Form 1042 & 1042-S

1. Introduction
2. The Big Picture: 1042-S Audits Expected to Remain Elevated! 00:01:07
3. W-8 Validation Issues to Watch! - W-8BEN 00:13:23
4. W-8 Validation Issues to Watch! - W-8BEN-E 00:23:43
5. W-8 Validation Issues to Watch! - W-8ECI 00:34:54
6. W-8 Validation Issues to Watch! - W-8IMY 00:37:37
7. The W-9 00:40:22
8. W-9/W-8 Data Collection and Validation For 1042/1042-S Filing 00:46:09
9. W-9/W-8 Data Collection and Validation - W-9 to W-8 00:48:38
10. Validation For 1042/1042-S Filing - Payments and Payees 00:53:34
11. Validation For 1042/1042-S Filing - 1042-S Treaty Benefit Processing 00:54:09
12. Who is My Payee - Non-U.S. Status Red Flags 00:54:42
13. Who is My Payee - U.S. or Non-U.S.? 00:57:18
14. Who is My Payee - Determining Payee Tax Status - Tests for Tax Residency 00:57:42
15. Who is My Payee - Determining Payee Tax Status -  Substantial Presence Test 01:03:25
16. Who is My Payee - Special 1042-S Reporting Entity Rules 01:04:23
17. Who is My 1042-S Payee –Dual Residents 01:05:00
18. 1042-S Reportable Income: Purchase Invoices 01:06:19
19. 1042-S Reportable Income: How Income is Taxed 01:07:17
20. 1042/1042-S Payment Sourcing 01:07:37
21. 1042/1042-S & Treaty Benefits 01:11:00
22. Wrap Up of General Pre-1042/1042-S Filing Validation Tips 01:13:23
23. 1042/1042-S Compliance  - Extensions 01:15:03
24. 1042/1042-S Compliance - Box issues 01:17:13
25. 1042/1042-S Compliance  - Complete the Form 01:25:41
26. 1042/1042-S Compliance  - Penalty Rates 01:26:17
27. Protect Yourself 01:35:30
28. Attendee Questions 01:36:34
29. Presentation Closing 01:40:01

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  Steven Mercatante

  Steven Mercatante is the principal and founder of TIR Consulting, LLC. He is a nationally recognized leader in tax reporting education and consulting on specialized compliance issues. He has conducted on-site consultation for corporate clients from across the world and led countless seminars and web [...]

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• Artificial Intelligence (AI) 00:06:47
• Audt 00:04:44, 00:45:50, 00:52:18
• Backup Withholding 00:17:10, 00:21:34
• Due Diligence 01:17:13, 01:28:05:
• EIN 00:55:23
• Exempt 00:43:18, 00:58:51
• Expatriate 00:58:22
• FATCA 00:41:16, 01:22:47
• Federal Insurance Contributions Act (FICA) 00:58:51
• FIRE - File Information Returns Electronically 01:18:04:
• Foreign Taxpayer Identification Number - FTIN 00:20:34, 00:36:23
• Form 1042 00:01:07, 00:05:30, 00:45:47, 00:50:42, 01:19:32
• Form 1042-S 00:01:07, 00:05:30, 00:11:52, 00:18:42, 00:45:48, 00:52:01, 01:18:20, 01:28:17
• Form 7004 01:26:07
• Form 8233 00:32:39, 00:40:11, 01:13:09
• Form 8809 01:26:11
• Form 945 00:52:06
• Form W-8 00:13:27, 00:25:23, 00:35:58, 00:54:25, 01:11:04
• Form W-9 00:13:56, 00:24:46, 00:40:22
• Green Card 00:57:43
• Green Card Test 00:57:42
• Independent Contractor 00:32:56, 00:45:11
• Information Returns Intake System (IRIS) 01:17:56
• IRC Section 1446(f) 00:39:42
• IRC Section 6109(a)(2) 00:49:06
• IRC Section 6724 00:51:44
• ITIN 00:55:24
• Nonresident Alien (NRA) 00:04:54, 00:14:38, 00:21:25, 00:25:08, 00:49:10, 00:59:03
• Publicly Traded Partnerships (PTP) 00:36:40
• Reasonable Cause 00:51:43
• Resident Alien 00:57:25, 01:03:29
• Safe Harbor 01:24:47
• Substantial Presence Test (SPT) 01:03:27
• Tariff 00:03:27
• Tax Gap 00:02:41
• TIN 00:20:36, 00:49:06, 00:55:34, 01:11:10, 01:27:02
• Transmitter Control Code (TCC) 01:18:07
• Vendor 00:15:50, 00:41:40, 01:14:02
• W-8BEN 00:14:13, 00:21:10
• W-8BEN-E 00:14:14, 00:23:54, 00:36:09
• W-8ECI 00:34:58
• W-8EXP 00:46:22
• W-8IMY 00:24:22, 00:37:40

Artificial Intelligence (AI): Artificial intelligence is intelligence demonstrated by machines, as opposed to the natural intelligence displayed by humans or animals.

Audit: A formal examination of an organization's or individual's accounts or financial situation

Backup Withholding: Backup withholding is the tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. (www.investopedia.com)

Due Diligence: Due diligence is a process or effort to collect and analyze information before making a decision or conducting a transaction so a party is not held legally liable for any loss or damage. The term applies to many situations but most notably to business transactions.

EIN: The Employer Identification Number, also known as the Federal Employer Identification Number or the Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service to business entities operating in the United States for the purposes of identification.

Exempt : Exempt employee is a term that refers to a category of employees set out in the Fair Labor Standards Act. They do not receive overtime pay, nor do they qualify for the minimum wage

Expatriate: An expatriate (often shortened to expat) is a person residing in a country other than their native country. ... However, the term 'expatriate' is also used for retirees and others who have chosen to live outside their native country. Historically, it has also referred to exiles.

FATCA: FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. (www.treasury.gov). FACTA (Fair and Accurate Credit Transactions Act) is an amendment to FCRA (Fair Credit Reporting Act ) that was added, primarily, to protect consumers from identity theft. The Act stipulates requirements for information privacy, accuracy and disposal and limits the ways consumer information can be shared.

FIRE - File Information Returns Electronically: The IRS FIRE system is the electronic network used to accept and process most types of filing forms. Technically, it stands for File Information Returns Electronically.

Federal Insurance Contributions Act (FICA): The Federal Insurance Contributions Act is a United States federal payroll contribution directed towards both employees and employers to fund Social Security and Medicare—federal programs that provide benefits for retirees, people with disabilities, and children of deceased workers.

Foreign Taxpayer Identification Number - FTIN: An FTIN is a taxpayer identification number issued by a country other than the United States. If aforeign person does not provide its FTIN, it must provide the withholding agent with an explanation ofwhy an FTIN has not been provided.

Form 1042: Form 1042, also "Annual Withholding Tax Return for U.S. Source Income of Foreign Persons", is used to report tax withheld on certain income of foreign persons.

Form 1042-S: Form 1042-S is used to report amounts paid to foreign persons (including persons presumed to be foreign) who are subject to income tax withholding. For an individual taxpayer, Form 1042-S is a document provided to you (and the IRS) by the payer of the income reported.

Form 7004: Use Form 7004 to request an automatic 6-month extension of time to file certain business income tax, information, and other returns.

Form 8233: IRS Form 8233 must be completed when a non U.S. citizen is claiming tax treaty exemption from income taxes for income received for services provided as an independent contractor.

Form 8809: Use Form 8809 to request an initial or additional extension of time to file only the forms shown on line 6 for the current tax year.

Form 945: IRS Form 945 is titled Annual Return of Withheld Federal Income Tax. Form 945 is used to report withheld federal income tax from nonpayroll payments, including distributions from qualified retirement plans.

Form W-8: Form W-8 is filled out by foreign entities (citizens and corporations) in order to claim exempt status from certain tax withholdings. The form is used to declare an entity's status as non-resident alien or foreign national who works outside of the United States.

Form W-9: Form W-9 (officially, the "Request for Taxpayer Identification Number and Certification") is used in the United States income tax system by a third party who must file an information return with the Internal Revenue Service (IRS). It requests the name, address, and taxpayer identification information of a taxpayer (in the form of a Social Security Number or Employer Identification Number). - Wikipedia (https://en.m.wikipedia.org/)

Green Card: A Green Card, also known as a Permanent Resident Card, is an identification card issued by USCIS (.gov) to foreign nationals who have been granted lawful permanent resident status in the United States. It serves as proof that the holder is authorized to live and work permanently in the U.S. While the physical card has an expiration date (usually 10 years), the underlying status as a lawful permanent resident does not automatically expire.

Green Card Test: You are a resident, for U.S. federal tax purposes, if you are a lawful permanent resident of the United States at any time during the calendar year. This is known as the "green card" test. You are a lawful permanent resident of the United States, at any time, if you have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Services (USCIS) issued you a Permanent Resident Card, Form I-551, also known as a "green card."

IRC Section 1446(f): Under IRC section 1446(f), if the foreign partner has gain on the sale or exchange of a partnership interest, the purchaser/transferee of the partnership interest must withhold 10% of the amount realized on that sale or exchange, unless the transaction qualifies for a full or partial exception

IRC Section 6109(a)(2): Requires that a payee provide a TIN to the payer when the payment will be reportable on an information return.

IRC Section 6724: I.R.C. § 6724(a) Reasonable Cause Waiver — No penalty shall be imposed under this part with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect.

ITIN : An Individual Taxpayer Identification Number is a United States tax processing number issued by the Internal Revenue Service. It is a nine-digit number that begins with the number 9, and the 4th and 5th digits, also known as second section, range from 70 to 88, 90 to 92 and 94 to 99.

Independent Contractor: An independent contractor is a person or entity contracted to perform work or provide services to another entity as a non-employee. As a result, independent contractors must pay their own Social Security and Medicare taxes. - Investopedia (https://www.investopedia.com/)

Information Returns Intake System (IRIS): The Information Returns Intake System (IRIS) Taxpayer Portal is a system that provides a no cost online. method for taxpayers to electronically file Form 1099 series. The Taxpayer Portal allows you to enter. data to create Forms 1099 by either keying in the information or uploading a .csv file.

Nonresident Alien (NRA): This income is taxed at a flat 30% rate, unless a tax treaty specifies a lower rate. Nonresident aliens must file and pay any tax due using Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents.

Publicly Traded Partnerships (PTP): A publicly traded partnership (PTP) is a business organization owned by two or more co-owners whose shares are regularly traded on an established securities market. A publicly traded partnership is a type of limited partnership managed by two or more general partners—including individuals, corporations, or other partnerships—and is capitalized by limited partners who provide capital but have no management role in the partnership.

Reasonable Cause : Reasonable cause is based on all the facts and circumstances in your situation. The IRS will consider any reason which establishes that you used all ordinary business care and prudence to meet your federal tax obligations but were nevertheless unable to do so.

Resident Alien : A resident alien is a foreign person who is a permanent resident of the country in which he or she resides but does not have citizenship. To fall under this classification in the United States, a person needs to either have a current green card or have had one in the previous calendar year.

Safe Harbor: A safe harbor is a provision of a statute or a regulation that specifies that certain conduct will be deemed not to violate a given rule. It is usually found in connection with a vaguer, overall standard. Under the safe harbor, a “rental real estate enterprise” is treated as a trade or business for purposes of Sec. 199A if at least 250 hours of services are performed each tax year with respect to the enterprise. ... The safe harbor requires that separate books and records be maintained for the rental real estate enterprise.

Substantial Presence Test (SPT) : The Substantial Presence Test (SPT) is a criterion used by the Internal Revenue Service (IRS) in the United States to determine whether an individual who is not a citizen or lawful permanent resident in the recent past qualifies as a "resident for tax purposes" or a "nonresident for tax purposes"; it is a form of physical presence test. The SPT should be used in conjunction with the Green Card Test (the criterion that the individual possessed a valid Green Card at any time of the year). An individual who satisfies either one or both of these tests is treated as a resident for tax purposes.

TIN: A Taxpayer Identification Number is an identifying number used for tax purposes in the United States and in other countries under the Common Reporting Standard. In the United States, it is also known as a Tax Identification Number or Federal Taxpayer Identification Number.

Tariff: Tariffs are taxes imposed by one country on goods imported from another country. Tariffs are trade barriers that raise prices, reduce available quantities of goods and services for US businesses and consumers, and create an economic burden on foreign exporters.

Tax Gap: The gross tax gap is the difference between true tax liability for a given tax year and the amount that is paid on time. It is comprised of the nonfiling gap, the underreporting gap, and the underpayment (or remittance) gap.

Transmitter Control Code (TCC): The Transmitter Control Code (TCC) is an identifier that the IRS uses to distinguish different electronic filing companies. It's necessary when you need to file for a correction. Getting a TCC depends on how you file your 1099 forms

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.

W-8BEN: Form W8-BEN, Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding, is used by a foreign person to establish both foreign status and beneficial ownership, and to claim income tax treaty benefits with respect to income other than compensation for personal services. Give Form W-8 BEN to the withholding agent or payer if you are a foreign person and you are the beneficial owner of an amount subject to withholding. Submit Form W-8 BEN when requested by the withholding agent or payer whether or not you are claiming a reduced rate of, or exemption from, withholding.

W-8BEN-E: W-8BEN-E is an important tax document which allows businesses operating outside of the U.S. to claim tax exemption on U.S.-sourced income. The official document title is Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities).

W-8ECI: Form W-8ECI is the Certificate of Foreign Person's Claim for Exemption From Withholding on Income Effectively Connected With the Conduct of a Trade or Business in the United States. You must give Form W-8 ECI to the withholding agent or payer if you are a foreign person and you are the beneficial owner of U.S. source income that is (or is deemed to be) effectively connected with the conduct of a trade or business within the United States.

W-8EXP: A foreign government must provide Form W-8EXP to establish eligibility for exemption from withholding for payments exempt from tax under section 892 or for purposes of establishing its status as an exempt beneficial owner.

W-8IMY: This form may serve to establish foreign status for purposes of sections 1441, 1442, and 1446. The W-8IMY is used by an intermediary, a withholding foreign partnership, a withholding foreign trust, or flow-through entity.