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Old 12-03-2013, 10:26 PM
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quarterly witholding irs

Hi,

I am a canadian (non resident to US). I own 2 rental houses in Arizona. Both are rented. Both are contained inside an LLP (not LLC). Is it mandatory for an llp to pay 4 quaterly witholding (35%) payments to IRS or do I wait until end of the year?
What If there was very little actual profit in Rent (rent minus expense) for the whole year? or no profit?

Please help

TIA
mike


Last edited by TaxGuru : 12-04-2013 at 09:26 AM.


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Old 12-05-2013, 12:06 PM
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Join Date: Oct 2010
Posts: 5,233
Quote:
Originally Posted by sarb007 View Post
Hi,

#1:I am a canadian (non resident to US). I own 2 rental houses in Arizona. Both are rented. Both are contained inside an LLP (not LLC). Is it mandatory for an llp to pay 4 quaterly witholding (35%) payments to IRS or do I wait until end of the year?




#2:What If there was very little actual profit in Rent (rent minus expense) for the whole year? or no profit?

Please help

TIA
mike


#1;Partnerships do not have to calculate or pay estimated taxes. This is a natural extension of being a pass-through entity that is not liable for income tax. However, the partners in a general partnership may have to pay quarterly estimated taxes, depending on their circumstances. For instance, partners who are residents of the US(or a US resident for tax purposes) and expect to owe $1K or more in tax must pay quarterly estimated taxes.If you are filing as a, partner and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1K or more when you file your return; rental properties are considered passive income even if you actively or materially participate in the rental activity. Passive income by definition is not subjected to self-employment tax.In ome state, i.e., CA state, no estimated tax is required;but the LLP may be required to withhold taxes if the partnership distributes CA source taxable income to a nonresident partner.
NOTE: if a partnership has income effectively connected with a trade or business in the US, it must withhold on the income allocable to its foreign partner(s) under Partnership Withholding. A partnership may have to withhold tax on a foreign partner's distributive share of fixed or determinable annual or periodical gains and income not effectively connected with a U.S. trade or business, as well as withhold on any other FDAP income(U.S.-source fixed annual or periodic income) paid to a foreign person regardless of whether he is a partner or not under NRA Withholding. However, there are exemptions so you need to fill out the W8-BEN form to atleast establish you are not a US person;
claim you are the ‘beneficial owner’ of the foreign income; confirm you are a non-resident claiming exemption from the 30% (if you are eligible).



#2;As mentioned above.



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