Reminders

Electronic filing. Beginning for tax year 2023 (Forms 1042 filed in 2024), electronic filing requirements apply to Form 1042. For general information about electronic filing, see Pub. 4163, Modernized e-File (MeF) Information for Authorized IRS e-File Providers for Business Returns . Also see Where and When To File , later, for more information on the electronic filing requirements for Form 1042.

Reliance on proposed regulations reducing burden under FATCA and chapter 3. On December 18, 2018, the IRS and the Department of the Treasury issued proposed regulations (83 FR 64757) to reduce the burden on taxpayers of certain requirements under chapters 3 and 4 of the Internal Revenue Code. The proposed regulations provide that, under section 7805(b)(1)(C), taxpayers may generally rely on the proposed regulations until final regulations are issued. Specifically, for purposes of these instructions, a withholding agent may rely on the following provisions of these proposed regulations in connection with completing Form 1042.

• Withholding and reporting in a subsequent year. 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 for the prior year may designate the deposit of the withholding as attributable to the preceding year and report the associated amounts on Forms 1042 and 1042-S for the preceding year. See Foreign partners of U.S. partnerships and foreign beneficiaries of U.S. trusts,

later.

• Adjustments to overwithholding under the reimbursement and set-off procedures. A withholding agent may make adjustments to overwithholding using either the reimbursement or set-off procedure until the extended due date for filing Form 1042-S (unless the Form 1042-S has already been filed or furnished). Additionally, a withholding agent may use the extended due date for filing a Form 1042 to claim a credit for any adjustments made to overwithholding.

Centralized partnership audit regime. Section 1101 of the Bipartisan Budget Act (BBA) of 2015 repealed the TEFRA partnership procedures and the electing large partnership (ELP) provisions and replaced them with a new centralized partnership audit regime effective for partnership tax years beginning on or after January 1, 2018. The new regime provides for determination,

Instructions for Form 1042 (2025) Catalog Number 54843T Nov 10, 2025 Department of the Treasury Internal Revenue Service www.irs.gov

assessment, and collection of underpayments at the partnership level unless certain elections are made by the partnership. Under these rules, a partnership (or a pass-through partner) may be required to withhold under chapter 3 or 4 when there has been an adjustment under the centralized partnership audit regime to an item of income or gain allocable to a foreign person (or any other person subject to withholding). If the adjustment is to an amount subject to withholding that is reportable on Form 1042, the partnership (or pass-through partner) should report the withholding on Form 1042 for the year in which it pays the tax required to be withheld. See section 6241(9).

Section 871(m) transition. On September 12, 2022, Notice 2022-37, 2022-37 I.R.B. 234, available at IRS.gov/irb/2022-37_IRB#NOT-2022-37, was published announcing the Department of the Treasury and the IRS intention to amend the section 871(m) regulations to further delay the effective/applicability date of certain rules in those final regulations and certain requirements of a qualified derivatives dealer (QDD), generally through 2024. Notice 2024-44, 2024-25 I.R.B. 1737, available at IRS.gov/irb/2024-25_IRB#NOT-2024-44, extends the transition relief in Notice 2022-37 for an additional 2 years.