The electronic filing requirement for Form 1042 was introduced with effect from calendar year 2025 (tax year 2024), however, IRS Notice 2024-26 extended this requirement until calendar year 2026 (tax year 2025) for non-US filers (e.g., almost all QIs).

Starting with tax year 2025 Form 1042 must be electronically filed with the IRS using the e-file platform.

In order to meet this requirement, QI Solutions has added electronic filing of Form 1042 to our reporting services starting with tax year 2025. Please contact us if you need any assistance with this electronic filing requirement

IRS publishes revised version of Form 1042-S

The IRS has published the 2025 version of Form 1042-S and instructions. The revisions include the following:

• New box 7d. A new checkbox has been added to indicate a Form 1042-S reporting a withholding rate pool is being amended to reflect a new Form 1042-S issued to a client that was originally included in the withholding rate pool;
• Two new Chapter 3 status codes have been added. Status code 40 for QDD partnership and status code 41 for US government entity or tax-exempt entity;
• Three new income codes have been added (these will be optional for use in tax year 2025 reporting). Income code 59 for consent fees, income code 60 for loan syndication fees and income code 61 for settlement payments; and
• Country Code Updates. “US” is now a valid country code entry in box 12f (withholding agent) or 13b (recipient).

We observe that the revision most likely to impact QIs is the introduction of box 7d, reporting an amendment of Form 1042-S issued to a withholding rate pool in light of the removal of a client who is provided with a recipient specific Form 1042-S.

Reminder – Form 1099 Reporting

As an ongoing reminder, Form 1099 reporting may be required in relation to US clients that received US source investment income in 2025. Note that the Form 1099 reporting requirement is deemed satisfied in case the account is a “reportable US account” for purposes of FATCA under a Model 1 or Model 2 IGA and the account holder is subject to FATCA reporting (either to the local tax authorities or directly to the IRS).

However, Form 1099 reporting is required if 1) the client’s account is not a “reportable US account” for FATCA purposes (e.g., exempt products under an IGA such as pension products) or 2) the income paid was subject to US withholding tax.

2026 Deadlines