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Wednesday, April 22, 2015

Non Resident Withholding Tax by State for Sale of Real Estate

We have been discussing the tax implications of Canadians selling U.S. real estate. We have discussed the 10% withholding tax on the federal level and how to deal with that.

How it works with most states (but not all) is that you will receive a copy of the withholding statement that the buyer of the property (or his escrow company) will have mailed to the IRS. You can file an exemption form so that the tax is not withheld in most cases if you will not be making a gain on the sale.

To recover the withholding tax once it has been withheld, in most states you will have to file an income tax return as a non-resident and claim the withheld tax as an estimated tax payment, with the withholding statement and escrow documents along with the receipts of any expenses you are deducting to the tax return. This is not true for all states, please read further into each state.

Non Resident Withholding Tax by State for Sale of Real Estate



STATE WITHHOLDING TAX RATE EXEMPTION FORM
ALABAMA
ALASKA
ARIZONA
ARKANSAS
CALIFORNIA 3.33% Form 593-W
COLORADO 2% DR1083
CONNECTICUT
DELAWARE
FLORIDA
GEORGIA 3% IT-AFF2
HAWAII 5% N289, N-288C, N-288B
IDAHO
ILLINOIS
INDIANA
IOWA
KANSAS
KENTUCKY
LOUISIANA
MAINE 2.5% REW-5
MARYLAND 7% Form MW506NRS
MASSACHUSETTS
MICHIGAN
MINNISOTA
MISSISSIPPI 5%
MISSOURI
MONTANA
NEBRASKA
NEVADA
NEW HAMPSHIRE
NEW JERSEY
NEW MEXICO
NEW YORK 8.82% IT-2663
NORTH CAROLINA 4% NC-1099NRS
NORTH DAKOTA
OHIO
OKLAHOMA
OREGON 4% Form WC
PENNSYLVANIA
RHODE ISLAND 6% RI 71.3
SOUTH CAROLINA 7% Form I-295
SOUTH DAKOTA
TENNESSEE
TEXAS
UTAH
VERMONT 2.5%
WASHINGTON
WEST VIRGINIA 2.5% WV.NRAE
WISCONSIN
WYOMING

More Information on Canadians Selling U.S. Real Estate