income tax — is 30%. Even individuals and companies exempt from withholding are required to turn over the form to the IRS.

You can count on us to complete and submit Form 1042 form. Contact us at tax@drummondadvisors.com and talk to one of our consultants!