If you work, study, or receive payments in the United States, knowing whether you should receive a W-2, a 1042-S, or both can make tax season much easier. The right form depends on your tax residency status and the type of income you received—not simply your citizenship.
This guide explains what each form reports, who gets it, how withholding works, key deadlines, and what to do if both forms show up in the same year. For official IRS references, see About Form W-2, About Form 1042-S, and the IRS page on Determining an Individual’s Tax Residency Status.
Quick take
- Form W-2 reports wages paid to employees and the related payroll taxes withheld.
- Form 1042-S reports certain U.S.-source payments to nonresident aliens and foreign entities, including scholarships or fellowships, investment income, and independent personal services.
- Your tax residency status—resident alien vs. nonresident alien—drives which form applies, not your citizenship.
- It is common for foreign nationals to receive both forms in the same year for different types of payments.
1042-S vs W-2: At a glance
When people compare 1042-S vs. W-2, they are really comparing two different reporting systems. A W-2 covers employee wages subject to U.S. payroll rules, while a 1042-S covers certain U.S.-source income paid to nonresidents, often with treaty exemptions or special withholding rules.
Which one you receive depends on both the type of income and your tax residency for the year. If you handle payroll or year-end reporting, BoomTax also offers solutions for W-2 forms and 1099 forms.
Who gets what: Form W-2 vs. Form 1042-S
Form W-2 (Wage and Tax Statement)
A W-2 is issued by an employer to an employee for wages and salaries. It shows the amounts paid and the taxes withheld during the year.
- Taxable wages and tips
- Federal income tax withheld
- Social Security and Medicare (FICA) wages and taxes
- State and local wages and taxes, if applicable
Typical recipients include U.S. citizens and resident aliens working as employees. Nonresident aliens can also receive a W-2 for taxable wages earned as employees.
Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding)
A 1042-S is issued by a withholding agent, such as a university, financial institution, or company, to report certain U.S.-source income paid to nonresident aliens and foreign entities.
Common 1042-S income types include:
- Scholarships or fellowships, especially amounts for non-qualified expenses like stipends, room, or board
- Independent personal services performed in the U.S. by a nonresident
- Royalties, certain interest, dividends, and awards or prizes
- Wages exempt from tax under an income tax treaty
Important: If you are a nonresident alien employee and your wages are fully taxable without a treaty exemption, those wages are typically reported on a W-2, not a 1042-S.
First step: Determine your tax residency status
Your tax forms depend on whether you are a resident alien or a nonresident alien for tax purposes. The IRS does not rely on citizenship alone.
Two main tests apply:
- Green card test: If you held a U.S. lawful permanent resident card at any time during the year, you are generally a resident for tax purposes.
- Substantial presence test: This is based on days physically present in the U.S. over a three-year lookback formula. Certain visa categories, such as F, J, M, and Q, may be temporarily exempt from counting days.
Resident aliens are generally taxed like U.S. citizens and receive W-2s for employment. Nonresident aliens are taxed under special rules and may receive a 1042-S for certain payments.
Withholding and tax rates: How the two forms differ
W-2 withholding
- Federal income tax withholding based on Form W-4
- Social Security and Medicare (FICA) taxes for most employees
- State and local tax withholding where applicable
1042-S withholding
- Default federal withholding rate is often 30% for many types of U.S.-source income paid to nonresidents
- The rate may be reduced or eliminated by an applicable income tax treaty, with proper documentation
- Amounts reported on 1042-S typically do not involve FICA taxes
To claim treaty benefits, nonresident individuals usually provide Form 8233 for personal services income or Form W-8BEN for other income types, such as royalties, certain scholarships, or investment income. Keep copies for your records.
Deadlines and delivery
- Form W-2 must be furnished to employees by January 31 and filed with the Social Security Administration by the same date.
- Form 1042-S must be furnished to recipients by March 15 and filed with the IRS by March 15.
If you expect a 1042-S, remember that it usually arrives later than a W-2. You may need to wait for both forms before filing your return.
Common scenarios and examples
1) International student with wages and a stipend
Maria is an F-1 student who worked on campus and also received a $3,000 living stipend. She may receive:
- A W-2 for taxable campus wages
- A 1042-S for the stipend, and potentially scholarship amounts, possibly with a treaty reduction if applicable
If Maria is a nonresident for tax purposes, she typically files Form 1040-NR and includes the 1042-S information. If she is a resident for the year, she generally files Form 1040 and reports her W-2 wages; the treatment of any 1042-S amounts depends on the type of income and her status during the year.
2) Visiting researcher with a treaty benefit
Dr. Chen, on a J-1 visa, earns $40,000 in wages from a university. The first $10,000 is exempt under an income tax treaty. He may receive:
- A W-2 showing taxable wages, such as $30,000, and payroll tax withholding
- A 1042-S showing the $10,000 treaty-exempt amount
It is normal to receive both forms from the same payer when treaty-exempt wages are involved.
3) Nonresident contractor performing services abroad
Amara, a nonresident living outside the U.S., performs all consulting work from her home country for a U.S. company. Because the services are performed outside the U.S., the income is foreign-source and is not reportable on 1042-S.
She typically provides Form W-8BEN to the company to document her foreign status and avoid U.S. withholding.
4) Nonresident contractor performing services in the U.S.
Luis, a nonresident, speaks at a paid conference in the U.S. He is likely to receive a 1042-S, and 30% withholding may apply unless a treaty benefit is properly claimed, often through Form 8233 for personal services.
How to file your tax return with these forms
- If you are a resident for tax purposes for the year, you generally file Form 1040 and include your W-2 wages. Other income reported on 1042-S may or may not be relevant depending on your residency period and income type.
- If you are a nonresident for the year, you generally file Form 1040-NR and include any 1042-S income and related withholding. W-2 wages earned as a nonresident are also reported on Form 1040-NR.
- If you are dual-status, meaning part-year resident and part-year nonresident, special filing rules apply. Identify which part of the year each item of income belongs to and follow the dual-status instructions.
- Students and scholars in F, J, M, or Q status who are nonresidents often must file Form 8843. Review the IRS instructions to confirm your requirement.
Actionable steps for a smooth tax season
- Confirm your tax residency status each year using the IRS tests and your visa history.
- Collect all forms before filing: W-2 by January 31 and 1042-S by March 15. It is common to have both.
- Check details carefully:
- W-2: Name, SSN, wages, and tax withheld
- 1042-S: Income code, exemption code, gross income, and tax withheld
- Claim treaty benefits correctly and on time using Form 8233 for services and Form W-8BEN for other income types. Renew them when they expire.
- File the right return: Form 1040 for residents, Form 1040-NR for nonresidents, and dual-status filing if applicable.
- If something looks wrong, request a corrected W-2c or an amended or corrected 1042-S from the payer. Do not try to substitute one form for the other on your own return.
- Keep records of visas, travel days, forms submitted to payers, and prior returns.
FAQs
Is it possible to receive both a W-2 and a 1042-S?
Yes. For example, a university employee who is a nonresident may receive a W-2 for taxable wages and a 1042-S for treaty-exempt wages or a taxable stipend. This is a common 1042-S vs. W-2 situation.
I’m a nonresident and got a 1099-NEC. Is that correct?
Often, no. U.S.-source payments to nonresident individuals for services are generally reported on 1042-S, not 1099-NEC, and may be subject to withholding unless a treaty applies. Ask the payer to review your status and documentation.
Do scholarships always appear on 1042-S?
For nonresident recipients, scholarships and fellowships frequently appear on 1042-S, especially for non-qualified expenses like stipends or housing. Treatment can depend on school policy, treaty benefits, and whether withholding applies.
What if I worked both as a nonresident and later became a resident in the same year?
You may have a dual-status year. Income earned while a nonresident is governed by nonresident rules, while income earned after becoming a resident follows resident rules. You could receive both forms and must follow dual-status filing instructions.
Why does my 1042-S show a 30% rate?
Thirty percent is the default withholding rate for many types of U.S.-source income paid to nonresidents when no treaty reduction or valid documentation is in place. Providing the correct forms on time may reduce or eliminate that rate.
When to compare 1042-S vs W-2
Review both forms side by side if you received them in the same year. Confirm that employee wages are on the W-2 and that nonresident income types—such as treaty-exempt wages, scholarships, or U.S.-source personal services—appear on the 1042-S.
If amounts seem misclassified, contact the payer promptly. Businesses managing year-end reporting can streamline filing with BoomTax’s tools for W-2 forms and electronic filing support for 1099 forms.
Bottom line
Understanding 1042-S vs. W-2 starts with knowing your tax residency and the nature of your income. Employees typically receive W-2s, while nonresident income such as scholarships and certain service payments are often reported on 1042-S, sometimes with treaty benefits.
Gather both forms, verify the details, and file the correct return for your status. This article is for general education and is not tax or legal advice. For personal guidance, consult a qualified tax professional or review IRS resources such as Publication 519, Publication 515, and the instructions for Forms 1040, 1040-NR, 1042-S, and W-2.
If your business needs a faster, easier way to handle year-end reporting, explore BoomTax solutions for W-2 forms and online filing for 1099 forms. BoomTax helps businesses e-file accurately with the IRS, SSA, and state agencies.
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.
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