File 1099 INT for a foreigner

Forum|Forum|1 year ago
January 2, 2025
7 replies
29 views

Hi there

How do I fill out the 1099 INT for a foreigner who received the interest during the year and paid the 10% tax on it during the year?

Let's say the total interest due in 2024 was $1,000 but, they paid $100 to IRS (so, the person received only $900). In 1099 INT (at Box 1 Interest Income) will be $900 or $1,000?

Thank you

pk_

Level 15

@ArinaStan ,

Generic answer For the form 1099-INT,

Box 1 Contains the total / gross amount of interest i.e. it is the gross/total interest earned by the Principal / Corpus invested , before any withholding and/or other charges.

Box 4 contains the Federal Taxes withheld

Box 17 contains any State taxes withheld

Thus ,and absent any other charges , -- Box 1 amount should be the final amount received PLUS amounts in Box 1 and Box 17

Are you the issuer of the 1099-INT or the recipient ? What kind of interest i.e. from lending monies or what? Is the recipient a US person ( NRA rates are different; also treaty considerations may apply )

Should we assume " a foreigner" imply the person is not a US person or that the earnings are from a different country ? Does this country have a Tax Treaty with the US ? Is this a sanctioned country ?

Is there more I can do for you ?

ArinaStanAuthor

Level 2

Thank you for your answer.

Yes, I am the issuer of 1099 INT. The recipient is a nonUS person but has an ITIN, that's why I had to pay 10% of the amount to IRS every time when I paid the recipient (owe them $100 from this: $10 I paid to IRS and $90 I paid to them)

guywong

Level 6

I don't believe you report the interest paid to a foreigner on a 1099-INT. Rather, you should report the payment and withholding on an IRS Form 1042 series Take a look at this link below from the IRS. In addition to Form 1042. there is a 1042-S and a 1042-T. You may be required to file most of these forms electronically. See the 1042 Instructions.

About Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons | Internal Revenue Service

Use Form 1042 to report the following:

The tax withheld under chapter 3 on certain income of foreign persons, including nonresident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts.
The tax withheld under chapter 4 on withholdable payments.
The tax withheld pursuant to section 5000C on specified federal procurement payments.
Payments that are reported on Form 1042-S under chapters 3 or 4.

ArinaStanAuthor

Level 2

Thank you @guywong

pk_

Level 15

@ArinaStan , under many circumstances I would heartily agree with @guywong, that you should issue a 1042-S showing the earnings and withholdings ( acting as withholding agent ). However, if the beneficiary / recipient is in the US and is on a dependent visa then you may have to issue 1099 ( depending on the tax status of the primary visa holder). Also note that the general rule for NRAs, absent any tax treaty assertions, is 30% federal withholding rate.

As an aside , should we assume that this earned interest is related a loan, mortgaged asset or what ? I ask because some these situations may require more delving into.

Is there more I can do for yopu ?