Deposit — Instruction 1042 — Instructions for Form

You are required to use either the Electronic Federal Tax Payment System (EFTPS) or IRS Direct Pay, discussed later, to deposit the tax withheld and required to be shown on Form 1042 (regardless of whether withholding was applied under chapter 3 or 4 or with respect to a specified federal procurement payment).

Caution: To avoid a penalty, do not mail your deposits directly to the IRS.

The amount of tax you are required to withhold determines the frequency of your deposits. The following rules explain how often deposits must be made.

Note: If you are requesting an extension of time to file using Form 7004, follow these rules to see if you must make a deposit of any balance due or if you can pay it with Form 7004. See Form 7004 and its instructions for more information.

4 Instructions for Form 1042 (2025)

If at the end of any quarter-monthly period the total amount of undeposited taxes is $2,000 or more, you must deposit the taxes within 3 business days after the end of the quarter-monthly period. (A quarter-monthly period ends on the 7th, 15th, 22nd, and last day of the month.) A business day is any day other than a Saturday, Sunday, or legal holiday in the District of Columbia.
If at the end of any month the total amount of undeposited taxes is at least $200 but less than $2,000, you must deposit the taxes within 15 days after the end of the month. If you make a deposit of $2,000 or more during any month except December under rule 1, earlier, carry over any end-of-the-month balance of less than $2,000 to the next month. If you make a deposit of $2,000 or more during December, any end-of-December balance of less than $2,000 should be remitted with your Form 1042 by March 15 of the following calendar year.
If at the end of a calendar year the total amount of undeposited taxes is less than $200, you may either pay the taxes with your Form 1042 or deposit the entire amount by March 15 of the following year.

Electronic deposit requirement. You must make electronic deposits of all depository tax liabilities using EFTPS or IRS Direct Pay. If you fail to use EFTPS or IRS Direct Pay, you may be subject to a 10% penalty. To enroll in or get more information about EFTPS, call 800-555-4477 or go to EFTPS.gov . To contact EFTPS using Telecommunications Relay Services (TRS) for people who are deaf, hard of hearing, or have a speech disability, dial 711 and then provide the TRS assistant the EFTPS number above or 800-733-4829.

IRS Direct Pay is a free service that allows you to make tax payments online directly from your bank account to the IRS. For more information about IRS Direct Pay, go to IRS.gov/DirectPay .

Depositing on time. For deposits made by EFTPS to be on time, you must submit the deposit by 8 p.m. Eastern time the day before the date the deposit is due. If you use a third party to make deposits on your behalf, they may have different cutoff times.

Same-day payment option. EFTPS accepts same-day payments for business tax payments that meet the following criteria.

Payment is $1 million or less.
Payment is submitted prior to 3:00 p.m. Eastern time on a business day.

Business tax payments that do not meet the criteria above must be scheduled at least one calendar day before the tax due date by 8:00 p.m. Eastern time to reach the IRS on time. On the date you select, the funds will be moved to Treasury from your banking account, and your records will be updated at the IRS.

Same-day wire payment option. If you fail to initiate a deposit transaction on EFTPS by 8 p.m. Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Collection Service (FTCS). If you ever need the same-day wire

payment method, you will need to make arrangements with your financial institution ahead of time. Check with your financial institution regarding availability, deadlines, and costs. Your financial institution may charge you a fee for payments made this way. To learn more about the information you will need to provide to your financial institution to make a same-day wire payment, go to IRS.gov/SameDayWire to download the Same-Day Wire Taxpayer Worksheet.

Note: All payments should be made in U.S. dollars.

Escrow procedure. See the instructions for lines 1 through 60, later, if you are using the escrow procedure under Regulations section 1.1471-2(a)(5)(ii) or 1.1441-3(d) (and are not depositing the amount of tax withheld with the IRS during the year). Under Regulations section 1.1471-2(a)(5)(ii) or 1.1441-3(d), if a withholding agent is not able to determine the portion of a payment subject to withholding (for example, because it is unable to determine the source of the income at the time of the payment), a withholding agent can follow the escrow procedures by withholding 30% on the entire payment and depositing the amount withheld in an escrow account instead of depositing such amounts with the IRS. With respect to such payment, the withholding will be due the earlier of the date a determination is made with respect to the amount subject to withholding or 1 year from the date the amount is placed in escrow. To the extent that withholding is not required, the escrowed amount must be repaid to the payee.

Note: Generally, an amount placed in escrow during 1 calendar year will be reported on a Form 1042 the following year.

Deposits made during subsequent year. If you are making a deposit of tax withheld in the year following the calendar year in which the related payment was made (to the extent permitted under an applicable regulation section in chapter 3 or 4), you must designate the deposit at the time that it is made as attributable to the calendar year in which the payment was made. In such a case, you should report the tax paid on line 65b.

For example, if a REIT declares a dividend to shareholders of record in October, November, or December of 2025, but pays the dividend in January of 2026, under section 857(b)(9), the dividend is treated as having been paid by the REIT and received by each shareholder on December 31, 2025. If the REIT chooses to withhold when it pays the dividend in January of 2026 (pursuant to the procedures for adjusting underwithholding in Regulations section 1.1461-2(b) or 1.1474-2(b)), it should report the liability with respect to the distribution on its 2025 Form 1042 and should designate the deposit of such tax as being made for 2025 (if the deposit is made by March 16, 2026).

Additionally, under proposed regulations (83 FR 64757), a partnership or trust that is permitted to withhold in a subsequent year with respect to a foreign partner’s or beneficiary’s share of income may designate the deposits of the withholding as attributable to the preceding calendar year. See Foreign partners of U.S. partnerships and foreign beneficiaries of U.S. trusts , later.

Instructions for Form 1042 (2025) 5