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Note. For rules that apply for WPs and

manufactured or produced in any country

(4)), report the tax liability related to the

WTs, see Rev. Proc. 2017-21.

which is not a party to an international

deemed distribution on line 59.

procurement agreement with the United

You should report on line 63c(2) the

Example. In 2017, USP, a U.S.

States, or the provision of services, if such

amounts you withheld in the following

partnership, has foreign partners that are

services are provided in any country which

calendar year in which the payment was

individuals and for which it has obtained

is not a party to an international

made. You should also report deposits of

valid documentation to establish their

procurement agreement with the United

amounts withheld in the year following the

foreign status. The withholding tax under

States.

calendar year in which the payment was

section 1441 relating to the distributive

made on line 65b.

shares of the foreign partners was $120.

Qualified intermediaries with no pri-

USP made no distributions in 2017. On

mary chapters 3 and 4 withholding re-

Line 61. Enter the number of Forms

the 2017 Form 1042, USP did not enter

sponsibility. If you are a QI that did not

1042-S filed on paper and electronically.

any amount as tax liability on lines 1

assume primary withholding responsibility,

If you are a financial institution or

through 60 because it did not distribute

under both chapters 3 and 4, enter the

you file 250 or more Forms

any amounts.

total amount of the tax liability of U.S.

1042-S, you must submit them

withholding agent(s) under both chapters

USP made a distribution on February

CAUTION

electronically.

3 and 4 on line 59. Report all other

10, 2018, that related to the 2017

amounts on the line that corresponds with

distributive shares of the foreign partners.

Total Gross Amounts Reported

the date the liability was incurred.

USP withheld $100 at the time of the

distribution. USP sent the 2017 Schedules

Lines 62a through 62c. Enter the

Note. Reporting on line 59 as described

K-1 (Form 1065) to its partners on April 2,

amounts reported on all Forms 1042-S for

above also applies to any other entity that

2018.

the calendar year (regardless of whether

reports on Form 1042 to the extent such

the form was filed electronically or on

On the 2018 Form 1042, USP entered

entity claims a credit on line 67 for

paper) and for all Forms 1000, Ownership

$100 on line 7. This is the tax liability for

amounts withheld by another withholding

Certificate.

the period (February 8 through 15) during

agent (whether under chapter 3 or 4).

which it made a distribution. USP entered

Be sure to reconcile amounts on

Adjustments to withholding. If you

$20 on line 16. This is the tax liability for

Form 1042 with amounts on

used procedures for adjusting

the period (April 1 through 7) during which

Forms 1042-S (including Forms

overwithholding or underwithholding, see

it furnished the Schedules K-1 (Form

CAUTION

1042-S filed electronically), to avoid

Adjustment for Overwithholding and

1065) to the partners.

unnecessary correspondence with the

Adjustment for Underwithholding, later, for

IRS.

Use Form 8804 to report

instructions on reporting on lines 1 through

withholding tax liability on the

TIP

60.

Line 62a. The amount on line 62a should

partnership's income effectively

Escrow procedure. A withholding agent

equal: The sum of all amounts shown on

connected with a U.S. trade or business.

that withheld tax during calendar year

Form 1042-S, box 2 that are payments of

2017 and that was not required to deposit

U.S. source FDAP income, less the sum of

Corporate distributions. Do not include

all amounts that are U.S. source substitute

on lines 1 through 60 any tax liability

with the IRS the amount of tax withheld

during calendar year 2017 pursuant to the

payments reported on line 62b.

caused by adjustments of underwithheld

escrow procedure under Regulations

tax on corporate distributions made in

Line 62b. The amount on:

section 1.1471-2(a)(5)(ii) or 1.1441-3(d)

calendar year 2017 if the following apply.

Line 62b(1) should equal the sum of all

should not report such amount as a liability

The distributing corporation made a

amounts shown on Form 1042-S, box 2

reasonable estimate of accumulated and

on lines 1 through 60 or lines 64a through

that are U.S. source substitute dividend

64d and should not report such amount as

current earnings and profits under

payments, and

withheld on lines 63a through 63d. An

Regulations section 1.1441-3(c)(2)(ii)(A)

The amount shown on line 62b(2)

amount held in escrow is required to be

or 1.1474-6(c)(2)(ii); and

should equal all amounts shown on Form

reported on the future calendar year return

The distributing corporation or

1042-S, box 2 that are U.S. source

for the year in which the withholding agent

intermediary immediately paid over the

substitute payments other than substitute

is required to deposit the amount of tax

underwithheld tax by March 15, 2018.

dividend payments.

with the IRS.

Instead, include these payments of

See Regulations section 1.1441-2(b)(4)

underwithheld tax on line 64a.

Withholding after the time of payment.

regarding substitute payments.

In limited cases, the regulations under

Excise tax on specified federal pro-

Line 62c. The amount on line 62c should

chapters 3 and 4 allow you to withhold

curement payments. Section 5000C

equal the sum of all amounts shown on

after the time that a payment has been

imposes a 2% tax on any foreign person

Forms 1042-S, box 2, and all amounts

made. In such a case, you should include

that receives a specified federal

shown as gross interest paid on Forms

the tax liability for the period in which you

procurement payment. Include on lines 1

1000.

actually withheld with respect to the

through 60 any withholding obligation

payment. If you withheld in the year

Line 62d. Enter gross amounts

under section 5000C with respect to

following the calendar year in which the

reportable on Forms 1000 and Forms

specified federal procurement payments.

payment was made, include the tax

1042-S if different from the total gross

Report the amount on the line that

liability relating to the payment on line 59

amounts actually reported on Forms 1000

corresponds with the date the deposit was

for the year you made the payment. For

and Forms 1042-S (as shown on line 62c).

due.

example, if a deemed distribution under

Total Tax Reported as Withheld

Specified federal procurement

section 305(c) is made on August 15,

payment. A specified federal

or Paid

2017, but you are not required to withhold

procurement payment means any

with respect to the deemed distribution

Lines 63a through 63e. Except as noted

payment made pursuant to a contract with

until a subsequent payment of interest is

directly below, enter for each line the

the United States Government entered

made on February 15, 2018 (see

amounts reported for all Forms 1042-S

into after January 1, 2011, for the

Proposed Regulations section 1.1441-2(d)

(regardless of whether the form was filed

provision of goods, if such goods are

Instructions for Form 1042 (2017)

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Instructions For Form 1042 - Annual Withholding Tax Return For U.s. Source Income Of Foreign Persons - 2017 Page 6

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