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.
Please note: Nonresident
C-Corporations that are partners or members of pass-through entities are not
subject to withholding but still have a Kentucky filing obligation under the
doing business standard of KRS 141.010(13). 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.
- 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.