Washington Deductions from Royalty

State:
Multi-State
Control #:
US-OG-787
Format:
Word; 
Rich Text
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Description

This lease rider form may be used when you are involved in a lease transaction, and have made the decision to utilize the form of Oil and Gas Lease presented to you by the Lessee, and you want to include additional provisions to that Lease form to address specific concerns you may have, or place limitations on the rights granted the Lessee in the “standard” lease form.

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FAQ

Washington does not use a state withholding form because there is no personal income tax in Washington.

The "royalty fees" are part of taxable gross receipts when the taxpayer does the printing for the franchisees. Where the franchisees do not purchase printing from the taxpayer, the "royalty fees" are not taxable since there is no sale of tangible personal property.

For products manufactured and sold in Washington, a business owner is subject to both the Manufacturing B&O Tax and the Wholesaling or Retailing B&O Tax. However, you may be entitled to the Multiple Activities Tax Credit (MATC). The MATC is also known as Schedule C.

Payments for the use of trademarks, trade names, service marks or copyrights, whether or not payment is based on the use made of such property, are ordinarily classified as royalties for federal tax purposes."

This tax classification applies if you manufacture products in Washington, whether for your own use or for sale (as tangible property) to another person. The tax amount is based on the value of the manufactured products or by-products.

(1) Upon every person engaging within this state in the business of receiving income from royalties, the amount of tax with respect to the business is equal to the gross income from royalties multiplied by the rate of 1.5 percent.

Required Payroll Taxes for Employers Social Security tax ? 6.2% Medicare tax ? 1.45% Federal unemployment tax (FUTA) ? 6% State unemployment insurance (SUI) ? Variable*

Federal tax must be withheld at the rate of 30% of gross royalties unless an IRS tax treaty is applicable.

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Washington Deductions from Royalty