Form 1042-S with zero withholding: when reporting still applies

November 14, 2026 · 1 min read

A withholding agent may still have to file Form 1042-S when a reportable payment to a foreign recipient has no tax withheld because of a treaty or Internal Revenue Code exemption. Start with the type of payment and the reporting exceptions in the IRS instructions.

What to check

Document the recipient's status and the reason for the exemption. Use the applicable year's instructions to check the income code and the chapter 3 or chapter 4 fields. Review the associated Form 1042 requirement separately and keep a copy of the information return provided to the recipient.

Example

A U.S. payer makes an otherwise reportable payment for which a valid treaty claim reduces withholding to zero. The payer checks the Form 1042-S instructions and reports the payment using the applicable income and exemption fields.

Before you proceed

Classify the payment
Document the exemption
Check the reporting exceptions

Does zero withholding by itself mean that Form 1042-S can be skipped?

No. Review whether the payment is reportable and whether a specific reporting exception applies.