If you oversee a J-1 exchange program that pays scholars—whether as a university, research institute, or sponsoring organization—issuing Form 1042-S correctly and on time is non-negotiable. Form 1042-S is the document that reports income paid to nonresident aliens for tax purposes, and your J-1 scholars depend on it to file their U.S. tax returns accurately. The February deadline means you need a clear process in place now, not in January when you’re overwhelmed. This guide walks you through exactly what to do, when to do it, and where compliance usually breaks down.

What is Form 1042-S and why does your J-1 program need to issue it by February?

Form 1042-S is the IRS document that reports income paid to a nonresident alien during the tax year—in this case, your J-1 scholars. Unlike a W-2, which reports withholding from a U.S. employer-employee relationship, 1042-S reports stipends, salaries, fellowship payments, or other compensation paid to foreign nationals. The IRS requires you to issue 1042-S to the scholar by February (the exact date varies by year—typically mid-February) and file a copy with the IRS at the same time. Your scholar needs this form to file Form 1040-NR, the nonresident alien tax return. If you miss the deadline or issue 1042-S with errors, your scholar’s return filing gets delayed, and the IRS may flag your program for audit.

The February deadline applies because the tax year ends on December 31, and the IRS wants all 1042-S forms distributed and filed in a narrow window at the start of the filing season. Your program can’t delay—your scholar can’t file, and your compliance record takes a hit.

Who counts as a J-1 scholar that requires a 1042-S?

This is where many programs get confused. Not every J-1 on your program necessarily receives a 1042-S from you. You issue 1042-S for any J-1 to whom you—the sponsoring organization or host institution—pay compensation during the tax year. That includes research scholars, visiting professors, fellows, interns, specialists, and trainees who receive a stipend, salary, or other payment for their work or research. If a J-1 is self-funded or funded by their home country and you pay them nothing, you issue no 1042-S.

The key variable is whether you paid them. If another entity paid them—say, a U.S. employer where your J-1 interned—that employer issues the 1042-S, not your program. Your job is only to report what your organization paid.

It depends on the J-1 category, prior time in the U.S., and treaty status

Before you issue a 1042-S, confirm that the scholar actually owes tax on that income. Here’s where it gets nuanced: a few J-1 categories and situations can affect taxability, and you need to know this before you issue the form.

J-1 student vs. teacher/trainee exclusion periods. If your scholar is in the “student” category (exchange student, academic visitor, researcher), they can generally exclude their presence in the U.S. from the Substantial Presence Test for up to 5 calendar years—meaning they may not be a resident alien for tax purposes during those years, even if they were paid. If they’re in a “teacher or trainee” category (visiting scholar, specialist, intern, camp counselor), the exclusion is shorter: 2 of the last 6 calendar years in most cases, extendable to 4 in certain situations. This matters because a nonresident alien—someone not meeting the Substantial Presence Test—files a different form and may owe tax on only U.S. source income. You still issue 1042-S in both cases, but the scholar’s taxability status affects how they use it.

Tax treaty benefits. Many countries have a tax treaty with the United States. If your scholar is from a treaty country, they may be able to claim a treaty exemption—for example, a scholarship or fellowship exemption, or a reduced withholding rate on income. Treaty benefits are self-reported by the scholar on Form 8233, not by you, but you still issue 1042-S showing the gross amount paid. The scholar will use Form 8233 to claim the exemption when they file their return.

Prior time in the U.S. If this is not the scholar’s first time in J-1 status (or even first time in the U.S. on any visa), their exclusion period may have already been used up. A scholar who was on an F-1 student visa last year may not be eligible for the 5-year student exclusion any longer. Verify this before you assume they’re nonresident.

Your job as the issuer of 1042-S is to report what you paid, accurately and on time. The scholar’s responsibility—with the help of a tax preparer—is to determine their residency status and claim any treaty benefits. But you need to understand these categories well enough to ask the right questions and flag issues if something seems off.

Where sponsors get 1042-S wrong most often

Missing or incorrect TIN. The scholar’s Tax Identification Number (TIN)—usually their Social Security Number (SSN) if they’ve been assigned one, or an Individual Taxpayer Identification Number (ITIN)—must be correct on the form. If it’s missing or wrong, the IRS can’t match the 1042-S to the return the scholar files, and you both end up with compliance headaches. Always verify the TIN directly with the scholar using a Form W-9 or equivalent documentation.

Double-counting or failing to coordinate with other payers. If the scholar worked for both your program and an outside employer, or if your program paid them but didn’t track all payments (e.g., a bonus issued late in the year), the total income on 1042-S may not match what the scholar actually received. Reconcile your records with any other payers before you issue. If the scholar has income from multiple sources, only you issue 1042-S for what you paid; the other payer issues theirs.

Issuing 1042-S for a scholar who should receive a W-2 instead. If a J-1 is a regular employee of your organization (not a visiting scholar, but a staff hire on J-1 status), and they meet certain criteria, they may owe FICA (Social Security and Medicare taxes) and should receive a W-2, not a 1042-S. This is rare but important: confirm the employment relationship and visa status with your HR and compliance team. A tax advisor can help you sort this out if you’re unsure.

Late issuance or failure to file with the IRS. Issuing the form to the scholar on time is only half the job—you must also file copy B with the IRS on the same schedule. If you miss the deadline, the IRS may assess penalties to your organization, not the scholar.

Step-by-step: How to issue Form 1042-S correctly

1. Gather and verify scholar information. Collect the scholar’s name, address, date of birth, passport number (or U.S. identification number if available), and TIN. Use a Form W-9 to request the TIN and confirm the spelling of the name. Keep this documentation in your files.

2. Tally all payments made during the calendar year. Compile every payment—salary, stipend, bonus, allowance, research support—that you issued to the scholar from January 1 to December 31. Use your payroll system or accounting records. Round to the nearest dollar.

3. Determine the income type and coding. Form 1042-S has multiple boxes for different types of income: “salaries, wages, other compensation,” “interest,” “dividends,” etc. Most J-1 scholars fall under “salaries, wages, other compensation” (Box 1). If you paid fellowship or scholarship income, it may go in a different box—consult IRS instructions if needed.

4. Calculate withholding, if any. Many J-1 scholars are exempt from federal income tax withholding because they’re nonresident aliens. However, you must withhold any applicable FICA (Social Security and Medicare) at the time of payment, which you would then report on the 1042-S. If the scholar provided Form 8233 claiming treaty exemption, you follow the instructions on that form regarding withholding. If you did not withhold anything, Box 2 (federal income tax withheld) will be zero.

5. Complete Form 1042-S using IRS software or a tax service provider. You can prepare 1042-S using IRS e-services, commercial tax software designed for foreign income reporting, or by hiring a payroll or tax service to generate the forms for you. If you have only a few scholars, you can complete the form manually, but software is faster and reduces errors.

6. Issue Copy B to the scholar by the February deadline. Print and mail (or provide electronically if your program and the scholar agree) Copy B of the form to the scholar’s U.S. address. Include instructions on how to use it for their tax return. Keep a copy for your records.

7. File Copy A and summary information with the IRS. File the IRS copy and Form 1042-S Summary with the IRS by the same February deadline. You can file electronically through IRS e-services (for sponsors with ITAR numbers) or submit by paper mail. Confirm the filing method with the IRS in advance.

8. Retain documentation. Keep copies of all 1042-S forms, the W-9s, payment records, and any correspondence with scholars for at least three years. This protects you if the IRS audits your program or the scholar’s return.

Frequently Asked Questions

Do all J-1 scholars need a 1042-S, or only nonresident aliens?

You issue 1042-S for any J-1 scholar who is a nonresident alien under IRS rules for the tax year. Most J-1 scholars in their first few years in the U.S. are nonresident aliens and require 1042-S. However, if a scholar has been in J-1 status (or other visa status) long enough to meet the Substantial Presence Test and become a resident alien, they would receive a W-2 instead (assuming they’re also a regular employee). The safest approach: ask your tax or compliance advisor to verify residency status for each scholar before you issue.

What if a J-1 scholar claims a tax treaty exemption—do I still issue 1042-S?

Yes. You issue 1042-S reporting the full amount paid, regardless of treaty status. The scholar then uses Form 8233 (when filing their return) to claim the treaty exemption and request a refund of any tax withheld. You don’t make that decision; you report what you paid, and the scholar handles the treaty claim on their tax return.

Can I issue 1042-S electronically, or must it be paper?

The IRS prefers electronic filing. If you file electronically, you transmit Copy A and the summary to the IRS online; you can provide Copy B to the scholar by mail or, in some cases, electronic copy if your program policy allows. Paper filing is permitted but slower and more prone to processing delays. If you use an automated tax service provider, they typically handle electronic filing for you.

What if I didn’t withhold federal income tax from a J-1 scholar’s pay—is that legal?

Yes, if the scholar is a nonresident alien and you correctly determined they were exempt from withholding. You are generally not required to withhold federal income tax from a nonresident alien’s wages, though you must withhold FICA (Social Security and Medicare) unless a treaty exemption applies. Document your exemption determination (e.g., a completed Form 8233 or W-9) in your files to show the IRS you made a good-faith effort to comply.

What happens if I miss the February deadline?

Missing the February deadline creates problems for both your program and the scholar. Your organization may face penalties from the IRS for late filing. The scholar cannot file their tax return on time without the form, which delays any refund they’re owed. If the delay extends into March or later, file anyway and include a brief written explanation with your submission. Contact the IRS or a tax advisor to confirm the filing address and any remedial steps required.

This is general information about Form 1042-S issuance procedures, not personalized tax or legal advice. Each program’s situation depends on the specific scholars, payment structures, visa categories, and treaty status. For anything beyond standard 1042-S issuance, consult a tax advisor or employment attorney familiar with J-1 exchange programs.

Issuing 1042-S on time and accurately is how you fulfill your role as a J-1 program sponsor and ensure your scholars can file their tax returns without delay. The February deadline is firm, the steps are straightforward, and the compliance payoff is real—both for your program’s reputation and your scholars’ ability to settle their U.S. tax obligations. The fastest way to verify your process is correct and stay ahead of common errors is to confirm your scholar’s individual tax situation with a qualified preparer; for your scholars preparing their own J-1 visa taxes, the tax calculator can help them estimate what they owe based on the 1042-S you issue.