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e314_2
July 12, 2022
Question

Withholding State tax from Members/Owners Draw

  • July 12, 2022
  • 1 reply
  • 0 views

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 

1 reply

Rustler
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

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    e314_2Author
    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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