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Tax-women
Level 2

what to do with 1042 s?

what to do with 1042 s? do i need to entered in profile?

5 Comments 5
janisbossenberry
Level 6

what to do with 1042 s?

Usually, the 1042 s is issued to report  a US pension amount paid to a non-US citizen.  So yes, it is reportable as foreign pension income.  The 1042 s can also be issued for other things, but generally would be a Canadian taxable item, such as a sale of a real estate property in the US.

ET29
Level 1

what to do with 1042 s?

On which tax form/tax slip in Profile should we input box 2 (Gross Income) and 7a (Federal Tax withheld) of Form 1042-S?

janisbossenberry
Level 6

what to do with 1042 s?

What is the income code in Box 1 of the 1042 - S, and what was the % of tax withheld?

ET29
Level 1

what to do with 1042 s?

The income code on box 1 is 12 - Other royalties (for example, copyright, software, broadcasting, endorsement payments)

% of tax withheld was 30%.

Thanks.

janisbossenberry
Level 6

what to do with 1042 s?

Royalty income should be reported on a T2125 - business schedule.  Remember to convert it to Canadian $$.  You will have to complete the FTC schedule to report that the business income was foreign, and record the US tax withheld there.  BUT - according to the US/Canadian tax treaty, they should only have withheld 10% tax from Royalty income.  That is the most you can claim as a FTC on the Canadian return.  To get the rest back, the taxpayer will have to file a US 1040NR.