Form 1042-S Explained: The U.S. Slip Canadians Receive
What it reports, the income and exemption codes, the tax withheld, and how to use it on both returns
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Form 1042-S is the U.S. slip a withholding agent issues to a foreign person, such as a Canadian resident, reporting U.S.-source income — dividends, interest, royalties, pensions, scholarships — and the U.S. tax withheld. Canadians use it to report the income in Canada, claim a foreign tax credit, and file a U.S. return if a refund is due.
On this page
What's on it
| Box | Meaning |
|---|---|
| Income code | The type of income (e.g., dividends, interest, pensions, scholarships) |
| Gross income | The amount paid |
| Chapter 3 exemption code / tax rate | Whether a treaty rate or exemption applied (e.g., 15 percent on dividends with a W-8BEN) |
| Federal tax withheld | The U.S. tax actually withheld |
| Recipient's status and country | Confirms the treaty country used |
Who receives one
Canadian residents with U.S. dividends from a U.S. broker, U.S. pensions or annuities, U.S. royalties, U.S. scholarships, gambling winnings, and some services income (the W-8BEN guide). U.S. withholding agents must file it and furnish it to you by March 15 of the following year. When a Canadian broker holds the U.S. shares, it usually reports the U.S. dividends and the U.S. tax withheld on a Canadian T5 slip (box 15 foreign income, box 16 foreign tax paid) rather than issuing you a 1042-S.
Using it
On the Canadian return: report the gross income (in Canadian dollars) and claim the U.S. withholding as a foreign tax credit. On the U.S. side: no return is needed if the correct treaty rate was withheld; if too much was withheld (no W-8BEN on file — 30 percent instead of 15), file Form 1040-NR to claim a refund — the 1040-NR instructions require a copy of the 1042-S showing the income and U.S. tax withheld, and you need an SSN or ITIN. The IRS allows up to six months for these refunds.
Frequently asked questions
What is Form 1042-S?
A U.S. slip reporting U.S.-source income paid to a foreign person and the tax withheld.
Do Canadians need to file a U.S. return because of a 1042-S?
Only if too much tax was withheld (to claim a refund) or other U.S. income requires a return.
How do I report it in Canada?
Report the income in Canadian dollars and claim the U.S. tax withheld as a foreign tax credit.
Why was 30 percent withheld?
Usually because no valid W-8BEN was on file — file one with the payer and a Form 1040-NR to recover the excess.
Official sources
The IRS explains: “Forms 1042-S, whether filed on paper or electronically, must be filed with the IRS and be furnished to the recipient of the income by March 15 of the following calendar year.” — Internal Revenue Service, Instructions for Form 1042-S (2026), https://www.irs.gov/instructions/i1042s
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk and Canadian Tax Desk handle U.S. withholding reviews, Form 1040-NR refund claims, and Canadian foreign tax credit reporting for U.S.-source income. See pricing or book a call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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