Key Terms for 1042-S Foreign Person’s US Source Income Subject to Withholding:
Income Code
This two-digit income code identifies the appropriate income source.
Gross Income
The total amount of all income paid as specific to the income code. This includes dividends, interest and other income sources.
Chapter Indicator 3 or 4
Applies to non-U.S. beneficial owners of U.S. source FDAP income under Chapter 3 and to non-U.S. payees who receive U.S. source withholdable payments under Chapter 4.
Tax Rate
The rate of withholding applied.
Withholding allowance
The personal exemption amount.
Net Income
The amount after withholding and other deductions have been applied.
Federal Tax Withheld
The amount of taxes withheld based on the tax rate.
Tax Withholding Credit
The amount of taxes already paid to the IRS.