This maintenance screen sets the percentage rate to withhold Federal and State income taxes from an owner.  Be sure to contact each taxing authority for accurate tax rates and instructions on how to calculate them.

SETUP STEPS:  

1. Enter the state, WH type, tax rate, and liability Account/Sub-Account to which the taxes will be posted in the G/L (multiple rates may be used for each state, e.g., MT0 rate and MT1 rate).  
2. Normally, you would set the Owner Default to Yes if the state has a law requiring income tax withholding against revenue disbursed.  Oklahoma is one such case.  
3. Select the applicable Yes or No answer for each owner interest type.  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.
• A second US/State rate can be added, such as NM1 and NM0, if needed.
• 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 distributions for that property and optionally deducting the billing amount) before computing the withholding tax.  If the withholding type is the owner (i.e., NM), the Backup Withholding report will not list Gross amounts (subject to), only the withholding amounts.

This screen will allow withholding codes not required per the company's guidelines to be permanently deleted. However, even after deletion, the system will automatically create Federal and State Withholding codes for New Mexico, Oklahoma, and the United States.

How do I correct State Withholding?