Partnerships with foreign partners may be required to make Section 1446 withholding payments. Generally, if a partnership has taxable income effectively connected with the conduct of a trade or business within the United States that is allocable to a foreign partner, the IRS requires the partnership to report and pay a withholding tax under IRC Section 1446. This withholding must be paid regardless of foreign partners’ ultimate U.S. tax liability and whether or not the partnership makes any distributions during the year.
See Revenue Procedure 92-66 and Treasury Regulation 1.1446-3 for information on the time and manner for paying, as well as other obligations.
Report the withholding amounts paid on Form 8804 Annual Return for Partnership Withholding Tax (Section 1446) and Form 8805 Foreign Partner’s Information Statement of Section 1446 Withholding Tax. Use Form 8813 Partnership Withholding Tax Payment Voucher (Section 1446) to pay the quarterly installments of withholding tax to the United States Treasury.
To enter foreign partner information into the TaxAct program:
To complete Forms 8804, 8805, and/or 8813 within TaxAct 1065:
Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.