IRS Form 1042 Electronic Filing Requirement:
What You Need to Know
This Tax Return must be filed in addition to the
1042-S Information returns submitted using our 1042 S Express software.
Starting with tax year 2023 (returns due in 2024), the IRS introduced a mandate requiring many withholding agents to
electronically file Form 1042, the Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.
This change stems from final regulations issued in February 2023 under the Taxpayer First Act of 2019.
Who Must E-File Form 1042?
Under the new regulations, electronic filing is required for withholding agents who meet any of the following criteria:
- File 10 or more tax returns of any type during the calendar year
- Are financial institutions
- Are partnerships with 100 or more partners
IRS Enforcement Timeline
Although the e-filing requirement was enacted earlier, the IRS delayed enforcement for calendar year 2024. According to Notice 2024-26:
- U.S. withholding agents are exempt from e-filing Form 1042 for tax year 2023 (filed in 2024) and tax year 2024 (filed in 2025)
-
Foreign withholding agents are
exempt for both 2023 and 2024 reporting years
However, this exemption is temporary. The IRS has made it clear that electronic filing will be mandatory going forward, and failure to comply may result in penalties.
Penalties for Non-Compliance
If you fail to file Form 1042 electronically when required, the IRS considers it a failure to file, subject to penalties under IRC Section 6651:
- Late filing penalty: 5% of the unpaid tax per month, up to 25%
- Late payment penalty: 0.5% of the unpaid tax per month, up to 25%
- Failure to use EFTPS for deposits: May result in a 10% penalty
Why Choose Our Software for Form 1042 Filing?
Our IRS-authorized e-file solution is designed to simplify compliance and reduce risk:
✅ Fully compliant with
IRS Modernized e-File (MeF) system
✅ User-friendly
interface for quick and accurate filing
✅ Secure and
reliable data handling
✅ Expert
support to guide you through every step
Avoid costly penalties and stay ahead of IRS requirements. Start filing Form 1042 electronically with confidence.
