The Virginia 502 Form is a tax document used by pass-through entities to report income and withholding taxes for nonresident owners. This form is essential for ensuring compliance with Virginia's tax laws and helps entities accurately calculate their tax obligations. Understanding how to complete and submit this form is crucial for maintaining good standing with the state.
The Virginia 502 form, officially known as the Return of Income for Pass-Through Entities, is a crucial document for businesses operating in the state. This form is specifically designed for pass-through entities such as partnerships, S corporations, and limited liability companies that need to report income, deductions, and taxes withheld for nonresident owners. It covers various essential aspects, including the entity's name, federal employer identification number (FEIN), and the period for which the return is being filed. Additionally, it requires details about the number of owners, both resident and nonresident, and the total amount withheld for nonresident owners. The form also includes sections for reporting taxable income, deductions, and any applicable tax credits. Furthermore, it provides a framework for reconciling withholding payments, calculating penalties for late filings, and determining any overpayments or amounts due. Completing the Virginia 502 form accurately is vital for compliance with state tax laws and to avoid potential penalties.
Filling out the Virginia 502 form can be a complex process, and many individuals make common mistakes that can lead to delays or issues with their filings. One frequent error is failing to check the appropriate boxes at the beginning of the form. These boxes indicate whether the return is an initial, amended, or final return. Not marking these correctly can result in processing delays.
Another common mistake involves misreporting the entity type. Each entity type has specific requirements and implications for tax treatment. If the wrong type is selected, it may lead to incorrect tax calculations or missed deductions. Furthermore, it's essential to ensure that the entity name matches the name registered with the state. Discrepancies here can cause confusion and delays in processing.
Many filers also overlook the need to report all owners accurately. The form requires the total number of owners and the number of nonresident owners. Omitting any owners or incorrectly counting them can lead to inaccurate withholding calculations, which could result in penalties.
In the income and deductions section, errors frequently occur when reporting total taxable income and total deductions. Ensure that these amounts are calculated correctly and reflect the entity's financial records. Double-checking these figures can prevent potential audits or penalties.
Another mistake involves the allocation of income. Filers sometimes fail to allocate income correctly between Virginia and other states. This can lead to incorrect tax liability assessments. Always refer to the Schedule 502A to confirm that allocations are made accurately.
When it comes to tax credits, many individuals neglect to report them properly. Ensure that any nonrefundable or refundable credits are included accurately on the form. Missing these can result in overpayment of taxes.
Additionally, it's crucial to include the correct Federal Employer Identification Number (FEIN). A missing or incorrect FEIN can delay processing and may lead to complications with tax obligations.
Lastly, filers often forget to sign the form. A missing signature can render the return invalid, resulting in penalties or additional scrutiny from the tax department. Always ensure that the form is signed and dated before submission.
Form 502
Return of Income and Return of *VA0PTE122888*
2022 Virginia
Pass-Through Entity
Virginia Department of Taxation
Nonresident Withholding Tax
P.O. Box 1500
Official Use Only
Richmond, VA 23218-1500
FISCAL or
SHORT Year Filer: Beginning Date ___________________ 2022; Ending Date _________________ , 20_______
Check if Schedules VK-1 were filed by Web Upload
By checking the box to the right, I (we) authorize the Department to discuss this return with the undersigned tax preparer.
Check if:
Initial return
Change in fiscal year
Amended return: Enter Reason Code____________
Unified nonresident return filed
Electing large partnership
Final return
Name change
Subject to Bank Franchise Tax
Address change
Certified Company Apportionment
FEIN
Date of Formation
Entity Type (see instructions)
Entity Name
Date Operations Began in Virginia
NAICS Code
Number and Street
State or Country Where Incorporated
Description of Business Activity
or Organized
City or Town, State, and ZIP Code
Number and Types of Owners (See instructions) Count all of the owners who were issued a federal Schedule K-1 for the taxable year and enter:
a. The total number of owners (include individuals and any other entity types) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b. The total number of nonresident owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c. Total amount withheld for nonresident owners (total of Line e from all Schedules VK-1) . . . . . . . . . . . . . . . . . . .
d. If the entity is exempt from withholding, enter the exemption code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributive or Pro Rata Income and Deductions (See instructions)
1.Total taxable income amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.Total deductions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.Tax-exempt interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allocation and Apportionment: Check if electing the manufacturer’s alternative method of apportionment
4.Income allocated to Virginia from Schedule 502A, Section C, Line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.Income allocated outside of Virginia from Schedule 502A, Section C, Line 3(e) . . . . . . . . . . . . . . . . . . . . . . . . .
6.Apportionable income from Schedule 502A, Section C, Line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.Virginia apportionment percentage from Schedule 502A, Section B, percent from Line 1 or Line 2(f) or 100% . . .
a.
b. c. d.
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.00
%
Virginia Additions – See Schedule 502ADJ for Other Additions
8. Fixed date conformity – depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
9. Fixed date conformity – other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
10. Net income tax or other tax used as a deduction in determining taxable income (see instructions) . . . . . . . . . . . 10.
11. Interest on municipal or state obligations other than from Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
12. Total additions from enclosed Schedule 502ADJ, Section A , Line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
13. Total additions. Add Lines 8 through 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
Virginia Subtractions – See Schedule 502ADJ for Other Subtractions
14. Fixed date conformity – depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
15. Fixed date conformity – other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
16. Income from obligations of the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
17. Total subtractions from enclosed Schedule 502ADJ, Section B, Line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
18. Total subtractions. Add Lines 14 through 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
Virginia Tax Credits Passed Through to Owners
19. Total nonrefundable credits from enclosed Schedule 502ADJ, Section C, Part II, Line 1 . . . . . . . . . . . . . . . . . . . 19.
20. Total refundable credits from enclosed Schedule 502ADJ, Section C, Part IV, Line 1 . . . . . . . . . . . . . . . . . . . . . 20.
Va. Dept. of Taxation 2601015-W Rev. 07/22
_________________________
*VA0PTE222888*
2022 Virginia Name
____________________________________
Page 2
Section 1 – Withholding Payment Reconciliation
1. Total withholding tax due for nonresident owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Total withholding tax paid (Entity’s own payments only – see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Overpayment. If Line 2 is greater than Line 1, subtract Line 1 from Line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Withholding tax due. If Line 2 is less than Line 1, subtract Line 2 from Line 1 . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2 – Penalty and Interest Charges on Withholding Tax
5.Extension penalty (may apply to returns filed within extension period if 90% of Line 1 is not paid timely) . . . .
6.Late payment penalty on tax due (will apply if there is a balance due on Line 4 and Form 502 is being filed more than 6 months after the original due date). Enter 30% of the amount on Line 4 . . . . . . . . . . . . . . . . . . .
7.Interest (may apply if there is a balance due on Line 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.Penalty and interest charges due. Add Line 5 or Line 6 (whichever applies) to Line 7 . . . . . . . . . . . . . . . . . . .
Section 3 – Penalty for Late Filing of Form 502
9.If Form 502 is being filed more than 6 months after the original due date, or more than 30 days after the federal extended due date, enter $1,200. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4 – Withholding Overpayment
10.Net overpayment. If Line 8 or Line 9 exceeds Line 3, go to Line 13 below to compute the total payment due.
Compare Line 6 and Line 9. If Line 6 is greater than Line 9, subtract Line 8 from Line 3. If Line 9 is greater than Line 6, subtract Line 7 plus Line 9 from Line 3. Otherwise, enter overpayment amount from Line 3 . . . .
11.Amount of withholding overpayment to be credited to 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.Amount of withholding overpayment to be refunded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 5 – Tax, Penalty, and Interest Due
13.Balance of tax due plus extension penalty, if applicable. If there is an amount due on Line 4, enter Line 4 plus Line 5. If there is an overpayment on Line 3 and Line 8 or Line 9 is greater than Line 3, enter Line 5 minus Line 3 . . . . . . .
14.Interest charges on withholding tax from Line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.Late filing penalty. Enter the greater of Line 6 or Line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16.Total payment due. Add Line 13, Line 14, and Line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6 – Amount Due or Refund
17.Motion Picture Production Tax Credit to be refunded directly to PTE (see instructions) . . . . . . . . . . . . . . . . . .
18.Research and Development Expenses Tax Credit to be refunded directly to PTE (see instructions) . . . . . . . .
19.Credit to be refunded directly to PTE. Add Line 17 and Line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20.Amount Due. If there is an amount due on Line 16 and the amount exceeds the amount on Line 19, subtract Line 19 from Line 16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.Amount of Refund. If there is an amount due on Line 16 and the amount is less than the amount on Line 19, subtract Line 16 from Line 19. If there is an amount on Line 12, add Line 12 and Line 19 . . . . . . . . . . . . . . . .
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I, the undersigned owner and authorized representative of the pass-through entity for which this return is made, declare under the penalties provided by law that this return (including any accompanying schedules, statements, and enclosures) has been examined by me and is, to the best of my knowledge and belief, a true, correct, and complete return, made in good faith, for the taxable year stated, pursuant to the tax laws of the Commonwealth of Virginia. A preparer other than the authorized representative declares the same, and such declaration is based on all information of which he or she has any knowledge.
Signature of Owner or Authorized Representative
Title
Date
Printed Name of Owner or Authorized Representative
Phone
Individual or Firm, Signature of Preparer, Phone Number, and Address
Printed Name of Individual or Firm
Preparer’s FEIN, PTIN, or SSN
Approved Vendor Code
Include a copy of your federal return with Form 502. Important: do not include a federal Schedule K-1 for each owner. If you filed
a Schedule VK-1 for each owner online using Web Upload, do not include copies of Schedules VK-1 with the Form 502.
Do not submit Form 765 with this return – Mail it to the address on Form 765.
The Virginia Form 502 is similar to the IRS Form 1065, which is used for reporting the income, deductions, gains, and losses of partnerships. Both forms serve the purpose of providing tax information for pass-through entities. Just like Form 502, Form 1065 requires details about the entity, its income, and its partners. Additionally, both forms necessitate the issuance of Schedule K-1 to each partner, detailing their share of income, deductions, and credits. This similarity ensures that both state and federal tax authorities receive consistent information regarding the financial performance of the partnership.
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Another document similar to the Virginia Form 502 is the IRS Form 1120-S, which is used by S corporations. Both forms require S corporations to report income, deductions, and credits. They also both require the distribution of Schedule K-1 to shareholders, outlining each shareholder's share of income and deductions. The focus on pass-through taxation in both forms reflects the nature of these entities, where income is taxed at the individual level rather than at the corporate level, ensuring that tax obligations are met appropriately.
The Virginia Form 502 also resembles the IRS Form 990, which is used by tax-exempt organizations. While Form 990 serves a different purpose, both documents require detailed financial reporting. They both include sections for income, expenses, and changes in net assets. Each form aims to provide transparency about the financial activities of the organization or entity, ensuring compliance with tax regulations and maintaining accountability to stakeholders.
In addition, the Virginia Form 502 shares similarities with the IRS Form 1041, which is used for estates and trusts. Both forms require reporting of income, deductions, and credits. They also necessitate the distribution of Schedule K-1 to beneficiaries, detailing their share of income and deductions. This connection highlights the importance of accurate reporting in managing the tax obligations of pass-through entities and ensuring that beneficiaries understand their tax responsibilities.
The Virginia Form 502 is also comparable to the IRS Form 8865, which is used for reporting foreign partnerships. Both forms require detailed information about the partnership's income, deductions, and ownership structure. They both aim to provide tax authorities with a clear picture of the entity's financial activities. This similarity emphasizes the need for transparency and compliance in tax reporting, regardless of the entity's geographic location.
Lastly, the Virginia Form 502 is akin to the IRS Form 1120, which is used by C corporations. Both forms require comprehensive reporting of income, deductions, and credits. However, while Form 502 focuses on pass-through entities, Form 1120 deals with entities subject to corporate tax. This distinction highlights the different tax treatments for various types of entities, while still underscoring the importance of accurate financial reporting for compliance purposes.
Completing the Virginia 502 form is a crucial step for pass-through entities operating in Virginia. This form requires detailed information about the entity's income, deductions, and tax liabilities. It is essential to provide accurate information to ensure compliance with state tax regulations.
The Virginia 502 Form is a tax return specifically designed for pass-through entities operating in Virginia. This form is used to report income, deductions, and taxes withheld for nonresident owners. It serves as a means for these entities to comply with Virginia tax laws while ensuring that nonresident owners meet their tax obligations.
Any pass-through entity, such as partnerships or S corporations, that has nonresident owners and conducts business in Virginia must file the Virginia 502 Form. This includes entities that have income sourced from Virginia and are subject to withholding requirements for their nonresident owners.
To accurately complete the Virginia 502 Form, you will need several pieces of information, including:
The Virginia 502 Form is typically due on the 15th day of the fourth month following the end of the entity's fiscal year. For calendar year filers, this means the due date is April 15. If the due date falls on a weekend or holiday, the deadline is extended to the next business day.
Filing the Virginia 502 Form late may result in penalties and interest charges. If the form is submitted more than six months after the original due date, a penalty of $1,200 may apply. Additionally, late payment penalties and interest on any tax due may also be assessed, which can increase the total amount owed.
Yes, if there are errors or changes that need to be made after the Virginia 502 Form has been filed, an amended return can be submitted. To do this, check the box indicating that it is an amended return and provide the reason for the amendment. Ensure that all necessary adjustments are accurately reflected in the amended form.
Schedules VK-1 are used to report each nonresident owner's share of income, deductions, and credits from the pass-through entity. These schedules must be filed along with the Virginia 502 Form, but if they are uploaded electronically via Web Upload, physical copies do not need to be submitted with the form.
The withholding tax for nonresident owners is calculated based on the income allocated to them from the pass-through entity. The total amount withheld must be reported on the Virginia 502 Form, and it should reflect the sum of withholding as detailed in the Schedules VK-1 issued to each owner.
If there is an overpayment of withholding tax, it can be credited to the following tax year or refunded. The Virginia 502 Form provides sections to indicate how you would like to handle the overpayment, whether to apply it to the next year's taxes or to receive a refund.
The completed Virginia 502 Form should be mailed to the Virginia Department of Taxation at the address specified on the form. Ensure that any accompanying schedules and documentation, such as the federal return, are included as required.
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