Peoplesoft Payroll for North America

U.S. Year End Processing for 2017: Form 1042-S – Tax Update 18-A – January 2018PeopleSoft Payroll for North America

PeopleSoft Payroll for North America

Payroll Tax Update 18-A

January 2018

PeopleSoft Payroll for North America: Payroll Tax Update 18-AU.S. Year End Processing 2017: Form 1042-S

This document describes the process for printingForm 1042-S and creating the file to report Form 1042-S data to the Internal Revenue Service, and is updated to reflect changes made to Form 1042-S for tax year 2017.

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Overview of Year End Form 1042-S Processing

PeopleSoft Payroll for North America supports Public Sector & Higher Education employers in the year end reporting of income paid to and tax withheld fromnon-resident alien employees during the year on Form 1042-S. Employers are required to produce the following forms annually:

Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding) for each non-resident alien.
Form 1042 (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons), which is a summary of the Form 1042-S forms submitted.

Summary of Topics and Procedures

Listed below are the topics covered in this document and the procedures involved in year end Form 1042-S processing:

Form 1042-S for 2017
Data Sources for Form 1042-S
Review and Update Employee Data and Tax Balances
Review and Update Tables Used in Form 1042-S Reporting
Load Form 1042-S Data (TAX951LD.SQR)
Review 1042-S Employee Information
Review 1042-S Year End Data
Create Form 1042-S Records (TAX950.SQR)

Reset 1042-S File Status

Prepare Tax Liability Summary for Form 1042 (TAX955.SQR)

Form 1042-S for Tax Year 2017

Note: Beginning with tax year 2014, the Internal Revenue Service added new fields to Form 1042-S related to the reporting of payments to foreign entities other than individuals under Chapter 4 of the Internal Revenue Code, as required by the Foreign Tax Account Compliance Act (FATCA). PeopleSoft Payroll for North America supports Form 1042-S processing supports only those fields related to the reporting of payments to foreign individuals under Chapter 3 of the Internal Revenue Code.

Form 1042-S (2017)

Instructions for Form 1042-S (2017)

IRS Publication 1187, Specifications for the Electronic Filing of Form 1042-S for Tax Year 2017

Data Sources for Form 1042-S

The following table shows the relationships between the various boxes on Form 1042-S and the PeopleSoft tables from which the data is retrieved for printing on Form 1042-S.
Box numbers in blue italic text identify new items orthose data items which have been assigned new box numbers for tax year 2017.

Form 1042-S Data Sources for Tax Year 2017

1042-S Box / Description
/ Data Source in PeopleSoft Payroll
- / UNIQUE FORM IDENTIFIER
- / AMENDED (checkbox)
AMENDMENT NO.
1 / Income code / TAX1042_BALANCE and
INC_CD_1042_TABLE
2 / Gross income / TAX1042_BALANCE
3 / Chapter indicator. Enter “3” or “4”. / This box will always be “3”.
3a / (Chapter 3) Exemption code / TAX1042_BALANCE and
EXM_CD_1042_TABLE
3b / (Chapter 3) Tax rate / TAX1042_BALANCE
4a / (Chapter 4) Exemption code / This box will always be “15”.
4b / (Chapter 4) Tax rate / Not supported
5 / Withholding allowances / TAX1042_BALANCE
6 / Net income / box 2 minus box 5
7a / Federal tax withheld / TAX1042_BALANCE
7b / Check if tax not deposited with IRS pursuant to escrow procedure (checkbox) / Not supported
8 / Tax withheld by other agents / Not supported
9 / Tax paid by withholding agent / Not supported
10 / Total withholding credit / same dollar amount as in box 7a
11 / Amount repaid to recipient / TAX1042_BALANCE
12a / Withholding agent’s EIN / COMPANY_TBL
12b / (Withholding agent’s) Ch. 3 status code / HP_1042S_PARAM
12c / (Withholding agent’s) Ch. 4 status code / Not supported
12d / Withholding agent’s name / COMPANY_TBL
12e / Withholding agent’s Global Intermediary Identification Number (GIIN) / Not supported
12f / (Withholding agent’s) Country code / (blank)
12g / (Withholding agent’s) Foreign taxpayer identification number, if any / Not supported
12h / (Withholding agent’s) Address
(number and street) / COMPANY_TBL
12i / (Withholding agent’s)
City or town, state or province, country, ZIP or foreign postal code / COMPANY_TBL
13a / Recipient’s name / PERSON_NAME
13b / Recipient’s country code / TAX1042_BALANCE
13c / (Recipient’s) Address
(number and street) / PERSON_ADDRESS
13d / (Recipient’s) City or town, state or province, country, ZIP or foreign postal code / PERSON_ADDRESS
13e / Recipient’s U.S. TIN / PERS_NID
13f / (Recipient’s) Ch. 3 status code / “16” (Individual)
13g / (Recipient’s) Ch. 4 status code / Not supported
13h / Recipient’s GIIN / Not supported
13i / Recipient’s foreign tax identification number, if any / Not supported
13j / LOB code / Not supported
13k / Recipient’s account number / Not supported
13l / Recipient’s date of birth / Not supported
14a / Primary Withholding Agent’s Name
(if applicable) / Not supported
14b / Primary Withholding Agent’s EIN / Not supported
15 / Check if pro-rata basis reporting (checkbox) / Not supported
15a / Intermediary or flow-through entity’s EIN, if any / Not supported
15b / (Intermediary or flow-through entity’s)
Ch. 3 status code / Not supported
15c / (Intermediary or flow-through entity’s)
Ch. 4 status code / Not supported
15d / Intermediary or flow-through entity’s name / Not supported
15e / Intermediary or flow-through entity’s GIIN / Not supported
15f / (Intermediary or flow-through entity’s) Country code / Not supported
15g / (Intermediary or flow-through entity’s)
Foreign tax identification number, if any / Not supported
15h / (Intermediary or flow-through entity’s)
Address (number and street) / Not supported
15i / (Intermediary or flow-through entity’s)
City or town, state or province, country, ZIP or foreign postal code / Not supported
16a / Payer’s name / Not supported
16b / Payer’s TIN / Not supported
16c / Payer’s GIIN / Not supported
16d / (Payer’s) Ch. 3 status code / Not supported
16e / (Payer’s) Ch. 4 status code / Not supported
17a / State income tax withheld / TAX_BALANCE
17b / Payer’s state tax no. / CO_STATETAX_TBL
17c / Name of state / TAX_BALANCE

Review and Update EmployeeData and Tax Balances

Before you create Form 1042-S data to print forms or generate the electronic file of Form 1042-S records, review and update the following employee data:

Employee balances. The system maintains 1042 balance information for each type of earnings that is to be reported on Form 1042-S. These balances are updated when the payroll calculation and confirmation processes are run during the year. Make sure that employee 1042 balances are current and correct.
Employee exemption code. When the system creates the employee’s 1042 balance record during payroll calculation/confirmation processes, it enters a default exemption code of Tax Treaty. Make sure the employee exemption codes on the 1042 balance records are correct.

Procedures for Updating Employee Data

Follow these steps to review and adjust employee 1042 Balance data:

Run the TAX030.SQR report at any time for audit purposes and/or to assist in your review and correction process. The report shows a breakdown of individual employee 1042-S income and tax information by pay period.
Check the employee’s Social Security Number (SSN) or Taxpayer ID Number (TIN).
View balances on the following inquiry pages:

1042 Tax Balances component -
YTD 1042Tax Balances 1 page and YTD 1042 Adjustment page
Tax Balances component -
1042 taxable gross and tax amounts in summary form

View each employee’s exemption code in the 1042 Tax Balances component.
Manually adjust 1042 balances and exemption codes using the Adjust 1042 Tax Balances component (Adjust 1042 Tax Balances 2 page).

Note: Balance adjustments are applied individually - if you make an adjustment to a 1042 balance on the Adjust 1042 Balances page, you will also likely want to apply the same adjustment to the summarized 1042 totals on the Adjust Tax Balance page.

Pages Used to Review and Adjust Employee Data

Page Name / Component Name / Navigation / Usage
Form 1042 Audit Report / RUNCTL_TAX030 / Payroll for North America, Pay Period Tax Reports USA, Form 1042 Audit / Run TAX030 - Form 1042 Audit report, which lists employee Form 1042-S information by pay period within pay group within Company.
Biographical Details / PERSONAL_DATA3 / Workforce Administration, Personal Information, Biographical, Modify a Person, Biographical Details, National ID / Check the employee’s Social Security Number
Federal Tax Data / TAX_DATA1 / Payroll for North America, Employee Pay DataUSA, Tax Information, Update Employee Tax Data / Check the employee’s Taxpayer ID Number.
1042Tax Balances / BALANCES_TAX3 / Payroll for North America, Periodic Payroll EventsUSA, Balance Reviews, 1042 Taxes / View the 1042 balances, reimbursed amount, and exemption code.
1042 Tax Balance Adjustments / BALANCES_TAX4 / Payroll for North America, Periodic Payroll EventsUSA, Balance Reviews, 1042 Taxes, 1042 Tax Balance Adjustments / View 1042 tax adjustment information.
Adjust 1042 Tax Balance 1 / ADJ_TAX_BAL3 / Payroll for North America, Periodic Payroll EventsUSA, Balance Adjustments, 1042 Taxes, Adjust 1042 Tax Balance 1 / Adjust 1042 balance information.
Adjust 1042 Tax Balance 2 / ADJ_TAX_BAL4 / Payroll for North America, Periodic Payroll EventsUSA, Balance Adjustments, 1042 Taxes, Adjust 1042 Tax Balances 2 / Adjust 1042 balances, reimbursed amount, and exemption code.

Form 1042 Audit

Run TAX030.SQR to produce the Form 1042 Audit report. The report lists employee Form 1042-S information (income code, taxable gross, withholding allowances, tax rates tax amount) by pay period within pay group within a Company. It provides subtotals at the pay group, pay period, and Company levels.

Note: This report lists details at the employee pay period level. If you have many employees and pay periods to report, the report can be quite large.

Access the Form 1042 Audit page.

Form 1042 Audit

Tax Year / If you enter a tax year, the system automatically sets the date range to be from 01/01 to 12/31 of the tax year you enter.
From Date, Thru Date / Enter a date range to select only the pay periods within that range.
Company / Select a Company or enter ALL to list all companies.

Adjusting 1042 Balance Information

Access the Adjust 1042 Tax Balance 1 page.
Payroll for North America > Periodic Payroll Events USA > Balance Adjustments > 1042 Taxes

Adjust 1042 Tax Balance 1

Enter the information on this page and save it to populate the fields on the Adjust 1042 Tax Balances 2 page.

State / $U is the most common value because it represents Federal.
Country / Select the country that is entered in the employee’s tax data.
Income Code / Select the Income Code associated with the earnings as defined by Non Resident Alien tax treaty. (Valid IRS Income Codes for Form 1042-S for the current tax year are displayed from the Income Code Table.)
Dependent Personal Services
Independent Personal Services
Other Income
Royalties
Scholarship/Fellowship Grants
Studying and Training
Teaching
Tax Rate / Enter the tax rate applied to 1042 gross income corresponding to the Income Code.
Reason for Adjustment / Record the reason for the balance adjustment for audit trail purposes.

Adjusting Employee 1042 Balances and Exemption Code

Access the Adjust 1042 Tax Balance 2 page.
Payroll for North America > Periodic Payroll Events USA > Balance Adjustments > 1042 Taxes

Adjust 1042 Tax Balance 2

You must complete the fields on the Adjust 1042 Tax Balances 1 page and save that page to populate this page.

Exemption Code / To change the displayed Exemption Code, select the correct Exemption Code. Values are:
Effectively connected income
Exempt under IRC (other than portfolio interest)
Income is not from U.S. sources
Exempt under tax treaty
Portfolio interest exempt under IRC
Qualified intermediary that assumes primary withholding responsibility
Withholding foreign partnership (WFP) or withholding foreign trust (WFT)
U.S. branch treated as U.S. person
Qualified intermediary that represents income is exempt
Qualified securities lender that assumes primary withholding responsibility
Payee subjected to chapter 4 withholding
Valid IRS Chapter 3 Exemption Codes for Form 1042-S for the current tax year are displayed from the Exemption Code Table.
Suspend Adjustment / Select this check box if you want to re-enter some key fields.

Adjusting the Balance

You can enter updated values directly into the Current Month-to-DateforTax, Taxable Gross, and/orWithholding Allowance fields. The system then calculates the Adjustment to Month-to-Date values.

Adjusting the Tax (1042) Reimbursed Amount

Use the Tax (1042) Reimbursed Amount group box to record over-withheld tax amounts that have been repaid to employees according to IRS reimbursement procedures. You can report reimbursed amounts on Box11 of Form 1042-S.

Revised / If you enter an amount in this field the system will automatically calculate the Adjustment Amount.
Adjustment Amount / If you enter an amount in this field the system will automatically calculate the Revised amount.

The total reimbursed amount is recorded on the YTD 1042 Tax Balance 1 page.

Review and Update Tables Used in Form 1042-S Reporting

For Form 1042-S reporting, the Federal EIN and Company address information is obtained from the Company table, and the Employer ID for State Withholding is obtained from the Company State Tax table.

Review the following pages to ensure that the information reported on Form 1042-S will be correct:

1042-S Year End Control
Define 1042-S Parameters
Company Table component, Company Location, and Default Settings pages
Company State Tax tables
Income Code Table (This table is maintained by PeopleSoft.)
Exemption Code Table (This table is maintained by PeopleSoft.)

Note: Country codes used in the Form 1042-S reporting process are obtained from PS_CNTRY_1042_TBL(COUNTRY_CD_1042), and not from PS_COUNTRY_TBL(COUNTRY_2CHAR).

Pages Used for Reviewing Table Setup

Page Name / Component Name / Navigation / Usage
1042-S Year End Control / 1042S_YE_CNTRL / Payroll for North America, U.S. Annual Processing, 1042 Reporting, 1042-S Year End Control / Enter or review the Transmitter Control Code and the list of Companies for which the Transmitter Control Code will be used to submit Form 1042-S data.
Define 1042-S Parameters / HP_1042S_COMPANY / Payroll for North America, U.S. Annual Processing, 1042 Reporting, 1042-S Year End Control/Update Transmitter Contact or Update Company Contact / Enter or review the Withholding Agent and Transmitter Contact information.
Company Table / COMPANY_TABLE1,
COMPANY_TABLE2_GBL / Set Up HRMS, Foundation Tables, Organization, Company / Review Company address and Federal EIN information.
CompanyState Tax Table General / CO_STATE_TAX_TBL / Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, CompanyState Tax Table / Check the Employer ID for State Withholding.
Income Code Table / INC_CD_1042_TABLE / Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, Income Code Table / Review valid IRS Income Codes for the current tax year. (This table is maintained by PeopleSoft.)
Exemption Code Table / EXM_CD_1042_TABLE / Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, Exemption Code Table / Review valid IRS Exemption Codes for the current tax year. (This table is maintained by PeopleSoft.)

Setting Up 1042-S Year End Control and Defining 1042-S Parameters

Find and review an existing 1042-S Year End Control record, or, if there is no existing 1042-S Year Control Record, select Add a New Value to add a new 1042-S Year End Control record.
Payroll for North America > U.S. Annual Processing > 1042-S Reporting > 1042-S Year End Control