For employees who are not US tax residents, this IRS form reports the US-based income that is subject to federal tax withholding, perhaps at a rate specified by a treaty. The form’s instructions indicate the types of income that are reported on the form. For example, you usually receive Form 1042-S if you have received cash dividends and have paid US taxes on dividends earned from your company stock holdings.

According to the instructions, Form 1042-S applies to compensation for independent personal services performed in the United States. This would include outside directors who have received nonqualified deferred compensation, along with consultants.

For US-sourced dividend income received during a calendar year, companies send Form 1042-S to employees by mid-March of the following year. Completing Form W-8BEN does not exclude non-US residents from US taxes on dividend payments. The withholding rate is 30% on any interest and dividend payments, although this can be reduced or eliminated if there is a tax treaty between your country of residence and the US.