U.S. State Non-resident Withholding Tax
Encyclopedia
U.S. State Nonresident Withholding Tax is a mandatory prepayment of tax
of individuals or entities that are not resident in the State
. A common example of this is the taxation of oil and natural gas royalty interest revenue. In order to ensure that the State receives a portion of the revenue from oil and gas leases within the State, any payments made to an address outside of the State require that a tax be withheld and paid directly to the State.
States that have enacted such laws include, but are not limited to:
A majority of states with income taxes impose similar requirements on partnerships (including LLCs) and S corporations with nonresident partners or shareholders. All states with income taxes impose a similar withholding obligation on wages paid to nonresidents by businesses operating within the state.
The taxes withheld must be treated as prepaid taxes, with final taxes imposed at the same rate and under the same computations for residents and nonresidents.
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
of individuals or entities that are not resident in the State
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...
. A common example of this is the taxation of oil and natural gas royalty interest revenue. In order to ensure that the State receives a portion of the revenue from oil and gas leases within the State, any payments made to an address outside of the State require that a tax be withheld and paid directly to the State.
States that have enacted such laws include, but are not limited to:
- Oklahoma
- New Mexico
- Utah
- California
- Oregon
- Montana
A majority of states with income taxes impose similar requirements on partnerships (including LLCs) and S corporations with nonresident partners or shareholders. All states with income taxes impose a similar withholding obligation on wages paid to nonresidents by businesses operating within the state.
The taxes withheld must be treated as prepaid taxes, with final taxes imposed at the same rate and under the same computations for residents and nonresidents.