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  • Form 1042-S reports gross distributions of ordinary income dividends (including short-term capital gains and qualified interest income), long-term capital gains, gain from U.S. real property interests, and return of capital paid during the year to beneficial owners or other payees who are either nonresident alien individuals or foreign entities (including foreign corporations, foreign partnerships, foreign trusts, foreign estates, foreign governments, international organizations and qualified intermediaries).1

    1 The fund’s withholding agent is generally required to presume a foreign person to be a U.S. person unless the foreign person has furnished the fund with the certifications required by one or more of Forms W-8BEN, ECI, IMY or EXP. Though you may be a nonresident alien individual, failing to furnish the fund with Form W-8BEN will result in the imposition of “backup withholding” at 28% on all reportable payments. Reportable payments include ordinary income dividends (including short-term capital gains and interest-related dividends), long-term capital gain distributions and gross redemption proceeds. The fund cannot return an amount withheld.

  • If you are a nonresident alien individual or foreign entity with investments in Franklin Templeton U.S. Mutual Funds and your investments paid ordinary income dividends, long-term capital gains or return of capital distributions in 2013, you may receive Form 1042-S.

  • Box 1: The income code is a two-digit numerical code used by the U.S. Internal Revenue Service (IRS) to identify the type of income reported in box 2 that was paid to you by your fund. Two types of income commonly paid are dividends paid by U.S. corporations (code 06) and capital gains distributions (code 36). Please note that income code 06 includes ordinary dividends, distributions of qualified interest income, and any gains from U.S. real property interests. In addition to dividends and capital gains distributions, your income may include distributions that are not from earnings and profits and are considered a return of capital (code 37), or exempt-interest dividends (code 01) or distributions from a retirement plan (code 14).

    Box 2: Gross income represents the amount of income described in box 1 that was paid to or on behalf of the recipient. Federal tax withheld as reported in boxes 7-9, if any, is included in the amount reported in box 2, gross income amount.

    Box 5: The U.S. withholding tax rate is generally 30%, or a lower rate based on a tax treaty, if any, between the U.S. and your country of residence. The rate is 0% if the gross income reported in box 2 is exempt from withholding. If your fund is a qualified investment entity for purposes of the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), the withholding tax rate is 30%, or a lower treaty rate, on gains from dispositions of U.S. real property interests for foreign shareholders owning not more than 5% of a fund.

    Box 6: The exemption code is a two-digit IRS numerical code identifying the authority for exempting a type of income from U.S. withholding tax. If the rate entered in box 5 is 0%, the appropriate exemption code will be reported in box 6. For example, exemption code 02 is used for distributions that are exempt from withholding under current U.S. tax law. If a withholding amount is reported in boxes 7-9, exemption code 00 will appear in box 6.

    Box 7: Federal tax withheld represents the total amount of U.S. federal tax withheld by the fund, if any, from the income distributions paid during 2013 as reported in box 2. The tax withheld is included in the gross income amount reported in box 2.

    Box 9: Reflects the aggregate amount of tax withholding by all withholding agents.

    Box 13b: The recipient code is a two-digit IRS numerical code that identifies the type of recipient that received a fund distribution. For example, common recipient codes are 01 (individual), 02 (corporation), 03 (partnership), 05 (trust), and 12 (qualified intermediary).

    Box 16: The country code is a two-letter IRS code identifying the country where the recipient claims residency under that country’s tax laws.

    Box 22: The recipient account number is the account number assigned to your account by Franklin Templeton Investments.

    If your account was subject to backup withholding in 2013, you will also receive a Form 1099-DIV, and, if applicable, Form 1099-B, each of which would reflect any amounts withheld.

    Please refer to IRS Publication 519, U.S. Tax Guide for Aliens, and the 2013 IRS tax form instructions for additional information on U.S. income tax requirements. You can download IRS publications and forms from the IRS website. Please consult a tax advisor for guidance regarding your individual tax situation.

  • Yes. It was available online by March 17, 2014. Registered shareholders can view or print their year-end tax forms by logging into their account on Login to your account or register now for account access.

Important Legal Information

The information contained in this Tax Center is not intended to be a complete discussion of all federal or state income tax requirements. This information cannot be used by an investor to avoid any income tax penalties that may be imposed under the Internal Revenue Code. Investors should seek advice from a financial and/or tax advisor about the potential tax implications of their investments in Franklin Templeton fund(s) based on their individual circumstances.

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