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Nonresident Withholding Filing Requirement

Per KRS 141.206(5)(a)  every pass-through entity doing business in Kentucky, except publicly traded partnerships, is required to withhold income tax on the distributive share income whether distributed or undistributed, of each:

  • Nonresident individual partner, member, or shareholder; and
  • Corporate partner or member that is doing business in Kentucky only through its ownership interest in a pass-through entity.

Please note: if the corporate partner or member is doing business in Kentucky other than through its ownership interest in a pass-through entity, withholding is not required. Withholding is not required if the net distributive share income is not subject to Kentucky income tax.

Other items of importance:

  • A Nonresident withholding and Composite Income Tax Return is filed on form 740NP-WH (with copy A of PTE-WH completed for each partner, member, or shareholder) by the 15th day of the fourth month following the close of the tax year.  The withholding rate is at the maximum rate provided in KRS 141.020 or KRS 141.040.
  • A partner, member, or shareholder may be exempt from withholding if an appropriate tax return was filed for the prior year.
  • Every pass-through entity required to withhold Kentucky income tax must make a declaration and payment of estimated tax.   Instructions to determine if you are required to make estimated payments are available in the Kentucky Nonresident Income Tax Withholding Instructions Packet.

If you need assistance with nonresident withholding, please call (502) 564-8139 or email us at DORWebResponsePassThroughEntity@ky.gov.

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​​​Extension of Time

An extension of time to file form 740NP-WH Kentucky Nonresident Income Tax Withholding on Distributive Share Income Report and Composite Income Tax Return may be obtained by filing a 740 NP-WH-EXT with the Department of Revenue on or before the due date of the return.  The balance of tax due must accompany the extension; an extension of time to file the return does not extend the date for the payment of tax.

If no tax is due, a copy of the federal Form 7004 may be used as an extension and must be attached to form 740 NP-WH when filed. 

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Pass-Through Entities

The Kentucky Department of Revenue conducts work
under the authority of the Finance and Administration Cabinet.