QI withholding & 1042-S schema basics — pools, boxes, reject patterns & corrections
This guide connects withholding pools to the 1042-S schema so rates, boxes and recipient codes align — plus the most frequent reject patterns and a clean corrections workflow with receipts.
Scope: Pool design (statutory/treaty/exempt), mapping to boxes/recipient codes, schema validation hygiene,
corrections/refilings (FIRE) and evidence you should keep in your dossier.
1) From pools to 1042-S: the essentials
- Pool taxonomy: statutory default (30%), treaty pools (e.g., 15%, 0%), portfolio interest, exempt interest/gains, Ch.4 default.
- Income codes: e.g., 06 = dividends, 01 = interest, 12 = royalties, 34 = substitute dividends, 40 = 871(m).
- Boxes overview: Box 1 = Gross income; Box 2 = Ch. 3/4; Box 3a/3b = Ch. 3 rates; Box 4a/4b = Ch. 4 rates; Box 7 = U.S. tax withheld; recipient code per payee type.
- Name/TIN & status link: W-8/W-9 acceptance drives pool eligibility; treaty pools require valid residency/LOB where relevant.
Template: start with a Product → Income Code → Pool → 1042-S Box mapping and keep it versioned.
Use our ready CSV/XLSX and extend by country for treaty pools.
2) Typical mapping patterns (examples)
| Product | Income code | Pool / Rate | Boxes / Recipient code | Notes |
|---|---|---|---|---|
| U.S. equity cash dividend | 06 | No treaty (30%) / Treaty 15% | Box 1 gross; Box 7 tax; Recip. 01/12 | Treaty requires valid residency; LOB where applicable |
| Portfolio interest (registered) | 01 | Portfolio interest (0%) | Box 1; Box 7 = 0; Recip. 01/12 | Requires valid W-8; check instrument features |
| Dividend equivalent (§871(m)) | 40 | Statutory (30%) unless QDD scope applies | Box 1; Box 7; Recip. 01/12 | Special QDD/QI handling; confirm status |
3) Common reject patterns (and how to avoid them)
| Reject | Root cause | Prevent/Fix |
|---|---|---|
| Income code/pool mismatch | Mapping table not version-locked | Lock product→code/pool map; unit tests before export |
| Recipient code wrong | Intermediary flagged as individual | Enforce recipient code from KYC entity type |
| Country/format issues | Non-ISO country codes; free-text addresses | ISO-3166 mapping; address normalization |
| TIN format errors | Hyphen/space artifacts; invalid ranges | Store digits-only; display format; SSN/ITIN sanity checks |
| Box totals inconsistent | Rounding/FX inconsistency; missing adjustments | Standardize FX/rounding; capture adjustments explicitly |
4) Corrections & re-filings (clean workflow)
- Identify errors: post-submission rejects, client updates, internal QA findings.
- Log & assess: create a corrections entry with before/after values and materiality.
- Resubmit: generate corrected 1042-S, upload; retain receipts and error reports.
- Close & evidence: link receipts, approval, and downstream tie-outs in the dossier.
Evidence to keep: submission IDs/receipts, error report, corrections log, and updated reconciliation to 1042/GL.
5) Ready-to-use templates
| Template | Purpose | Download |
|---|---|---|
| Product→Income Code→Pool mapping (CSV) | Locks rate logic & recipient codes | CSV |
| Mapping workbook (XLSX) | Dropdowns & Pivot-ready summary | XLSX |
| Treaty pools (country-specific) (XLSX) | Dependent dropdowns by country; LOB flag | XLSX |
| QI Reconciliation Pack (XLSX) | 1042-S→1042→GL tie-outs & variances | XLSX |
Want us to wire your 1042-S export?
We map pools/boxes, set validations and build the corrections workflow with receipts.
We map pools/boxes, set validations and build the corrections workflow with receipts.