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Form 593, Real Estate withholding

You can enter withholding on Form 593 on both the federal Deduct screen and in the Beneficiary module. You should enter the portion of withholding to distribute in the Beneficiary module and the portion to remain with the trust in federal Deduct screen.

The California FTB only requires information from Form 593, such as the withholding agent, seller or transferor, and escrow or exchange information if you are filing the return electronically. UltraTax CS only includes this information in the electronic file - it does not print with the return.

• If you are not filing the return electronically, you should only enter the withholding amounts as described below.
• If you’re filing the return electronically, complete the CA 593 screen in the CA Payments folder, unless you are distributing all the withholding. See below.

Withholding not distributed to beneficiaries:

Use the federal Deduct screen to enter the portion of Form 593 real estate withholding that should stay with the trust. Enter the amount of withholding you are not distributing in the Not entered elsewhere statement. Enter Tax type code 4 and Postal code CA.

If you’re filing the return electronically, go to the CA 593 screen in the Payments folder and complete the applicable fields.

Withholding distributed to beneficiaries:

To enter the portion of Form 593 real estate withholding to be distributed to beneficiaries, choose View > Beneficiary Information > California tab and enter the withholding in the Pass-through withholding field. For a simple trust or a final return, UltraTax CS allocates 100% of the state withholding to beneficiaries by default. To remove the default allocation, enter X in the Final return or simple trust: Allocate credits, estate taxes, or state withholding between trust and beneficiaries field on the federal Allocate screen.

If you are allocating 100% of the withholding to the beneficiaries, do not use the CA 593 or federal Deduct screens.

• Do not use the CA 593 screen because the California FTB does not want the 593 information when the withholding distribution is 100 percent (i.e., when the withholding is not on Form 541).
• Do not use the federal Deduct screen because it is only for withholding that doesn’t distribute to the beneficiaries.

If you do not allocate 100% of the withholding to the beneficiaries and you are filing the return electronically, complete the applicable fields on the CA 593 screen in the Payments folder. The withholding you enter on the 592B and 593 screens must add up to Form 541, line 31 for the return to pass electronic filing error checking.

Form 592-B, Other withholding

A trust or estate could receive a Form 592-B from another pass-through entity and/or generate from the trust and provided to the beneficiaries. 

Form 592-B received

You should enter Form 592-B withholding that was a payment for the estate or trust in the State income tax withheld field on the federal K1-3 screen if it comes from a partnership or S corporation, or in the Other withholding field on the federal PayExt screen if it comes from another kind of pass-through entity. To move this amount from Form 541, line 29 to line 31, enter the withholding from Form 592-B in the Withholding to reclassify field on the CA Pay screen.

If you are allocating 100% of Form 592-B withholding to the beneficiaries (see Withholding distributed to beneficiaries above), do not use the CA 592B screen. The California FTB does not want 592-B information when you distribute all of the Form 592-B withholding.

Generating Form 592-B

UltraTax CS completes Form 592-B based on the taxable income on Schedule K-1, column (e) for nonresident beneficiaries, or for instate source income on the Grantor Report.

Data entry can be found in View > Beneficiary Information > California tab. Amounts entered in the Nonresident withholding (Force) field flow to 592-B line 2. Amounts you enter in the Pass-through withholding field flow to 592-B line 3. 

E-filing Form 592-B and Form 593

For returns that you are filing electronically:

• Form 541, line 29 must equal the withholding you enter on the federal W2, W2G and 1099R screens. If there is withholding from any other sources that is on line 29 (including interest and dividends), you must paper file the return.
• Form 541, line 31 must equal the withholding you enter on the CA 592B and CA593 screens. Use the Withholding to reclassify field on the CA Pay screen to make adjustments to line 29 and line 31. UltraTax CS subtracts the amount you enter in this field from line 29 and adds it to line 31.

Other withholding

You should enter withholding that is a payment for the estate or trust, but not from Form 592-B or Form 593 on the federal 1099, Income, PayExt, W2, or W2G screens. Form 541, line 29 must equal the total of CA withholding you enter on the 1099, W2, and W2G screens for the return to pass electronic filing error checking. If you enter withholding on the Income or PayExt screen, and you do not allocate it to beneficiaries or move it to line 31 using the Withholding to reclassify field on the CA Pay screen, you have to paper file the return. If you enter withholding on the 1099, W2, or W2G screens and you do allocate it to beneficiaries, you have to paper file the return.

Nonresident Withholding Waiver Request

There is a nonresident withholding waiver request available in the California Non Calculating folder.

Related topic: 1041 California frequently asked questions

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