PWA: Form PWA - Passthrough Entity Withholding - Nonresident Member Adjustment (2024)
North Dakota · ND Tax Commissioner · Used for tax years 2024
North Dakota Form PWA lets an eligible nonresident member request reduced income tax withholding on income from a passthrough entity. It records estimated income, estimated tax payments, additional wage withholding, and the adjusted amount the entity should withhold.
Who files this form
Form PWA is a request to reduce withholding, not a form every nonresident member must file.
A passthrough entity must generally withhold North Dakota income tax at 2.50% from a nonresident member’s North Dakota distributive share of income if that share is $1,000 or more and is not included in a composite return.
A nonresident member may use Form PWA to request less withholding if any of these apply:
- The member already paid estimated North Dakota income tax on that income.
- The member had extra North Dakota income tax withheld from wages to cover the expected tax on that income.
- An offsetting North Dakota loss or income adjustment will make the member’s North Dakota taxable income smaller than the North Dakota distributive share.
What you'll need
To complete Form PWA, have the following information available:
- The nonresident member’s name and Social Security number or FEIN.
- The tax year to which the adjustment applies.
- The estimated North Dakota distributive share of income and estimated total North Dakota taxable income.
- Estimated North Dakota income tax already paid and additional North Dakota income tax withheld from wages.
- The passthrough entity’s name and FEIN for Part 2.
The nonresident member must sign and date the form.
How to file
Nonresident member
Complete Part 1:
- On line 1, enter the smaller of your estimated North Dakota distributive share of income or estimated total North Dakota taxable income.
- Multiply line 1 by 2.50% (.025) and enter the result on line 2.
- Enter estimated North Dakota income tax paid on line 3a and additional North Dakota income tax withheld from wages on line 3b.
- Add lines 3a and 3b on line 4.
- Subtract line 4 from line 2 to find the amount to withhold on line 5.
Sign, date, and submit the completed form to the passthrough entity before the last day of the entity’s tax year to which the adjustment applies.
Passthrough entity
- Complete Part 2 and withhold only the amount shown in Part 1, line 5, for the specified tax year.
- Fill in the member’s circle under “Form PWA or Form PWE” on the applicable return: Form 38, Schedule BI, Column 6; Form 58, Schedule KP, Column 7; or Form 60, Schedule KS, Column 7.
- Attach a copy of Form PWA to your North Dakota income tax return. Keep the original signed copy for your records.
Common mistakes
- Using payments or withholding from the wrong tax year. The amounts on line 3 must be for the same tax year in which the member’s North Dakota distributive share is reportable on the member’s return.
- Identifying the wrong adjustment year. If the member and passthrough entity have different tax years, specify the entity’s tax year to which the adjustment applies.
- Leaving out the Social Security number or FEIN. Disclosure is mandatory. Missing identification may delay or prevent processing.
- Failing to keep the signed original. The passthrough entity must attach a copy to its return and retain the original signed form.
Questions people ask
Who counts as a nonresident member?
An individual not domiciled in North Dakota, a trust not organized in North Dakota, or a passthrough entity without a commercial domicile in North Dakota.
What counts as a passthrough entity?
A partnership of any type, S corporation, trust, limited liability company not taxed as a C corporation, or another entity not taxed at the entity level for North Dakota income tax purposes.
Can a member request an exemption instead of reduced withholding?
If the nonresident member is itself a passthrough entity, it may be eligible to elect an exemption for its North Dakota distributive share of income. The form directs these members to Form PWE for more information.
How much should the entity withhold after receiving Form PWA?
The entity must withhold only the amount shown in Part 1, line 5, from the member’s North Dakota distributive share for the specified tax year.