The differences between 1042-S vs W2 might feel confusing. Employers can use both forms to report wages, but sometimes they will choose one or the other as well. Your filing requirements depend on your employees’ statuses.
Understand how 1042-S and W2 forms work before you start any tax and wage prep.
Knowing the ins and outs will make your year-end taxes easier to complete. You will also ensure that your employees have what they need. Utilizing accounting software can help when it comes to significantly reducing any tax-induced headaches. Our W-2/1099 Forms Filer software acts as an affordable option for many small businesses.
The Benefits and Disadvantages of 1042-S vs W2
Forms 1042-S and W2 are different forms that accomplish the same task of reporting payments that employers make to employees. Employees will receive a 1042-S form from an employer if they are:
- A foreign national
- A non-U.S. resident
- Classified as a foreign entity who received wages that were not subject to federal or state taxes
Conversely, employees who are U.S. citizens receive a W2 from employers. In terms of form simplicity, completing a W2 is more straightforward than when you need to complete a Form 1042-S. Since the W2 is for U.S. residents, the reporting requirements are less complex than those of non-residents.
For U.S.-resident employees, employers must withhold a set amount of wages for:
- Federal income tax
- Social Security
- Medicare
Non-resident wage earners are not subject to these same withholdings. The 1042-S reflects that difference and requires more information on what income is subject to taxing.
Tax treaties add another level of complexity to the 1042-S. To avoid taxing the same employee twice for each country of residence, some nations form tax treaties with the United States. The treaties outline the covered types of income. There are still many ways that non-residents can earn income that are often not covered. These nuances mean that 1042-S forms require much more detail than a W2.
How Remote Work Impacts 1042-S vs W2
Form 1042-S is becoming more common as businesses based in the U.S. begin to hire more employees that live outside of the United States. The pandemic gave rise to employers and employees adapting to the work-from-home concept, which popularized remote roles.
In mid-2025, over 32.6 million Americans (approximately 22% of the workforce) worked remotely and 83% of workers globally preferred hybrid working arrangements.
As employers take advantage of the ability to hire fully remote workers, international workers will need to account for non-resident employees with their tax reporting. We have just explained the complexities of the forms. We have a solution to make completing 1042-S and W2 forms simple.
Frequently Asked Questions
- Should you send W2 or 1042-S forms to independent contractors? – No, you should only send a Form 1099-NEC to independent contractors who earned $600 or more from your business in the previous calendar year.
- Can you use a W2 form for employees working in the U.S. on a visa? – Yes, you should send a W2 form to any employee that you pay regular wages to during the year. Only an employee that is subject to a tax treaty or special exemption is an exception.
How AMS Products Can Help
Filing 1042-S vs W2 is not a complicated process with our W2 and 1042-S filing software tools. Our products have an easy-to-use, menu-driven format that simplifies data entry. We know that you might have several types of employees who require different forms. Users can create up to 99,999 employee files, which transfer into whichever form you are using.
We want to make sure that your system has what you need. Download our free 1099-etc Demo software today and try it before you commit to buying software. If you have specific questions, a representative from our Sales and Information team is ready to help. Just call (800) 536-1099.