Comply would like to share a few reminders as we head into the filing season for 2020 Forms 1042 & 1042-S. This list is not all-inclusive and should not be used as a final checklist.
- Request extensions now if there is any chance you will be late in filing or there could be a September 15 filing.
- Be sure your form is complete!
- Round all income to the nearest dollar amount.
- Enter a chapter indicator of “3 “or “4” in Box 3.
- Choose the most specific chapter 3 and 4 status codes that apply!
- Enter chapter 3 and 4 status codes regardless of the type of payment they make.
- Confirm that your status codes are up to date!
– Don’t use deleted Chapter 3 Status Codes: 01 (U.S. Withholding Agent – FI), 02 (U.S. Withholding Agent – Other), and 34 (U.S. Withholding Agent – Foreign Branch of FI).
– 2020 added Chapter 3 Status Codes: 36 (Foreign Government – Integral Part) and 37 (Foreign Government – Controlled Entity).
– 2020 updated Chapter 3 Status Codes: 19 was “Government or International Organization” now “International Organization.
- Reconcile by ordering IRS transcripts! Review the deposits of withholding tax you are reporting and reconcile those amounts with the deposit that the IRS has recorded on file.
– Include Form 1099 workpapers in your final reconciliation to make sure filing is complete between both your system information for both U.S. and non-U.S. persons.
- Enter “US” in box 12f (country code) if you are a withholding agent that is a U.S. person or a foreign branch of a U.S. person may.
- Don’t forget to enter a LOB code if you are withholding at a reduced rate of withholding based on a treaty claim by an entity.
- Include a Unique Form Identifier!
- Check the status of your FIRE system filing within 5 business days to verify the results of the transmission. This is the responsibility of the filer.
- Indicate the amendment number at the top of the form, below the title, and to the right of the Amended checkbox – if you are filing an amended form. Be sure this is exactly one digit and a number.
- Update policy and procedure manuals, training materials, and presentations to staff, based on what you learned and changed during this reporting season!
Be sure to review the common errors identified by the IRS on page 21 of the
2020 Instructions for Form 1042-S: https://www.irs.gov/pub/irs-pdf/i1042s_20.pdf
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