In Advantage Financial, 1042-S reporting includes defining reportability for Vendors, Objects, Sub Objects, and Balance Sheet Accounts. It also includes the collection of information for events that are subject to 1042-S reporting, and reporting the income to the Internal Revenue Service (IRS).
The following are set up pages necessary for 1042-S reporting. Additional information about the page or fields can be found on Field Help or Page Help of the indicated pages.
1099 Processing Options and Control (1099P) - 1042-S Backup Withholding Rate is used to define the default 1042-S Backup Withholding Rate
IRS Tax Rate (ITAX) - stores valid tax rates from the Internal Revenue Service (IRS) required for form 1042-S reporting. The Tax Rate values specified on this table updates Box 5 on the 1042-S Form.
IRS Country Table (ICTY) - stores the IRS supported Country Codes and tracks the treaty status for a Country. This table provides country codes in required IRS format that will be used as input to the Offline 1099 Process.
1042-S Exemption Code table (EXMP) - provides the classifications for the types of income exempted from the tax base when processing 1042-S forms. The values on this table are used to populate Box 6 on the 1042-S Form. This table includes valid IRS Exemption codes.
1042-S Recipient Code table (RECP) - provides the IRS classification for the type of recipient being paid. Values on this table are used to populate Box 12 on the 1042-S Form.
1042-S Income Code table (INCM) - provides the classification of the type of income paid by a taxpayer. Values on this table are used to populate Box 1 on the 1042-S Form. This table includes valid IRS Income codes and their associated withholding allowance setting.
Vendor/Customer (VCUST) table - maintains the primary information about a vendor/customer. Several fields need to be established on VCUST to properly report on 1042-S activities such as 1042-S Recipient Code, 1042-S Recipient Account Number, and IRS Country of Residence.
1042-S Reporting Information (1042I) table - stores the name and mailing address information for foreign vendors who are subject to Form 1042-S reporting. A record is entered on this table for any individual or company that is eligible for 1042-S reporting by the Offline 1099 Process.
Note: The 1099I table remains as the primary reference table for Taxpayer Identification Number information. Records are added to 1042I in addition to the TIN/TIN Type also being present on the 1099 Reporting Information table.
While the 1099 Reporting Information table contains mailing information that is used on 1099 forms, this table also contains mailing address information which is used by the Offline 1099 Process to populate the mailing address on the 1042-S forms. The mailing information on the 1042-S Reporting Information page is not inferred from the 1099I page. The user is required to enter the mailing address for 1042-S reporting separately on 1042I. This is because the IRS strongly recommends that 1042-S forms be sent to the vendor's foreign address (home country) and not their US address, which is the address that is stored on 1099I.
1042-S Income Code/Tax Rate (ICTX) table - defines withholding tax rates including exemptions (i.e. tax rate is 00.00) per 1042-S Income Code for countries with which the US has entered into an income tax treaty. Two factors determine population of this table. The first factor is the IRS data in IRS Publication 515. Second, only countries with Treaty Indicator set to “true” on the IRS Country Code table may be defined on this table.
1042-S Type of Income (1042T) table - identifies valid combinations of 1042-S Income Code, 1042-S Recipient Code, and 1042-S Type of Income used in the 1042-S reporting process. Withholding Applicable and/or a Threshold amount can be indicated for each valid combination. When a record is added on 1042T, the Income Code/Recipient Code combination may not be found on the 1042-S Income Code/Recipient Code Exception table (ICRC) (this table is discussed below). Income Codes that are not defined on ICRC may be used with any valid 1042-S Recipient Codes on 1042T.
1042-S Organization Type/Recipient Code Crosswalk (OTRC) table - stores valid Organization Types and Recipient Code combinations and is used to help ensure that only valid Organization Type and 1042-S Recipient Code combinations are selected on the Vendor Customer (VCUST) table and the VCC and VCM documents.
1042-S Income Code/Recipient Code Exception (ICRC) table - identifies 1042-S Income Codes that can only be associated with certain 1042-S Recipient Codes on the 1042-S Type of Income table (1042T). When a record is saved on 1042T, the system will look for a matching Income Code value on ICRC and, if a matching Income Code record is found, determine if the Income Code/Recipient Code combination specified on 1042T exists on ICRC. If it does not, an error will be issued that the specified Income Code/Recipient code combination is invalid. Income Codes that are not defined on ICRC may be used with any valid 1042-S Recipient Codes on 1042T.