US tax for an owner abroad · A term for founders abroad
What are Forms 1042 and 1042-S?
The IRS forms a US payer files to report US-source income paid to foreign persons, such as dividends or royalties, and the tax withheld on it.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 54 of 105 in the glossary, filed under F.IRS: Publication 515, withholding on foreign persons
Forms 1042 and 1042-S, for a founder abroad.
When a US company pays dividends to a foreign shareholder, or a platform pays royalties to a foreign creator, the payer withholds tax and reports the payment and the tax on Form 1042-S, to the recipient and the IRS, with a Form 1042 summary, by 15 March.
The recipient uses the 1042-S to claim a credit at home or a refund from the IRS. A Delaware corporation paying a dividend to its founder abroad files them; a single-member LLC paying its owner a distribution doesn't, because that isn't a dividend.
Sources: IRS: Publication 515, withholding on foreign persons.
Read next · guide · 3 minHow a foreign-owned Delaware C-Corp is taxed: Form 1120, franchise tax and dividendsWhat founders ask next.
- Why did I receive a Form 1042-S?
- A US payer withheld, or reported, tax on US-source income paid to you, such as royalties or dividends. Keep it for your home country's return.
- Does my LLC file Form 1042-S when it pays me?
- Not for distributions from a single-member LLC, which isn't a separate taxpayer from you.
03 · See also
- US tax for an owner abroadWithholding taxTax a US payer deducts before paying a foreign person: 30% on US-source passive income, unless a treaty rate is claimed on a W-8.Read the term
- US tax for an owner abroadFDAP incomeFixed or periodic US-source income such as dividends, interest and royalties, withheld on at 30% or a treaty rate when paid to a foreign person.Read the term
- US tax for an owner abroadForm W-8BEN and W-8BEN-EThe IRS forms a foreign person or foreign company gives a US payer to certify foreign status and, where it applies, claim a treaty rate.Read the term
- US tax for an owner abroadDisregarded entityA single-member LLC the IRS ignores for income tax, treating its income as the owner's; it still files Form 5472 if the owner is foreign.Read the term
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