club_cafe: tax implications

iras1 on

Can you provide more information on the IRS request? If your member has a green card, s/he is a legal resident of the US and files an "ordinary" 1040 like any citizen. There is no "backup" withholding for partnership income. What I suspect may have happened is that you erroneously indicated that you had a foreign partner in the Form 1065 Schedule B questions, or on that partner's K-1. If this is the case, and your partner truly has a Green Card, you need to contact the IRS and ask how to correct the situation.

If you DO have to withhold taxes, you will be forced to follow the IRS guidance and withhold and deposit the taxes with the IRS. You will have to file Forms 8804, 8805 and 8813. See the instructions for Forms 8804, 8805 and 8813 for information on how to determine if your partner is a foreign partner and how to avoid having to withhold taxes. www.irs.gov/pub/irs-pdf/i8804.pdf

As to reinvested dividends, you can enter as a dividend and buy or as a reinvested dividend. There is no functional/tax difference between the two. Entering as a reinvested dividend saves some effort.

Hope this helps. If you still have questions, ask away.

Ira Smilovitz

In a message dated 08/27/03 5:55:07 PM Eastern Daylight Time, easorbet@bivio.com writes:

Two items -

One - we have a green card member and I got a letter from
the IRS that we had to do withholding. We have not had
taxable income, but the letter said that didn't matter.
What do we need to do?

Two - is there a difference between posting reinvested
dividends as such, or posting them as a dividend/buy as far
as taxes are concerned?

Elizabeth Sorbet on

As always,

Thanks so much!

Regards,
Elizabeth

> If you DO have to withhold taxes, you will be forced to follow the IRS guidance and withhold and deposit the taxes with the IRS. You will have to file Forms 8804, 8805 and 8813. See the instructions for Forms 8804, 8805 and 8813 for information on how to determine if your partner is a foreign partner and how to avoid having to withhold taxes. www.irs.gov/pub/irs-pdf/i8804.pdf
> �

> Hope this helps. If you still have questions, ask away.
> �Ira Smilovitz

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