If we paid a vendor in Canada who hosted a tour of a U.S. facility, are those funds withholdable and reportable for 1042 & 1042-S?


If we understand your question correctly, the situation involves a verified non-U.S. person (Form W-8BEN on file) who performed independent contractor services in the U.S. for you. If the vendor has submitted a current Form 8223 to you, verifying he is a resident of a tax treaty country and requesting a withholding exemption, then you would not need to withhold at 30 percent. (Note that this form needs to be updated each tax year.)

However, even if this contractor is exempt from withholding, you do have an obligation to report the payment on Form 1042-S. See the IRS Instructions for Form 1042-S, “Amounts Subject to Reporting on Form 1042-S.”

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