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Pass-Through Entities Tax

Nonresident Withholding

For tax years beginning on or after January 1, 2009, every pass-through entity required to file a return under  KRS 141.206(2), except publicly traded partnerships as defined in KRS 141.0401(6)(r), shall withhold Kentucky income tax at the maximum rate provided in KRS 141.020 or 141.040 on the distributive share income, whether distributed or undistributed, of each: (i) nonresident individual  (includes a nonresident estate or trust) partner, member or shareholder; and (ii) corporate partner or member that is doing business in Kentucky only through its ownership interest in a pass-through entity.

Withholding shall not be required if: (i) the nonresident partner, member or shareholder is exempt from withholding as provided by KRS 141.206(7); (ii) the nonresident partner or member is exempt from Kentucky income tax as provided by KRS 141.040(1); (iii) the pass-through entity is a qualified investment partnership as provided by KRS 141.206(15); or (iv) the partner or member is a pass-through entity.

The withholding shall be filed with the Department of Revenue on Form 740NP-WH, Kentucky Nonresident Income Tax Withholding on Distributive Share Income Report and Composite Income Tax Return, on or before the 15th day of the fourth month after the close of the pass-through entity’s taxable year, and shall include: (i) Form PTE-WH, Kentucky Nonresident Income Tax Withholding on Distributive Share Income, for each nonresident individual partner, member or shareholder and each corporate partner or member included in Form 740NP-WH; and (ii) remittance of the income tax due.

A copy of Form PTE-WH shall be provided to each nonresident individual partner, member or shareholder and each corporate partner or member included in Form 740NP-WH.
 
For taxable years beginning on or after January 1, 2012, a pass-through entity shall make a declaration and payments of estimated tax if: (i) a nonresident individual (includes a nonresident estate or trust) partner’s, member’s or shareholder’s estimated tax liability can reasonably be expected to exceed $500; or (ii) a corporate partner’s or member’s estimated tax liability can reasonably be expected to exceed $5,000.

A pass-through entity shall use Forms 740NP-WH-ES, Kentucky Estimated Tax Vouchers, to make the required estimated tax payments.
KRS 141.207(3) provides that the estimated tax installments shall be made by the pass-through entity in the same manner and at the same times as provided by: (i) KRS 141.305 for a nonresident individual partner, member or shareholder; and (ii) KRS 141.044, for a corporate partner or member.

Composite Income Tax Return

For tax years beginning on or after January 1, 2009, a pass-through entity may file a composite income tax return as provided by KRS 141.206(16) on behalf of electing nonresident individual (includes a nonresident estate or trust) partners, members or shareholders.  The tax shall be computed at the maximum rate provided in KRS 141.020 on the distributive share income, whether distributed or undistributed, of each nonresident individual partner, member or shareholder included in the composite return.

The composite income tax return shall be filed with the Department of Revenue on Form 740NP-WH (check composite income tax return box) on or before the 15th day of the fourth month after the close of the pass-through entity’s taxable year, and shall include: (i) only nonresident individual partners, members or shareholders whose distributable income was not subject to withholding; (ii) only nonresident individual partners, members or shareholders whose only source of income within this state is distributive share income from one or more pass-through entities; (iii) only nonresident individual partners, members or shareholders that have elected to be included in the composite income tax return by submitting a written statement to the pass-through entity within thirty (30) days after the close of the pass-through entity’s taxable year; (iv) Form PTE-WH (check composite box) for each nonresident individual partner, member or shareholder included in the composite return; and (v) remittance of the income tax due.

A copy of Form PTE-WH shall be provided to each nonresident individual partner, member or shareholder included in the composite return.
 
The pass-through entity shall make a declaration and payments of estimated tax if the estimated tax liability can reasonably be expected to exceed $500. The estimated tax installments shall be made by the pass-through entity in the same manner and at the same times as provided by KRS 141.305.

A pass-through entity shall use Forms 740NP-WH-ES, Kentucky Estimated Tax Vouchers, to make the required estimated tax payments.

Extension of Time

An extension of time to file Form 740NP-WH (for either nonresident withholding or a composite return) shall be obtained by filing a request on Form 740NP-WH (check extension payment box) with the Department of Revenue on or before the due date of the return. The balance of any tax due shall accompany the extension; an extension of time to file a return does not extend the date for payment of tax.

Locate Forms to Download

Current Year - Corporation and Pass-Through Entity Tax Forms

Prior Year - Corporation and Pass-Through Entity Tax Forms

Contact DOR Staff

E-Mail DOR Taxing Areas.

 

E-Filing and Payment Options

E-Tax - Electronic Filing and Payment Options


 

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Last Updated 4/16/2014
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