Interesting Statistics on the Form 1042-S: Foreign Person’s US Source of Income
The 1042-S IRS Tax Form is used to document income paid to nonresident aliens. Over the years the IRS has released data and some interesting trends have arisen.
Each year approximately 2.0 million 1042-S forms are filed in the U.S by tax payers and in the 2011 calendar year close to 9 billion dollars was withheld from non-resident aliens.
Oddly enough, in the distribution of foreign residents that received 1042-S forms Canada took the lead. However the source of income was not for wages paid to common services but rather calculated interested paid out by US taxpayers—$ 12.4 Billion.
India, a current hub for business offshoring, was the 2nd runner-up for US 1042-S forms next to Canadian recipients. Although India was less likely than Canada to receive the form, India remains above in being most likely to preform services for US tax payers among all other countries.
The implications of this volume has for record keeping are important to recognize. It should be emphasized in your organization’s accounts payable procedure to collect a W-8 form from foreign vendors for future filings.
Source: IRS 2012 Data & The Accounts Payable Network