Kentucky 740NP-WH

Instructions for Kentucky's nonresident income tax withholding with this straightforward guide to correctly completing Form 740NP-WH for pass-through entities.

Kentucky Form 740NP-WH is the official “Kentucky Nonresident Income Tax Withholding on Distributive Share Income Report,” a critical document that pass-through entities must file with the Commonwealth of Kentucky Department of Revenue. This form is designed for businesses such as S-corporations, partnerships, and limited liability companies (LLCs) that have nonresident partners, members, or shareholders. Its primary purpose is to calculate and remit the required state income tax withholding on the “distributive share” of income—that is, the portion of the business’s profits allocated to owners who do not live in Kentucky. Filing this form ensures that the state collects the appropriate taxes from non-residents on income earned within its borders. It serves as both a tax return for the entity’s withholding obligations and a reconciliation of payments made throughout the year. Failure to file correctly can result in penalties, interest, and compliance issues for both the business entity and its individual nonresident owners.

How to Complete Kentucky 740NP-WH Form

How to Complete Kentucky 740NP-WH Form

Before calculating any tax, you must establish the identity of the business entity and the period covered by the return.

  • Tax Payment Summary: At the top right, there is a summary box for “Additional Tax Due” (Lines 1-4). Leave this for the end, as it summarizes the final calculations from Line 16.
  • Entity Details: Print the legal Name of the Pass-Through Entity, full mailing address (Number, Street, City, State, ZIP), and Telephone Number.
  • Status Checkboxes: Mark the appropriate box if you have a Change of Name, Change of Accounting Period, are filing a Final Return (business closed), or are filing an Amended Return to correct a previous filing.
  • Tax Year: Specify the calendar year or fill in the specific dates for the fiscal tax year (beginning and ending MM-DD-YY).
  • Identification Numbers:
    • Box A: Enter your Federal Identification Number (FEIN).
    • Box B: Leave blank (reserved for future use).
    • Box C: Enter your Kentucky Nonresident Withholding (NRWH) Account Number.
    • Box D: Leave blank (for official use only).

Withholding Calculation (Page 1)

This section determines the base income subject to Kentucky tax and calculates the initial tax liability.

  • Line 1: Enter the total count of nonresident individuals, estates, and trusts included in this specific return.
  • Line 2: Enter the number of nonresident individuals, estates, and trusts that are exempt from this withholding requirement.
  • Line 3: Input the total Net distributive share income subject to withholding before any apportionment is applied.
  • Line 4: Enter the apportionment fraction from the pass-through entity’s Schedule A. If 100% of business is in Kentucky, enter 100%.
  • Line 5: Calculate the Kentucky distributive share income. Multiply Line 3 by Line 4 and enter the result.
  • Line 6: Calculate the Tax before credits. Multiply the amount on Line 5 by the tax rate of 4.0% (0.04).
  • Line 7: Enter the total nonrefundable tax credits available to the partners, members, or shareholders.
  • Line 8: Determine the Kentucky income tax liability. Subtract Line 7 from Line 6.

Tax Due Or Refund Calculation (Page 2)

This section reconciles what you owe against what you have already paid.

  • Line 9: Enter the total amount of Estimated tax payments made during the tax year.
  • Line 10: Enter any payment made with an extension request.
  • Line 11: Enter any tax credit carried forward from the prior year.
  • Line 12: If this is an amended return, enter the total tax paid with the original return.
  • Line 13: Calculate Total Payments. Add Lines 9 through 12.
  • Line 14: If this is an amended return, enter any tax overpayment refunded from the original return.
  • Line 15: Enter any Estimated Tax Penalty (attach Form NRWH-P if applicable).
  • Line 16: Calculate the Balance Due. Add Line 8, Line 14, and Line 15, then subtract Line 13. If the result is positive, this is the amount you owe.
  • Line 17: Calculate Overpayment. If Line 13 is greater than the sum of Lines 8, 14, and 15, enter the difference here.
  • Line 18: Enter the portion of the overpayment to be credited to 2024 interest.
  • Line 19: Enter the portion to be credited to the 2024 late filing/payment penalty.
  • Line 20: Enter the portion to be credited to the 2025 Nonresident Withholding (NRWH) estimated tax.
  • Line 21: Calculate the Refund Amount. Subtract Lines 18 through 20 from Line 17.

Signatures And Mailing

To finalize the submission, the form must be signed and sent to the correct address based on the outcome (refund or payment).

  • Signature: The Owner must sign, print their name, list their title, and date the form.
  • Paid Preparer: If a professional prepared the return, they must sign, date, and provide their firm’s name, ID number, and contact info. Check “YES” or “NO” to authorize the Department of Revenue (DOR) to discuss the return with the preparer.
  • Mailing Address:
    • Refund or No Payment: Mail to Kentucky Department of Revenue, Frankfort, KY 40619-0006.
    • With Payment: Mail to the same address (Frankfort, KY 40619-0006), but ensure the check is payable to “Kentucky State Treasurer”.
  • Electronic Payment: You may also pay online via www.revenue.ky.gov.[1]
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