Form 1042-S Country Code: Boxes, OC Rule, and Treaty Rate

The country code for Form 1042-S is a two-letter code from the IRS list at IRS.gov/CountryCodes, and the one that drives treaty withholding goes in Box 13b: the country where the recipient claims tax residency based on the Form W-8 they gave you.¹ Get this code wrong and you can blow up a treaty-based withholding rate, expose yourself to liability for the tax shortfall, and trigger IRS penalties on the information return itself.

Where the Official Code List Lives

The IRS publishes a dedicated country code document listing every recognized country and territory alongside its two-letter code. The same list appears in the Instructions for Form 1042-S and is shared with several other international forms, including Forms 926, 1118, 3520, and 8805.² Access it at IRS.gov/CountryCodes.

The common codes are what you’d expect: CA for Canada, GB for the United Kingdom, JP for Japan. Others are less intuitive. U.S. territories like American Samoa (AQ) and Guam (GQ) have their own codes and appear as separate jurisdictions, not under a generic United States entry.² If you pay income to a resident of a U.S. territory, use that territory’s specific code.

The Three Country Code Boxes on Form 1042-S

Form 1042-S has more than one country code field, and mixing them up is one of the most common errors on the form. The three boxes are:

Box 12f: the withholding agent’s country code, identifying where you (the payer) are a tax resident.
Box 13b: the recipient’s country code, identifying where the foreign person claims tax residency.
Box 15f: the intermediary or flow-through entity’s country code, used when an intermediary sits in the payment chain.

Box 13b is the one that matters for treaty purposes. It’s the field the IRS uses to verify whether the recipient’s claimed withholding rate matches a valid treaty.¹ An older version of the form placed the recipient’s country code in a different location, so if you’re working from prior-year templates or outdated reference materials, check against the current form layout.

Matching the Code to the Recipient’s W-8

The code in Box 13b must match the country of residence the recipient claimed on their Form W-8. Individuals provide this on Form W-8BEN; entities use Form W-8BEN-E.³ You don’t independently decide which country to use. You rely on the valid W-8 on file.

For entities, the country code should reflect the jurisdiction under whose laws the entity claims treaty benefits. That is usually the country of incorporation or organization, but not always. Some entities are treated as tax residents of a different country under that country’s domestic law, and the W-8BEN-E captures the distinction. Your code follows whatever the entity certified.

Mismatches create real problems. If the recipient certified residency in Germany on their W-8BEN but you enter the code for France on the 1042-S, the IRS’s automated matching system flags the discrepancy. Even if the underlying withholding was correct, an inconsistent filing can trigger inquiries and force an amendment. If the mismatch suggests you applied a treaty rate without proper documentation, you face potential liability for the under-withheld tax under IRC Section 1461, which makes withholding agents personally liable for tax they should have withheld.⁴

When to Use “OC” and When to Leave Box 13b Blank

Two situations fall outside the standard code list, and they are handled differently.

If the recipient’s country of residence isn’t on the IRS list, enter “OC” for “Other Country.” You also use “OC” when the payment goes to an international organization, such as the United Nations.¹ The code should be rare in practice: the IRS list covers virtually every sovereign nation and territory.

If you cannot determine the recipient’s country of residence at all, leave Box 13b blank. The IRS instructions are explicit: do not enter a fabricated code to fill the field.² A blank Box 13b tells the IRS you lacked sufficient documentation, which almost always means no valid W-8 on file. Without that documentation, you cannot apply any treaty-reduced rate. The default 30% statutory withholding rate applies to the entire payment.⁵ The IRS treats a blank country code field as a red flag for failed due diligence.

How the Country Code Drives the Treaty Rate

The code in Box 13b is the starting point for every treaty claim on the form. The United States has income tax treaties with dozens of countries, and each treaty sets its own reduced withholding rates for different categories of income.⁶ Without a country code that corresponds to a treaty partner, a reduced rate is unjustifiable no matter what the recipient certified on their W-8.

The country code works with several other fields to create a complete treaty claim. Box 1 identifies the type of income using a numeric income code (dividends, interest, royalties, and so on). Boxes 3a and 4a contain the exemption code explaining why a reduced rate applies. Code 04, for instance, means the rate is reduced under a tax treaty. Boxes 3b and 4b show the applicable tax rate. All of these must be internally consistent. Enter a country code for a nation that has no treaty with the United States, then enter an exemption code claiming treaty benefits, and the IRS’s matching system will catch it.

The actual dollar amount of federal tax withheld goes in Box 7a, which must be completed even when the amount is zero.¹ Treaty rates commonly range from 0% to 15% depending on the income type and the specific treaty; some modern treaties fully exempt categories like interest or royalties. The default without a treaty is 30% of the gross payment.⁷

Before applying any reduced rate, know the specific treaty article that provides for it. The IRS publishes treaty tables that cross-reference income codes with treaty rates for each country, which is the fastest way to verify you’re applying the right rate to the right income type.⁶

Correcting a Country Code After Filing

If you discover a country code error after filing, submit an amended Form 1042-S. The core steps are the same whether you filed electronically or on paper.¹

Check the “Amended” box at the top of the form and enter the amendment number (1 for the first correction, 2 for the second, and so on).
Enter all correct information, not just the changed fields. That means the recipient’s name, address, income amounts, codes, and the corrected country code.
Keep the same unique form identifier as the original filing so the IRS can match it.
File the amendment with the IRS and furnish a corrected copy to the recipient as soon as possible.

For paper-filed amendments, submit the corrected Form 1042-S with a Form 1042-T transmittal. Do not include Form 1042-T if you’re filing the amendment electronically.⁸

One situation trips people up. If you already gave copies to the recipient but haven’t yet filed with the IRS, and you spot an error, don’t check the “Amended” box. Instead, file the original with the correct information. The “Amended” designation is only for correcting forms already submitted to the IRS.¹

What a Wrong Country Code Costs

Filing Form 1042-S with an incorrect country code counts as filing an incorrect information return. The per-form penalty escalates based on how long the error goes uncorrected. For returns due in calendar year 2026, the tiers are:⁹

Corrected within 30 days of the due date: $60 per form.
Corrected after 30 days but on or before August 1: $130 per form.
Corrected after August 1 or not corrected at all: $340 per form.

If the IRS determines you intentionally disregarded the filing requirements, the penalty jumps significantly with no maximum cap.¹⁰ Separate penalties apply for failure to furnish correct statements to recipients on time.

The IRS can waive penalties if you demonstrate reasonable cause. You need to show you acted responsibly both before and after the failure: that you tried to prevent the problem, requested extensions when needed, and corrected the error as quickly as possible. The IRS also weighs mitigating factors like whether you’re a first-time filer of the form, your overall compliance history, and whether the failure resulted from circumstances beyond your control.¹¹ Catching and correcting a country code error inside that first 30-day window is the cheapest outcome and the strongest evidence of good faith if the IRS questions your filing.

1
Internal Revenue Service. Instructions for Form 1042-S (2026)
2
Internal Revenue Service. Country Codes for Form 1042-S
3
Internal Revenue Service. About Form W-8 BEN
4
Office of the Law Revision Counsel. 26 U.S. Code 1461 – Liability for Withheld Tax
5
Internal Revenue Service. Tax Withholding Types
6
Internal Revenue Service. Tax Treaty Tables
7
Internal Revenue Service. Fixed, Determinable, Annual, or Periodical (FDAP) Income
8
Internal Revenue Service. Discussion of Form 1042, Form 1042-S and Form 1042-T
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Internal Revenue Service. 20.1.7 Information Return Penalties
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Internal Revenue Service. Penalties Related to Form 1042-S
11
Internal Revenue Service. Penalty Relief for Reasonable Cause