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Changes to 2012 Forms

Updates to the Form 592-B on 12/27/2012 –– Resident and Nonresident Withholding Tax Statement

We replaced text on the Form 592-B Instructions on:

  1. Page 1, General Information
  2. Page 3, Column 3, Part IV Tax Withheld, Line 2 instructions

Previous Version

  1. For taxable years beginning on or after January 1, 2011, the maximum personal income tax rate is 9.3%. In addition, non-California partnerships are subject to withholding requirements on a sale of California real property at a rate of 3 1/3% (.0333) of sales price or 9.3% of gain. The alternative withholding rate for the gain on sale of California real property by S corporations is 10.8% and 12.8% for financial S corporations.
  2. Line 2
    Enter the total California tax withheld (excluding backup withholding). The amount of tax to be withheld is computed by applying a rate of 7% on items of income subject to withholding, i.e. interest, dividends, rents and royalties, prizes and winnings, premiums, annuities, emoluments, compensation for personal services, and other fixed or determinable annual or periodical gains, profits and income. For foreign partners, the rate is 8.84% for corporations, 10.84% for banks and financial institutions, and 9.3% for all others. For pass through entities, the amount withheld is allocated to partners, members, S corporation shareholders, or beneficiaries, whether they are residents or nonresidents of California, in proportion to their ownership or beneficial interest.

Revised Version

  1. What's New
    Increase in Rates – For taxable years beginning on or after January 1, 2012, the maximum personal income tax rate increased to 12.3%. In addition, non-California partnerships are subject to withholding requirements on a sale of California real property at a rate of 3 1/3% (.0333) of sales price or 12.3% of gain. The alternative withholding rate for the gain on sale of California real property by S corporations increased to 13.8% and 15.8% for financial S corporations.
  2. Line 2
    Enter the total California tax withheld (excluding backup withholding). The amount of tax to be withheld is computed by applying a rate of 7% on items of income subject to withholding, i.e. interest, dividends, rents and royalties, prizes and winnings, premiums, annuities, emoluments, compensation for personal services, and other fixed or determinable annual or periodical gains, profits and income. For foreign partners, the rate is 8.84% for corporations, 10.84% for banks and financial institutions, and 12.3% for all others. For pass through entities, the amount withheld is allocated to partners, members, S corporation shareholders, or beneficiaries, whether they are residents or nonresidents of California, in proportion to their ownership or beneficial interest.

Reason for the changes

In November 2012 Proposition 30 was passed by California voters. This ballot measure increased the maximum personal income tax rate for taxable years beginning on or after January 1, 2012, from 9.3% to 12.3%. As a result of the personal income tax rate increase, the alternative withholding rate for the gain on sale of California real property by individuals and non-California partnerships increased from 9.3% to 12.3%. The gain on sale of California real property by S corporations increased from 10.8% to 13.8% and from 12.8% to 15.8% for financial S corporations. We are revising the form and instructions to reflect the increase in rates.

Impact

No tax impact.

Back to Tax Form Changes for 2012