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Changes to 2012 Forms

Updates to the Form 592-A on 12/21/2012 –– Payment Voucher for Foreign Partner or Member Withholding

We replaced text on the Form 592-A Instructions on:

  1. Page 1, Column 1, General Information, Paragraph 2
  2. Page 1, Column 1, What’s New
  3. Page 1, Column 1, Section B Withholding Rates
  4. Page 2, Instructions below Worksheet

Previous Version

  1. For taxable years beginning on or after January 1, 2011, the maximum personal income tax rate is 9.3%. In addition, non-California partnerships are subject to withholding requirements on a sale of California real property at a rate of 3 1/3% (.0333) of sales price or 9.3% of gain. The alternative withholding rate for the gain on sale of California real property by S corporations is 10.8% and 12.8% for financial S corporations.
  2. Note: new text added.
  3. R&TC Section 18662 requires withholding on payments made to nonresidents for income received from California sources. For foreign partners or members, the withholding rate is the maximum California tax rate applicable to the partner or member (currently, 8.84% for corporations, 10.84% for banks and financial institutions, and 9.3% for all others).
  4. Using this installment payment worksheet and timely paying the calculated amounts protects you from penalties for underpayment. However, if there’s a balance due on Form 592-F at the end of the year, submit the final payment using the Form 592-A Supplemental Payment Voucher, and the completed Form 592-F. If you know exactly what the foreign partner’s or member’s share of California source partnership or LLC income is, you can calculate the payment by multiplying the partner’s or member’s allocable share of California source taxable income by the maximum tax rate (currently, 8.84% for corporations, 10.84% for banks and financial institutions, and 9.3% for all others) instead of using this worksheet.

Revised Version

  1. Text eliminated.
  2. Increase in Rates – For taxable years beginning on or after January 1, 2012, the maximum personal income tax rate increased to 12.3%. In addition, non-California partnerships are subject to withholding requirements on a sale of California real property at a rate of 3 1/3% (.0333) of sales price or 12.3% of gain. The alternative withholding rate for the gain on sale of California real property by S corporations increased to 13.8% and 15.8% for financial S corporations.
  3. R&TC Section 18662 requires withholding on payments made to nonresidents for income received from California sources. For foreign partners or members, the withholding rate is the maximum California tax rate applicable to the partner or member (currently, 8.84% for corporations, 10.84% for banks and financial institutions, and 12.3% for all others).
  4. Using this installment payment worksheet and timely paying the calculated amounts protects you from penalties for underpayment. However, if there’s a balance due on Form 592-F at the end of the year, submit the final payment using the Form 592-A Supplemental Payment Voucher, and the completed Form 592-F. If you know exactly what the foreign partner’s or member’s share of California source partnership or LLC income is, you can calculate the payment by multiplying the partner’s or member’s allocable share of California source taxable income by the maximum tax rate (currently, 8.84% for corporations, 10.84% for banks and financial institutions, and 12.3% for all others) instead of using this worksheet.

Reason for the changes

In November 2012 Proposition 30 was passed by California voters. This ballot measure increased the maximum personal income tax rate for taxable years beginning on or after January 1, 2012, from 9.3% to 12.3%. As a result of the personal income tax rate increase, the alternative withholding rate for the gain on sale of California real property by individuals and non-California partnerships increased from 9.3% to 12.3%. The gain on sale of California real property by S corporations increased from 10.8% to 13.8% and from 12.8% to 15.8% for financial S corporations. We are revising the form and instructions to reflect the increase in rates.

Impact

No tax impact.

Back to Tax Form Changes for 2012