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13. My business reports on a fiscal year basis. How do I determine the amount to withhold?
A fiscal year business should calculate member withholding based on the year in which the fiscal year ends. For instance, if an entity's fiscal year is July 1, 2011 through June 30, 2012, income for that period is considered income earned in 2012. For 2012 purposes, withholding must be based on the income for the period 7/1/11 - 6/30/12.
Example: Partnership XYZ operates on a fiscal year ending on 9/30. Maine apportionment is 50%. Partner A is not a resident of Maine and owns a 33% share of partnership XYZ. Partner A files a calendar year return.
IRS requires Partner A to include fiscal year partnership results in his calendar year return for the year during which the partnership year ends. Thus, XYZ results for fiscal year ended 9/30/12 would be included in Partner A's calendar year 2012 return. XYZ's budget projections for FYE ‘12 estimate income of $30,000. Maine income would be $15,000 and Partner A's share would be $5,000.
Thus, the income base for calculating the withholding requirement for Partner A for calendar 2012 would be $5,000. Estimated payments would be required equal to $4,500 (90% of current year).
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