Form 1042 withholding. Tax on payments to non-US persons.
Form 1042 covers US tax withholding on payments to non-US persons. Default rate is 30%. Tax treaties may reduce. Foreign-owner LLCs and any business paying non-US persons or entities must understand this.
Start here.
Annual return of tax withheld from payments to non-US persons.
Individual statement of withheld income (like 1099 but for non-US recipients).
30% on US-source income paid to non-US persons.
Tax treaties may reduce to 0-15% depending on income type and country.
Non-US recipient submits to claim treaty benefit and verify foreign status.
The full picture.
What Form 1042 covers
Form 1042 (Annual Withholding Tax Return) reports US tax withheld from payments to non-US persons. Plus Form 1042-S (individual recipient statements). Used when paying non-US individuals or entities US-source income.
Default withholding rate
30% on US-source income paid to non-US persons. Includes interest, dividends, rents, royalties, certain services. Withheld at source by the US payer; reported to IRS via Form 1042 + 1042-S.
Tax treaty reductions
The US has bilateral tax treaties with many countries that reduce or eliminate withholding on specific income types. Treaty rates vary by country and income type (dividends 5-15%, interest 0-15%, royalties 0-10% common).
Form W-8BEN (individuals)
Non-US individuals submit W-8BEN to certify foreign status and claim treaty benefits. Must include: name, country, tax ID (ITIN or foreign tax ID), date of birth, foreign address, treaty article and rate claimed.
Form W-8BEN-E (entities)
Non-US entities submit W-8BEN-E for the same purpose. Includes additional certification for chapter 4 (FATCA) status.
Foreign-owner US LLC implications
When a US LLC has foreign owners, the LLC may need to withhold on certain distributions or income flowing through to the foreign owner. Plus annual Form 5472 + 1120 (pro forma) filing.
When LLC must withhold
(1) Distributions to foreign partners with effectively connected income; (2) US-source income flowing through to foreign owners under certain circumstances; (3) Specific FDAP (fixed, determinable, annual or periodical) income.
Penalties for failure
Withholding agent (the US payer) is liable for unwithheld tax plus penalties. Civil penalties typically 100% of unwithheld amount. Plus interest.
Filing
Form 1042 due March 15 of year following payment. Form 1042-S to recipients March 15. Electronic filing required for filers with 10+ forms.
Common questions.
When does 30% withholding apply?
Can the rate be reduced?
How does the recipient claim treaty benefit?
Who files Form 1042?
When is Form 1042 due?
Do I need to withhold on my LLC distributions?
What is FDAP income?
What is ECI?
Penalties for failure to withhold?
Form your US LLC.
From abroad. Wyoming or Delaware. EIN, US banking, Stripe, ongoing compliance handled.
This guide is educational. International tax and compliance require specialty CPA and attorney advice.
How we deliver, end-to-end.
Four-step path from request to confirmation. State and IRS turnaround varies; our steps run in parallel where possible to compress the timeline.
Intake + scope
You tell us what you need through a short intake form (or a call for complex matters). We confirm scope, surface any gating issues (deadlines, missing documents, entity status), and quote any state fees that pass through at cost.
Prepare + verify
Our specialists draft the filing, verify entity details against state databases, run internal QA, and route any items needing your sign-off. You see drafts before anything gets submitted.
File with the authority
We submit directly to the state Secretary of State, FinCEN, IRS, USPTO, or whichever authority your filing requires. We pay state fees at cost and track the submission identifier in your account.
Confirmation + vault
Stamped certificate, IRS notice, or filing receipt arrives in your SOC 2 encrypted document vault the moment we receive it. Next filing deadline auto-added to your compliance calendar where applicable.
Built on the same infrastructure used by 220,000+ businesses.
SOC 2 Type II audited
Independent annual security audit covering access control, change management, incident response, and data handling. Current report on request.
All 51 US jurisdictions
Every state plus DC plus Puerto Rico - direct filings, not third-party reseller. We hold registered-agent qualifications in every state we operate.
Deadline guarantee
If we miss a filing deadline on a service you pay us to manage, we pay the state penalty. Specific to each plan and the filings it includes.
4.9 from 8,200+ verified reviews
Independently verified by Trustpilot + Google + our own NPS infrastructure. Customer success team within reach by email, chat, or phone.
60-day money-back promise
Change your mind in the first 60 days and we refund our service fee in full. State filing fees pass through at cost and are non-refundable once paid to the state.
E&O insured
Errors and omissions coverage protects you from service errors. Carrier and certificate available on request for enterprise clients.
Recommended add-ons
Most customers add these to keep their business compliant year-round.
Registered Agent
Most orderedRequired for every registered business entity in every state.
Compliance Monitoring
Best valueTrack every annual report, registered agent renewal, and license deadline.
Annual Report Filing
RecommendedAuto-file your state annual report. Never miss a deadline.
Premium compliance, no service-fee markup.
Trust you can verify
SOC 2 Type II audited platform. 220,000+ businesses served. 60-day money-back on service fees. State fees passed through at cost with no hidden markup. Explicit AUP on restricted industries.
A compliance partner, not a transaction
Most providers go quiet after checkout. We auto-track every annual report, registered agent renewal, and license deadline across your entities. The Business OS dashboard keeps your compliance score visible year-round.
Premium experience competitors cannot match
Premium positioning, transparent pricing, no service-fee markup on state or federal filings. Premium positioning, transparent pricing, no service-fee markup on state filings.