Why would an Orchestra file Form 1042-S?

An orchestra files Form 1042-S when it makes payments to nonresident aliens (e.g., performers, conductors, or music licensors) for U.S. source income.  Here’s why an orchestra may be required to file Form 1042-S:

1. Nonresident Alien Musicians or Performers

If the orchestra hires nonresident alien musicians or performers for concerts, events, or other performances in the U.S., it may need to withhold U.S. income tax on their compensation. The orchestra is required to report the income and tax withholding to the IRS using Form 1042-S.

2. Nonresident Guest Conductors or Artists

An orchestra might hire nonresident alien guest conductors or artists to perform in the U.S. If these individuals receive compensation for their services, the orchestra must withhold taxes and file Form 1042-S to report both the income and the amount withheld.

3. Payments for Royalties

If the orchestra pays royalties (for the use of music, for example) to nonresident alien songwriters, composers, or music publishers, the orchestra must report these payments on Form 1042-S.

4. Withholding Tax Obligations

• The orchestra may be required to withhold tax on the income paid to nonresident aliens. Typically, the withholding rate is 30% unless a tax treaty between the U.S. and the musician’s country of residence reduces or eliminates this withholding.
• The amount withheld should be reported on Form 1042-S and sent to the IRS.

5. Filing Form 1042-S

• Form 1042-S reports the income paid to the nonresident alien and the tax withheld on that income.
• The orchestra must provide a copy of Form 1042-S to the payee (nonresident alien) and file the form with the IRS.
• The orchestra must also submit Form 1042 (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons) to report all the withholding on payments made to nonresident aliens.

Key Takeaways

✔ The orchestra must withhold taxes on these payments unless a tax treaty applies.
✔ The amount withheld and the income paid are reported on Form 1042-S, which is submitted to the IRS and provided to the payee.