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GG6
Experienced Member

Recording Virginia S Corp pass through payment for an out of state shareholder?

When filing a state corporate income return, a payment to Virginia for an Out of State shareholder's potential income tax liability was paid as required. Shareholders who are Virginia state residents must pay their own tax.  How do I record the exception transaction? It is the shareholder who may dispute the tax liability and any refund is returned to the shareholder. The company may never know the outcome. But the company makes the full payment per the tax return filing. What account is used to record the payment to Virginia. It is not PAYROLL related.

1 Comment
Established Community Backer ***

Re: Recording Virginia S Corp pass through payment for an out of state shareholder?

Create a current liability account for the withheld tax. Payment to the commonwealth will reflect this liability. The net payment to the shareholder will have this luability as a negative line item.

 

Make certain it is shareholder distribution and not out of state 1099 contractors that you must withhold from. Our state tags out of state 1099 for in state income tax on gross payments regardless of whether the contractor even made an in state profit.