The penalty for not filing Form 1042 when due (including extensions) is 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax.

Failing to file complete and correct 1042-S forms for each foreign person your company pays could result in a penalty, unless you are able to prove that the failure was due to reasonable cause and not willful neglect. In 2021, the penalty for filing the form less than 30 days late is around $50 per form.

Use Form 1042-S to report: Income and amounts withheld as described in the Instructions for Form 1042-S. Specified Federal procurement payments paid to foreign persons that are subject to withholding under section 5000C. Distributions of effectively connected income by a publicly traded partnership or nominee.

If you received a taxable scholarship, fellowship, or grant, you will be receiving a 1042-S with code 16 in box 1. If your residency for tax purposes is a country that has a treaty with the U.S. to exclude this type of income, it will be reported on this form and not taxed on your federal tax return.

Form 1042-S is generated through the GLACIER online tax reporting system and is distributed to all eligible recipients on or before March 15 of each year following the year of payment. Forms issued to individuals are distributed directly through GLACIER, unless the individual has opted to receive their form by mail.

Failure to file or late or incorrect filing of Form 1042-S with IRS. A penalty may be imposed for failure to file each correct and complete Form 1042-S when due (including extensions), unless you can show that the failure was due to reasonable cause and not willful neglect.

The statute of limitations only allows you to file a refund claim within three (3) years of the issuance date of the Form 1042-S. After that, you can no longer receive a refund of the over-withheld amounts.