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Form 592-B resident and nonresident withholding statement

California partners are taxed based on the amount of the cash and property distributions that each partner receives. Any distribution from federal Schedule M-2 will trigger income subject to withholding and California tax is withheld. This applies to domestic residents and nonresidents, regardless of where the income was earned. Enter data for Schedule M-2 on the federal M1M2 or CAM1M2 screens. Foreign partners are taxed based on distributive income from Schedule K-1, column e, lines 1-7.
The amount of income subject to nonresident withholding and the nonresident withholding tax can be forced on the California
CAK-3
 screen located in the
Schedule K
 folder.
You can also mark partners as exempt from withholding by selecting
View
, then
Partner Information
, then the
California
 tab. Then select the option
Exclude from nonresident withholding
.
If there are less than $1500 in distributions or income for a partner, withholding does not calculate. There is also an option to elect withholding for the partners that have less than $1,500 in distributions. Go to
View
, then
Partner Information
.
The system doesn't distinguish if distributions are return of capital. If all distributions are not taxable (some are return of capital), then you need to enter taxable distributions in the CAK-3 screen located in the
Schedule K
 folder.
Domestic nonresident partners are calculated a withholding tax of 7.0% of distributions, corporations have a 8.84% withholding rate, and nonresident foreign partners calculate a withholding tax of 12.3% of income.

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