Ensure you are in compliance with the filing deadlines and withholding tax deposit requirements related to Form 1042S.Most organizations have procedures in place to correctly and efficiently report certain payments to U.S. persons on Form 1099. However, far fewer organizations are as familiar with the process of reporting certain payments to foreign persons on Form 1042S. The complexity involved in reporting payments to foreign persons is far greater. While a U.S. person would provide the same W9 regardless of entity or payment type, a foreign person could provide one of several W8s (e.g., W8BEN, W8BENE, W8ECI) or even a Form 8233. In addition, the type of payments reportable may depend upon sourcing (foreign or U.S.), and the determination to withhold may depend upon an income tax treaty. Lack of adequate documentation and analysis can result in the payer of income being liable for the 30 withholding tax in addition to penalties and interest. This topic will help the persons responsible for payments to foreign persons navigate the myriad of W8s available for documenting a payee as a foreign person. This material will help identify the type of payments reportable on Form 1042, including a broad overview of the sourcing rules which determine if a payment is U.S. or foreign source. The material will also provide guidance on determining if the payee should withhold on the payment and, if so, what is the proper withholding rate. This includes the role of income tax treaties. Finally, the information will discuss filing deadlines related to Form 1042S, withholding tax deposit requirements, and any penalties and interest related to lack of compliance.
Imposition of Withholding on FDAP Income 881 Discussion Brief Discussion of 882 ECI and Differences From FDAP 1441 and 1442 Discussion Status of Income Recipient (Resident vs. Nonresident; Individual vs. Entity, Substantial Presence Test) Sourcing of FDAP Income Interest Dividends Royalties Compensation for Services Other Income and Payments Treaties Requirements to Qualify and Residence Beneficial Rates on FDAP Income LOB Provisions Special Rules for Partnership Withholding General Withholding of FDAP Income Lag Method Reporting Requirement (Distributive Share of FDAP Withholding When K-1 Provided vs. Due Date) Withholding of ECI From Foreign Partners of Domestic Partnerships Foreign Partnerships Withholding Agent/Withholding Statement Issues Forms 8804, 8805, and 8813 Forms (Generally) 1042 1042-S W-8 Forms E-File Requirements Penalties Failure to File Late Filing
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