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Issue Number: 2023-08
Reminders for TY 2023 Form 1042 and 1042-S Filing Season
In preparation for the upcoming TY 2023 filing season, the IRS is sharing some reminders to consider when preparing and filing Form 1042 and 1042-S.
ELECTRONIC FILING (E-FILING)
Form 1042 is now available for electronic filing. Form 1042 electronic filing is required for TY 2023 for a withholding agent that is a financial institution, a partnership with more than 100 partners, and for withholding agents that are filing 10 or more information returns for the calendar year. For general information about electronic filing, see Publication 4163, Modernized e-file (MeF) Information for Authorized IRS e-file Providers for Business Returns and the instructions to Form 1042.
In addition, the e-filing requirements for Form 1042-S have changed for TY 2023, lowering the 250 return e-file threshold to 10 (calculated by aggregating all information returns). For additional information refer to E-file information returns for e-filing options. See also Publication 1187 and Filing Information Returns Electronically (FIRE).
RECENT DEVELOPMENTS
Section 1446(f) withholding: Make note of withholding and reporting requirements for the transfer of a publicly traded partnership interest under section 1446(f) that are in effect for TY 2023. See instructions to Form 1042 and 1042-S.
Termination of U.S. – Hungary Income Tax Treaty: The termination of the Convention Between the Government of the United States of America and the Government of the Hungarian People's Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income became effective on January 8, 2023. The Convention will cease to have effect with respect to taxes withheld at the source for income paid or credited beginning on January 1, 2024, and may have U.S. tax reporting and withholding implications. See United States’ Notification of Termination of 1979 Tax Convention with Hungary | U.S. Department of the Treasury.
Additional guidance at:
About Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
About Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding
Valid XML Schemas and Business Rules for 1042 Modernized e-File (MeF)
Pub 1187, Specifications for Electronic Filing of Form 1042-S
Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
Publication 966, Electronic Choices to Pay All Your Federal Tax
Publication 4163, Modernized e-File Information for Authorized IRS e-File Providers for Business Returns
Publication 4164, Modernized e-File (MeF) Guide for Software Developers and Transmitters
Publication 5446, MeF Submission Composition Guide
Webinar Form 1042* and Webinar Form 1042-S*
*Please refer to the latest version of the instructions to Forms 1042 and 1042-S for updates that occurred after the date webinars were recorded.
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