What is Form 1042-S, and will an international referral partner receive one?
Form 1042-S is the US information return a payer uses to report certain US-source income paid to foreign persons and any tax withheld, in place of a 1099 for US persons. Whether a referral partner receives one depends on their status, the payment and the payer's classification, so check the program terms and a tax adviser.
What is Form 1042-S, and will a referral partner outside the US get one?
Form 1042-S is the US information return a withholding agent uses to report certain US-source income paid to foreign persons, and the tax withheld on it; a US payer reports payments to US persons on forms such as the 1099 series instead. Whether you receive a 1042-S depends on who you are, what the payment is for and how the payer classifies it. This is general information, not legal, tax or financial advice.
The program terms govern how SourceX pays partners and which tax forms apply. This page does not say whether SourceX issues a 1042-S to any partner; read the program terms and ask your tax adviser.
Why 1042-S rather than 1099?
The split is between US and foreign payees. The IRS instructions for Form 1099-NEC describe payments to non-employees for services in the course of a payer's business, with a reporting threshold that depends on the year of payment, so check the current instructions. A payee outside the US is generally documented on a different track.
The IRS Publication 515, its guide for withholding agents paying US-source income to foreign persons, explains that most US-source income received by a foreign person is subject to US tax unless a treaty reduces it, and that pay for services performed in the US by a nonresident alien is generally subject to withholding. Whether a particular referral payment is US-source, and whether anything is withheld, depends on facts such as where the work is done and the type of income. Do not assume either outcome.
How does the paperwork chain run?
- The payer asks you for a withholding certificate before paying.
- You give it to the payer, not to the IRS.
- The payer decides how to classify and report the payment, and whether to withhold.
- After year-end the payer issues the relevant form to you, if one is required.
The IRS describes Form W-8BEN as the form a foreign individual who is a beneficial owner gives the payer when requested, whether or not claiming a reduced treaty rate. Entities use Form W-8BEN-E, which documents foreign status, any chapter 4 status and treaty claims. US persons, including resident aliens, use a Form W-9. For a firm, our W-8BEN-E guide for advisory firms goes through the form field by field in plain language.
What do the codes on a 1042-S signal?
The form carries a code for the type of income and codes for any exemption or reduced rate claimed. Treat them as labels that connect your income to the facts you declared on your W-8.
| Item on the form | What it tells you | What to check |
|---|---|---|
| Income code | The category of income the payer reported | Whether it matches what the payment was for |
| Exemption or rate code | Whether tax was withheld at a statutory or treaty rate, or not at all | Whether it matches the treaty position you claimed |
| Gross income and tax withheld | Amounts reported for the year | Whether they match your records and bank receipts |
| Your tax identification details | The identifier you gave the payer | Whether the name and identifier are correct |
| Withholding agent details | Who paid and reported | Whether it is the entity you contracted with |
Check the current IRS form instructions for the code lists; they change.
How might a partner use it at home?
Different countries treat it differently. Common practical uses:
| Situation | What to check | Typical outcome to confirm |
|---|---|---|
| Received a 1042-S with tax withheld | Whether your home country allows credit for US tax | Foreign tax credit or relief to confirm with your adviser |
| Received one with no tax withheld | Whether the income is still taxable at home | Declared in your home return |
| Received none | Whether any form was due and what the payer says | Keep payment records anyway |
| Received a 1099-NEC instead | Whether you gave the payer the right certificate | Correct classification with the payer |
Your home tax authority, not the US form, decides what you owe locally. Keep contracts, invoices, bank statements and the form together for the filing. For UK readers, see how US referral rewards are taxed for UK residents and the position on source of income for non-residents.
Confirm with your own tax adviser before acting.
What if I am an accountant or other licensed professional?
Professional rules on referral fees are separate from tax rules. Check the IESBA Code on referral fees and commissions and your national body's rules, including the German position on Steuerberater and Wirtschaftsprüfer referral fees. Firms can also read the page for international accounting firms, and agreements should be reviewed against the cross-border referral agreement checklist.
How do rewards work?
Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. The reward is paid only after the buyer pays and SourceX receives its fee; a lead, meeting or signed agreement alone does not trigger payment, and no reward is guaranteed. The reward is never deducted from what the company receives. The what is a SourceX referral partner page explains the role, and the referral earnings calculator shows how the formula works.
Next step
Read the terms, ask your adviser what documentation you will need, and then register as a partner.
- Step 1Share your linkSend your personal link to a company you know.
- Step 2Company appliesThe company applies itself at /apply.
- Step 3Buyer selects and paysThe buyer selects and pays for the data and SourceX receives its fee.
- Step 4You get your rewardYour share of SourceX fees becomes payable.
Common questions
Is a 1042-S the same as a 1099?
No. They are different information returns. A 1099 series form generally reports payments to US persons, while a 1042-S reports certain US-source income paid to foreign persons and any tax withheld. Which one applies depends on how the payer classifies you and the payment, based on the certificate you provided.
Do I file the 1042-S with my own return?
The payer files it with the IRS and sends you a copy. Whether you need to file a US return depends on your circumstances, so ask a US tax adviser. In your home country, you typically use the form as evidence of the income and any tax paid when you complete your own return.
Does SourceX issue 1042-S forms?
This page does not say. The signed partner agreement and the published program terms set out payment and tax documentation, including which forms are requested. Read them before registering, and ask your own tax adviser how your situation would be reported.
What if the form shows the wrong income code?
Contact the payer promptly with your records and ask whether a corrected form is needed. An incorrect code can create problems when you claim relief at home. Keep your W-8 submission, invoices and any correspondence so your adviser can see what was declared and when.
Can I claim treaty benefits on a referral reward?
Possibly, but it turns on the type of income, your residence and the treaty. Treaty claims are normally made through the withholding certificate you give the payer, such as a W-8BEN or W-8BEN-E. A tax adviser should confirm whether a claim is available and how to complete it.
Related pages
- How to fill out a W-8BEN-E for an advisory or consulting firm
- How is a commission or referral reward from a US company taxed if you live in the UK?
- Is a referral reward from a US company US-source income if you live outside the US?
- IESBA Code: can a professional accountant accept a referral fee or commission?
- Steuerberater and Wirtschaftsprüfer: can you accept a reward for an introduction?
- A referral playbook for accounting firms outside the US with US-group clients
Free resources
- Operational data inventory builder — List systems, record types, years held and owners.
- AI readiness assessment — Ten questions, five dimensions, a score out of 100.
- EBITDA calculator — Reported and adjusted EBITDA from net income.
- All free tools · MCP resource center
By SourceX Partnerships Team · Published 2026-10-09 · Updated 2026-10-09
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