Originally Posted by sarb007
#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?
#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.