1042

Tax Liability of Qualified Derivatives Dealer (QDD)

Agency
IRS
Revision
2025
Fillable fields
45
Pages
1
Official source
IRS form page
Checked
October 21, 2026
Fill 1042 online
Page 1 of form 1042

Schedule Q (Form 1042): Tax Liability of Qualified Derivatives Dealer (QDD)

Schedule Q (Form 1042) reports the tax liability of a qualified derivatives dealer (QDD). The schedule says that if the taxpayer or any branch of the taxpayer was a QDD during the tax year, Schedule Q is completed and filed for each of those QDDs, as an attachment to Form 1042, even if the QDD has zero tax liability.

The form defines a QDD as a home office or branch that, in accordance with the qualified intermediary agreement (QIA), qualifies and has been approved for QDD status and satisfies the requirements of the QIA. It says the QIA is section 6 of Rev. Proc. 2022-43, 2022-52 I.R.B. 570.

This is the 2025 schedule. Its own instructions are printed on the form, and Section 4 of the Instructions for Form 1042 says when to attach it. You can fill out the PDF free in your browser on this page and download it without an account.

What's on Schedule Q (Form 1042)

Header

Name of taxpayer and employer identification number, name of QDD and QI-EIN.

QDD tax year and period

Beginning and ending dates of the QDD tax year, and of the year or portion of the year the schedule relates to, with the schedule number.

Columns (a), (b) and (c)

Gross amount, withholding tax rate, and amount of tax liability, which is column (a) multiplied by column (b).

Lines 1 and 2

Total section 871(m) amount, and total dividends received in equity derivatives dealer capacity.

Lines 3 and 4

Total QDD tax liability under section 3.09(A) and under section 3.09(B) of the Qualified Intermediary Agreement.

Lines 5 and 6

Total QDD tax liability under section 3.09(C), with lines 5a to 5d for each income type, and the total of the line 5 amounts on line 6.

How to fill out Schedule Q (Form 1042)

  1. 1

    Name of QDD

    Enter the QDD's name following the naming protocol used when applying to be a QDD, along with its QI-EIN.

  2. 2

    Number of schedules

    Indicate the number of each Schedule Q filed and the total number of Schedules Q filed by the taxpayer. The form's example: a QDD with a September 1 fiscal year completes two schedules, one through December 31 and one from January 1.

  3. 3

    Column (b) for partnerships

    A QDD Partnership enters the weighted average applicable withholding tax rate of its partners. The form says a U.S. partner's rate is zero, unless it is a partnership with direct or indirect foreign partners.

  4. 4

    Column (c)

    Multiply column (a) by column (b). The form says this column is not reduced by any withholding that has occurred.

  5. 5

    Lines 1 to 3

    The form says that for calendar years 2019 through 2026, line 1 and line 3 information is not required, and for line 2 only the gross amount in column (a) and the tax rate in column (b) are required.

  6. 6

    Lines 4 to 6

    Complete all three columns on line 4. On line 5, name each income type, such as dividends or interest, and complete the columns for each. For 2019 through 2026, the form says not to include dividends included on line 2.

These steps follow the instructions printed on the schedule.

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Where it goes and filing notes

Attach to Form 1042

The schedule says "Attach to Form 1042." The Instructions for Form 1042 say to check the Section 4 box and attach Schedule(s) Q for each QDD.

Form 1042 due date

The Instructions for Form 1042 say to mail Form 1042 by the 15th day of the 3rd month after the end of the calendar year (March 15) to Internal Revenue Service, P.O. Box 409101, Ogden, UT 84409.

Electronic filing

The Instructions for Form 1042 say electronic filing of Form 1042 is required for a withholding agent that is a financial institution, one required to file 10 or more information returns, or a partnership with more than 100 partners.

Extension

The Instructions for Form 1042 name Form 7004 for more time to file Form 1042, and say Form 7004 does not extend the time for payment of tax.

Fiscal year QIs

The Instructions for Form 1042 say a QI with a tax year other than the calendar year files two Schedules Q for each QDD, one for each calendar-year portion.

Related forms

Who files Schedule Q (Form 1042)?

  • Qualified intermediaries that are QDDs

    The Instructions for Form 1042 say that if a QI, whether the home office or any branch, was a QDD during the tax year, it checks the box in Section 4 of Form 1042 and attaches Schedule(s) Q for each QDD.

  • QDD partnerships

    The form says a partnership that is, or has a branch that is, a QDD completes Schedule(s) Q, taking into account the partnership-specific adjustments in section 3.09 of the QIA.

  • Taxpayers with several QDDs

    A separate Schedule Q is required for each QDD, for example when several branches are QDDs. Each schedule shows its own number and the total number of Schedules Q filed.

  • Fiscal year taxpayers

    The form says a taxpayer with a fiscal year provides a separate Schedule Q for each QDD for each portion of the fiscal year that falls within a calendar year.

  • QDDs with zero tax liability

    The form says the taxpayer files Schedule Q as an attachment to Form 1042 even if the QDD has zero tax liability.

The taxpayer that files Form 1042 completes it when the taxpayer, or a branch of it, was a QDD during the tax year.

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Questions about Form 1042

Who files Schedule Q (Form 1042)?

The schedule says a taxpayer files it for each QDD if the taxpayer or any branch of the taxpayer was a qualified derivatives dealer during the tax year.

Is Schedule Q filed when the QDD owes no tax?

Yes. The form says Schedule Q is filed as an attachment to Form 1042 even if the QDD has zero tax liability.

How many Schedules Q are filed?

One for each QDD. A fiscal year taxpayer files a separate schedule for each QDD for each part of its fiscal year that falls in a calendar year.

Where is Schedule Q sent?

It is attached to Form 1042. The Instructions for Form 1042 give the paper filing address as Internal Revenue Service, P.O. Box 409101, Ogden, UT 84409.

What is the QIA?

The form says the qualified intermediary agreement (QIA) is section 6 of Rev. Proc. 2022-43, 2022-52 I.R.B. 570.

Which lines can be left blank for 2025?

The form says that for calendar years 2019 through 2026, the information on lines 1 and 3 is not required, and on line 2 only columns (a) and (b) are required.