502W: Pass-Through Entity Withholding Tax Payment Voucher and Instructions (2024)
Virginia · Virginia Tax · Used for tax years 2024
Virginia Form 502W is a payment voucher for pass-through entity withholding tax on income allocated to nonresident owners. It records the entity’s identifying information, taxable year, and total withholding payment. The paper voucher may be used only with an approved waiver from
Who files this form
A pass-through entity (PTE) must pay withholding tax if it does business in Virginia, has taxable income from Virginia sources, and must allocate any of that income to a nonresident owner.
The withholding rate is 5% of each nonresident owner's share of taxable income from Virginia sources. Qualifying tax credits earned by the PTE and passed through to nonresident owners may reduce the tax.
The PTE does not have to pay this withholding tax if it is:
- A publicly traded partnership.
- A disregarded entity.
- An entity filing a unified return on behalf of all nonresident owners.
Certain nonresident owners also qualify for exemptions. The PTE must obtain and keep documentation supporting an owner's claimed exemption.
Use the paper Form 502W voucher only if you have an approved electronic-filing waiver. Form 502W is also used to make withholding payments before filing Form 502, including early payments and payments made when using the filing extension.
When it's due
For tax year 2024 calendar-year filers, the withholding tax payment is due April 15, 2025.
Using the extension to file Form 502 does not extend the withholding payment deadline.
What you'll need
To complete the payment voucher, have:
- The PTE's federal employer identification number (FEIN), entity type, and 6-digit NAICS code.
- The PTE's name and mailing address.
- The taxable year's ending month and year.
- Taxable income, nonresident owners' shares of income, and applicable tax credit information needed to calculate withholding.
- The total payment amount, signature, date, and phone number.
If a nonresident owner claims an exemption, obtain documentation explaining the basis and keep it with the PTE's records. With the withholding tax return, provide a list of exempt owners showing each owner's name, taxpayer identification number, address, and basis for exemption.
An entity claiming diplomatic immunity must provide the PTE with a statement that it has diplomatic immunity from federal income tax.
How to file
Electronic payment is required unless you have an approved waiver.
- Go to www.tax.virginia.gov, open eForms, select 502W, and complete the form and payment information online. You can schedule a future payment.
- You may also pay by ACH credit through your bank. Some banks charge a fee. See the Department's Electronic Payment Guide on its website for details.
For paper payments with an approved waiver:
- Complete the entity information and taxable year's ending month and year. Check the initial-filer box if this is the first year filing a PTE return.
- Enter the required entity code: SC for S corporation, PG for general partnership, PL for limited partnership, LL for limited liability company, LP for limited liability partnership, NZ for nonprofit organization, or OB for other.
- Calculate withholding at 5% of the applicable nonresident taxable income, reduced by the owners' shares of qualifying tax credits. Enter the total amount withheld for all nonresident owners.
- Sign, date, and enter your phone number. Detach the voucher at the dotted line. Do not send the entire page.
- Send the payment voucher to:
Virginia Department of Taxation
P.O. Box 1500
Richmond, VA 23218-1500
Common mistakes
- Using a paper voucher without an approved waiver. Returns and payments must be submitted electronically unless a waiver has been granted.
- Using the wrong payment voucher. Use Form 502V when making a payment with Form 502. Do not use Form 502W or Form 502V for payments with the unified nonresident return, Form 765.
- Omitting the taxable year's ending month and year. These entries are needed to credit the payment to the correct taxable year.
- Sending the entire page. Detach and send only the voucher.
- Leaving out required entries. Enter the proper entity type code, and sign, date, and provide your phone number.
- Assuming withholding passes through an intermediate PTE. A nonresident owner PTE cannot claim credit for withholding on its Form 502, and the withholding does not pass through to owners more than one ownership level away. If a PTE erroneously withholds for a nonresident owner PTE, it should file an amended Form 502.
Questions people ask
Does a filing extension give the PTE more time to pay?
No. Withholding is due on the PTE's original return due date even if it uses the Form 502 filing extension. At least 90% must be paid by that date to avoid an extension penalty. Interest applies to unpaid tax from the due date until payment.
Must a PTE withhold for a nonresident owner that is another PTE?
Generally, no. The owner PTE is responsible for filing its own Form 502 and withholding for its nonresident owners. However, if it tells the paying PTE that it will not file Form 502, the paying PTE must withhold.
Can a PTE request relief because withholding creates an undue hardship?
Yes. It may request an exemption from the Tax Commissioner. The request letter must provide information allowing the Commissioner to compare the PTE's compliance costs with Virginia's costs of collecting tax from nonresident owners who do not voluntarily file and pay.
Where can I get help with Form 502W?
Call (804) 367-8037, or write to the Virginia Department of Taxation, P.O. Box 1115, Richmond, VA 23218-1115.