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Estimated Tax Withholding
MAAS
Member Posts: 2
I am using Wave Accounting and need to know how to categorize the IRS Estimated Income Tax Withholding payments I make on behalf of my foreign partners.
Please note:
The partnership I manage invests in Realestate rental and does not make any payroll (a.k.a we do not have employees).
The amount withheld gets added to my partner as their tax witholding so IRS would deduct the tax when personal tax is filed and then the excess is refunded as a check payable to the partner. So, in a sense, this ends up to be like an owner draw!
I can elaborate if my situation is not clear, however, what I want to understand is how to track those transactions in Wave.
Thank you
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@MAAS,
Either the estimated payments should categorized as prepaid taxes until the end of the year when you complete the 8805 by partner or treat as distributions to the foreign partners. Ultimately though they are distributions.
Thank you so much for the feedback. So, to make it simple for me, should I categorize them as owner draw within the equity section?
Thank you again
No problem. Yes, that would be fine.