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Beyond Form 1042 Compliance: International Withholding Requirements

Ensure you are in compliance with the filing deadlines and withholding tax deposit requirements related to Form 1042-S.

Most organizations have procedures in place to correctly and efficiently report certain payments to U.S. persons on Form 1099. However, far fewer organizations are as familiar with the process of reporting certain payments to foreign persons on Form 1042-S. The complexity involved in reporting payments to foreign persons is far greater. While a U.S. person would provide the same W-9 regardless of entity or payment type, a foreign person could provide one of several W-8s (e.g., W-8BEN, W-8BEN-E, W-8ECI) or even a Form 8233. In addition, the type of payments reportable may depend upon sourcing (foreign or U.S.), and the determination to withhold may depend upon an income tax treaty. Lack of adequate documentation and analysis can result in the payer of income being liable for the 30% withholding tax in addition to penalties and interest. This topic will help the persons responsible for payments to foreign persons navigate the myriad of W-8s available for documenting a payee as a foreign person. This material will help identify the type of payments reportable on Form 1042, including a broad overview of the sourcing rules which determine if a payment is U.S. or foreign source. The material will also provide guidance on determining if the payee should withhold on the payment and, if so, what is the proper withholding rate. This includes the role of income tax treaties. Finally, the information will discuss filing deadlines related to Form 1042-S, withholding tax deposit requirements, and any penalties and interest related to lack of compliance.

Runtime: 98 minutes
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Over 34 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

Imposition of Withholding on FDAP Income

  • 881 Discussion
  • Brief Discussion of 882 ECI and Differences From FDAP
  • 1441 and 1442 Discussion
  • Status of Income Recipient (Resident vs. Nonresident; Individual vs. Entity, Substantial Presence Test)

Sourcing of FDAP Income

  • Interest
  • Dividends
  • Royalties
  • Compensation for Services
  • Other Income and Payments

Treaties

  • Requirements to Qualify and Residence
  • Beneficial Rates on FDAP Income
  • LOB Provisions

Special Rules for Partnership Withholding

  • General Withholding of FDAP Income
  • Lag Method Reporting Requirement (Distributive Share of FDAP Withholding When K-1 Provided vs. Due Date)
  • Withholding of ECI From Foreign Partners of Domestic Partnerships
  • Foreign Partnerships - Withholding Agent/Withholding Statement Issues
  • Forms 8804, 8805, and 8813

Forms (Generally)

  • 1042
  • 1042-S
  • W-8 Forms
  • E-File Requirements

Penalties

  • Failure to File
  • Late Filing
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Why Lorman?

Over 34 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Course

This course was last revised on April 29, 2021.

Call 1-866-352-9540 for further credit information.

  • AIPB 1.5
     
  • This program is acceptable for 1.5 CPEC(s) towards the CB designation through the American Institute of Professional Bookkeepers (AIPB).
     
  • ISM 1.5
     
  • Participants who successfully complete this program will receive 1.5 hours of continuing education. They may be applied toward ISM CPSM, CPSD or C.P.M. recertification. ISM's consent to approve hours for this educational event is not an endorsement of this program or its content by ISM.
     

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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  • Arizona CLE 1.5
     
  • CA MCLE 1.5
     
  • CT CLE 1.5
     
  • HI CLE 1.5
     
  • ME CLE 1.5
     
  • NJ CLE 2.0
     
  • VT CLE 1.5
     
  • WV MCLE 2.0
     
The CLE Code is ONLY a requirement when applying for CLE Credit in California (for participatory credit), Kansas, New Jersey or New York. Other states do not need to supply the CLE Code to apply for CLE credit.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 34 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Michael Campbell, CPA

Michael Campbell, CPA

Crowe LLP

  • Senior Manager at Crowe LLP
  • U.S. international tax and tax technology specialist
  • Head of Crowe Global Tax Services Technology Pillar
  • Implemented electronic filing system for 1042-S forms
  • Worked in Fortune 500 tax department
  • Experience working with clients in a variety of industries
  • Can be contacted at 404-442-1674 or [email protected]
Robert L. Dykema

Robert L. Dykema

Crowe LLP

  • Senior Manager at Crowe LLP
  • A global tax specialist
  • Experience of ten years
  • Work in a variety of industries including the M&D and PEG space
  • Experience in both U.S. inbound and outbound taxation
  • Extensive expertise in Form 1042-S compliance, PFICs, & FTC
  • Experience in the new GILTI, FDII and BEAT tax regimes
  • Assisted a variety of business with A/P processing and Form 1042-S reporting
  • B.B.A. degree, Grand Valley State University
  • Can be contacted at 616-242-6193 or [email protected]
Brandon Harrell

Brandon Harrell

Crowe LLP

  • Senior Associate at Crowe LLP
  • An international tax specialist
  • Experience in both U.S. inbound and outbound taxation and associated tax planning
  • Experience with GILTI, FDII and BEAT tax regimes
  • Experience with U.S. international reporting, including Forms 5471, 1118, 8891, 8992, and 8993
  • Licensed member of the Florida Bar
  • College of Law Graduate, Florida State University
  • Can be contacted at 404-495-7068 or [email protected]
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Product ID: 408367
Published 2021
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