Nonresident Alien Payees: Using Forms 1042-S and W-8

Author: Miles Hutchinson

CPE Credit:  3 hours for CPAs
3 hours Federal Tax Related for EAs and OTRPs
3 hours Federal Tax Law for CTEC

How do you know whether you can accept a W-9 from someone or you must request a W-8 instead? What if you send them a 1099 when you should have sent them a 1042-S. How will you deal with the IRS demand for the backup withholding you failed to deduct from the Nonresident Alien’s (NRA’s) payments? The IRS is working hard to reduce the delinquent tax burden. They know we are becoming relatively compliant with our 1099 reporting, but they also know we are far less sure of ourselves when it comes to identifying and performing backup withholding on our NRA’s. Collecting the tax due from NRAs working in the U.S. is a Tier 1 audit issue. This tax burden is minimized when companies making payments to NRAs for dependent and independent personal services properly withhold on these payments.

Publication Date: November 2016

Designed For
CFOs, Controllers, Compliance Managers, Accounting Managers, Accounts Payable Managers, as well as any staff and professional advisors that deal with Forms W-8 and 1042-S.

Topics Covered

  • Best tools available to identify your Nonresident Alien payees
  • Bring your company into compliance
  • Develop a solid plan to move your company toward near absolute regulatory compliance
  • Efficiency improvements
  • Standardized processes
  • Adequate documentation to ensure your NRA's are properly handled according to IRS and tax treaty regulations
  • Obtain the treaties and confirm exemption claims made by your NRA's with the IRS

Learning Objectives

  • Differentiate whether Nonresident Aliens are working for you
  • Identify the five forms W-8 including the new W-8BEN-E just released in Q1-2014
  • Recognize the drafts of revised forms W-8 soon to be released
  • Identify how to determine which W-8 to provide to the NRA
  • Discover how a NRA individual must support their claim of exemption from withholding
  • Recognize the best way to handle questions form NRAs who do not understand your requests or the forms
  • Examine a tax treaty and learn how to use it to confirm a claim of exemption from or reduced rate of backup withholding
  • Describe how to make your backup withholding deposits timely and keep the IRS from confusing them with your payroll tax withholding deposits
  • Recognize the 1042-S and related forms for filing and reporting backup withholding on the Annual Withholding Tax Return
  • Identify how to avoid the penalties for under-withholding and failure to report your NRA's
  • Differentiate when to clients are exempt from the substantial presence test (SPT)
  • Recognize the most frequently asked questions about Form W-8 and Form 8233
  • Describe the steps to take if you sent a nonresident alien a Form 1099 without proper backup
  • Identify the penalty for filing Form 1042-S with missing information
  • Recognize when to file exemptions and the proper form to use


Instructional Method

NASBA Field of Study
Taxes (3 hours)

Program Prerequisites

Advance Preparation

Registration Options
Regular Fee $66.00

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