Withholding State tax from Members/Owners Draw

e3 · ‎July 11, 2022

LLC taxed as Sub S Corp. Illinois.

Previously I have paid members draw as a normal check. No taxes withheld as usual. Just made estimated payments personally.

Last year I moved across the state line to Kentucky and now I am a Non-Resident Member. Illinois requires the LLC to withhold state tax from non Resident Member Distributions. I guess to make sure they get the money.

But I can't figure out how to withhold without going through the "payroll" section. I can just create an expense account for it an manually deduct it but

Rustler · ‎July 12, 2022

I would suggest you talk to a tax accountant, I see several things that are an issue.

Working members of a chapter-s corp have to be on salary. And what state they live in does not apply for federal issues

Chapter-s stock holders do not have an equity draw account and do not take draws. ALL members get the same rate of payment (x-amount per share of stock) as a distribution, and yes FICA is withheld.

State regulations also come into play but I have no knowledge of them, sorry

e3 · ‎July 12, 2022

Thanks I figured it out. Not sure its exactly right but it works.

I do take a salary, that is not relevant to this.

I probably should have used the word distribution, not draw.

This is not an equity draw either.

It's a profit distribution over and sbove the salary. This has nothing to do with Federal. Just state.

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Withholding State tax from Members/Owners Draw

Withholding State tax from Members/Owners Draw

Withholding State tax from Members/Owners Draw

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