The US Internal Revenue Service (IRS) has reminded non-US citizens who may have taxable income, such as international students and scholars who may be working or receiving scholarship funds, that they may have special requirements to file a US tax return, and that this needs to be done accurately.
The tax authority pointed out that non-resident aliens such as foreign students, teachers or trainees temporarily in the US on F, J, M or Q visas are considered engaged in a trade or business, and therefore should be filing a tax return.
Most individuals in F-1, J-1, M-1, Q-1 and Q-2 non-immigrant status are eligible to apply for a social security number if they working in the US, or if they are not eligible can request an individual taxpayer identification number from the IRS.
Non-US citizens who hold a taxable scholarship or fellowship are required to file a form 1040-NR or 1040NR-EZ. They must attach one copy (generally copy B) for each form 1042-S received to their tax returns.
Non-US citizens should review the form 1042-S to ensure it accurately reflects their name and income. If the form does not contain accurate information, they must contact the withholding agent for an amended form.
Generally, non-US citizens who have taxable income also may have withholding of taxes by the source of their income. Withholding agents are required to complete form 1042-S, foreign person’s US source income subject to withholding.
Withholding agents must provide five copies of the form 1042-S, with one going to IRS, three to the recipient of the income and one retained by the agent. All information, including the name of the taxpayer, must match exactly on all copies of form 1042-S and any substitutes which are produced.
The IRS is also reminding withholding agents — such as payroll professionals or universities — that accurately filed forms 1042-S help speed any refunds due to their non-US citizen taxpayers. Errors on forms or returns could result in some refunds being delayed.
A common error is to have a form 1042-S listing two or more recipients in box 13a. The 2016 instructions have been updated to clarify that in the case of joint owners, form 1042-S can only list one of the owners in box 13a