Guide to Global Payroll Management - 2020 - D-67

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Appendix D--Federal Forms and Instructions

chapter 4 (on line 64c). The amounts
shown on lines 64b and 64c should not
include any amounts shown on lines 64a
and 64d. Do not make any other
adjustments to this line.

Line 64d. Enter on line 64d amounts
reported on the Record of Federal Tax
Liability that are attributable to liability for
specified federal procurement payments
under section 5000C.

Line 64e. The amount on line 64e should
equal the sum of lines 64a through 64d.

Reporting of Taxes Paid and
Overpayment or Balance Due

Line 65. Enter the total tax deposits you
made for the year (including amounts paid
with an extension of time to file). Enter
deposits of tax withheld during the
calendar year in which the related
payment was made on line 65a. Enter
deposits of tax withheld during the year
following the calendar year in which the
related payment was made (to the extent
permitted under an applicable regulation
section in chapter 3 or 4) on line 65b. See
Withholding and reporting in a subsequent
year, earlier.
Line 66. Enter any overpayment reported
on the 2018 Form 1042 that you are
applying as a credit on the 2019 Form
1042. See line 71.

Line 67. You are permitted to take a
credit for amounts withheld by other
withholding agents that relate to the total
net tax liability reported on lines 64b and
64c. For example, you are a QI and the
amount you entered on line 64b includes
amounts withheld by a U.S. withholding
agent under chapter 3 with respect to
payments made to you as an intermediary
on behalf of your account holders. You
may take a credit on line 67 for the
amounts that were withheld by the U.S.
withholding agent. The amount on line 67
should equal the sum of all Forms 1042-S,
box 8, that you file for the year.
Note. All withholding agents (including
QIs, WPs, WTs, NQIs, NWPs, and NWTs)
must verify entries on lines 67a and 67b
by attaching supporting Form(s) 1042-S or
1099 to verify the credit amounts claimed
for withholding by other withholding
agents. Failure to do so will result in the
denial of the refund or credit being
claimed. If you are a PTP or a nominee
withholding under section 1446, the tax
paid for a payee may only be claimed as a
credit by the payee.
QSL claiming a credit forward. If you
are a QSL or other withholding agent
claiming a credit forward of prior
withholding on substitute dividends on
line 67b as determined under Notice
2010-46, you should attach Form(s)
1042-S issued to you to support such

credits. If a credit is claimed with respect
to any U.S. source substitute dividends
paid to you from a withholding agent that
has not issued a Form 1042-S to you for
such payments, attach a supporting
statement to Form 1042 indicating the
following to support your credit.
* The withholding agent's name, address,
and EIN (if known).
* The amount of U.S. source substitute
dividends received from the withholding
agent.
* The amount of credit forward you
included on line 67b in connection with
these substitute dividends.
Lines 70a and 70b. Enter on line 70a
any overpayment attributable to payments
subject to withholding under chapters 3
and 4. Enter on line 70b any overpayment
attributable to payments subject to the
excise tax on specified federal
procurement payments. Do not include on
these lines any overpayment attributable
to amounts that were actually withheld
from the beneficial owner (unless such
amounts were repaid pursuant to the
reimbursement or set-off procedures).

Line 71. You may claim an overpayment
(the sum of lines 70a and 70b) as a refund
or a credit. Check the applicable box on
line 71 to show which one you are
claiming. If you claim a credit, it can
reduce your required deposits of withheld
tax for 2020. Note that if you repaid the
recipient overwithheld amounts after
year-end 2019 using the reimbursement or
set-off procedures, you are not able to
claim a refund for such an amount on the
2019 Form 1042. Instead, you must
indicate on line 71 that you are claiming a
credit to be applied to the 2020 calendar
year. See Adjustment for Overwithholding,
later.

Adjustment for
Overwithholding

What to do if you overwithheld tax
depends on when you discover the
overwithholding.

Overwithholding discovered by March
15 of the following calendar year. If
you discover that you overwithheld tax by
March 15 of the following calendar year,
you may use any undeposited amount of
tax to make any necessary adjustments
between you and the recipient of the
income before you make a deposit. Repay
the recipient and reduce the amount of
your total deposit. Report the reduced tax
liability on lines 1 through 60 for the
period(s) for which you repaid the
overwithheld tax.
If the undeposited amount is not
enough to make any adjustments, or if you
discover the overwithholding after the
entire amount of tax has been deposited,
you can use either the reimbursement or
-8-

the set-off procedure to adjust the
overwithholding.

If March 15 is a Saturday, Sunday,

TIP or legal holiday, the next business
actions.

day is the final date for these

Reimbursement procedure. Under
the reimbursement procedure, you repay
the beneficial owner or payee the amount
overwithheld. You use your own funds for
this repayment and may reimburse
yourself for an amount repaid by reducing
the amount of any subsequent deposit of
tax made during the calendar year or the
subsequent calendar year. You must
make the repayment by the earlier of:
* The date you actually file Form 1042-S
for the calendar year in which the amount
was overwithheld, or
* The due date for filing Form 1042-S for
the calendar year (generally, March 15 of
the year after the calendar year in which
the amount is overwithheld).
The reimbursement amount may not be
more than the amount you actually repaid.
The amount of the reduced tax liability for
amounts repaid to the beneficial owner or
payee during the calendar year must be
reflected on the line for the period you
reduced your liability. The amount
reported on line 59 for the calendar year
for which you overwithheld tax must reflect
the amount of the reduced tax liability for
amounts you repaid the beneficial owner
or payee in the subsequent calendar year,
if applicable. Amounts reported on
line 63c(1) should be limited to amounts
repaid to the beneficial owner or payee in
the subsequent calendar year (before the
earlier of the filing of the associated Form
1042-S or the due date for such form). On
line 71, indicate that you are claiming a
credit to be applied in the 2020 calendar
year for amounts you repay the beneficial
owner or payee in the subsequent
calendar year (note, you may not claim a
refund for such an amount).
For example, if you overwithhold tax in
2019, you must repay the beneficial owner
by March 16, 2020 (or the date on which
you filed the associated Form 1042-S with
the IRS, if earlier). You must keep a
receipt showing the date and amount of
the repayment and provide a copy of the
receipt to the beneficial owner if you
repaid the beneficial owner. If you repaid
the beneficial owner after year-end 2019,
you must report the repayment on
line 63c(1). You must reduce your federal
tax liability on line 59 of your 2019 Form
1042 by the amount of the repayment and
claim a credit on line 71 for the difference
between your tax liability and your
deposits with the IRS. You may reimburse
yourself by reducing any subsequent
deposits you make before the end of
calendar year 2020 (the year after the
Instructions for Form 1042 (2019)

D-67

Guide to Global Payroll Management - 2020

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