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This maintenance screen is used to setup the percentage rate to withhold Federal and State income taxes from an owner. Be sure to get with each taxing authority for accurate tax rates and how to calculate the rates.
SETUP STEPS:
1.Enter the state, WH type, tax rate, and liability account/Sub-Account the taxes will be posted to in the G/L (multiple rates may be used for each state, i.e. MT0 rate and MT1 rate).
2.Normally you would set the Owner Default to 'Yes' if the state has a law requiring an income tax withholding against revenue disbursed. The state of Oklahoma is one such case.
3.Select the applicable 'Yes' or 'No' answer for each of owner interest types. Candidates for the withholding deductions are determined on the Owner screen [F12]. For instance, if the state of OK is assigned to an owner, any owned property in Oklahoma will withhold income tax. Consult the appropriate state taxing entity for rates and exclusions.
4."Applies to" field options: Non-Tax, calculate backup withholding if DOI uses the standard A/R account only; Tax, calculate backup withholding if DOI uses non-standard A/R account (i.e. only for partnerships); Both, calculate tax regardless of the A/R account.
NOTES:
•Amounts deducted at distribution will be reported on the Backup Withholding Report.
•If needed, a second US/State rate can be added-for example, NM1 and NM0
•WH Type has two options Distribution and Owner. Distribution is the normal type used. This computes the withholding tax for each Revenue distribution being made independent of any other distribution or any billing for this owner. W/H type "Owner" is a specialized type of calculation that is used when the withholding is computed using the net amounts for an owner (i.e. combining multiple distribution for that property and optionally deducting the billing amount) before computing the withholding tax. If withholding type is owner (i.e. NM), the Backup Withholding report will not list Gross amounts (subject to) only the withholding amounts.
This screen will allow for withholding codes that are not required per the company's guidelines to be permanently deleted. However, the system will automatically create Federal and State Withholding codes for New Mexico, Oklahoma, and the United States even after deletion.