Search all codes at once in the Form 1042-S code finder. Every explanation below is our summary of the IRS instructions and the rule each code points to.
To work out the codes for one payment, use the chapter 3 and FATCA withholding calculator.
The codes
01Effectively connected income
The income is effectively connected with a U.S. trade or business, usually certified on Form W-8ECI, so it is not withheld under chapter 3; the payee reports it on its own U.S. return. The recipient's U.S. TIN must be in box 13i. Without it, withhold 30% and enter 00 in boxes 3a and 4a.
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a
02Exempt or reduced withholding under IRC (only if no other chapter 3 code applies; e.g., 14% scholarships)
An exemption or reduced rate under the Internal Revenue Code that no other code describes, such as the 14% rate on scholarships for F, J, M and Q visa holders, capital gain dividends, interest-related dividends and reportable deposit interest. The instructions say to use it only when no other chapter 3 code applies.
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a and box 1
03Income is not from U.S. sources
The amount reported is not from U.S. sources, so chapter 3 tax does not apply to it.
Source: Instructions for Form 1042-S (2026), Appendix B
04Exempt or reduced withholding under tax treaty
A treaty exempts the income or reduces the rate. Use it only for treaty relief; the country code in box 13b must be a country with an income tax treaty, the recipient generally needs a U.S. TIN or a foreign TIN, and an entity's limitation-on-benefits code goes in box 13n.
Source: Instructions for Form 1042-S (2026), boxes 3a, 13b, 13i and 13n
05Portfolio interest exempt under IRC
Portfolio interest, exempt under IRC 871(h) and 881(c): interest on registered debt held by someone who is not a 10% shareholder, not a bank lending in the ordinary course and, for a controlled foreign corporation, not related to the payer.
Source: Instructions for Form 1042-S (2026), Appendix B; IRC 871(h), 881(c)
06QI that assumes primary withholding responsibility
The payment went to a qualified intermediary that stated on its Form W-8IMY that it assumes primary withholding responsibility under chapters 3 and 4, so the QI withholds instead of you. A QI acting as a qualified derivatives dealer uses 22 instead.
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a
07Withholding foreign partnership or withholding foreign trust
The payment went to a withholding foreign partnership or withholding foreign trust that represented its status on Form W-8IMY; it withholds for its partners or beneficiaries under its agreement with the IRS.
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a
08U.S. branch treated as U.S. person
The payment went to a U.S. branch, or a U.S. territory financial institution, that agreed on Form W-8IMY to be treated as a U.S. person, so it takes on the withholding.
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a
10QI represents that income is exempt
A qualified intermediary that did not assume primary withholding responsibility represented, on the withholding statement with its Form W-8IMY, that the income is exempt.
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a
11QSL that assumes primary withholding responsibility
A substitute dividend paid to a financial institution (including a QI) that represented on Form W-8IMY that it acts as a qualified securities lender for the account, and so withholds itself.
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a
12Payee subjected to chapter 4 withholding
The payee was withheld on under chapter 4, so chapter 3 withholding does not also apply. The 30% must actually be withheld and deposited. Box 3 shows 4, and you may also show the chapter 3 rate that would otherwise apply, which helps the owner claim a refund.
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a, special instructions
22QDD that assumes primary withholding responsibility
The payment went to a qualified intermediary acting as a qualified derivatives dealer that assumes primary withholding responsibility.
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a
23Exempt under section 897(l)
A distribution by a REIT or other qualified investment entity to a qualified foreign pension fund, or an entity wholly owned by one, that is exempt under IRC 897(l).
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a
24Exempt under section 892
Income of a foreign government or an international organization that is exempt under IRC 892. The amounts are still reported on Form 1042-S.
Source: Instructions for Form 1042-S (2026), boxes 3a and 4a