I have very small joint venture shares in CO, OKL, and Texas. Do most people have the states withhold their taxes or file separately and pay after the fact? Newby here. What is the best, easiest, etc. way to handle this?
Regards,
RM
[Ok, just a couple more years of $85/WTI and 5$/Nat!!!
]
There is no income tax in the Grand State of Texas. We just get billed for the value of our property. I’ve never heard of an way to have withholding on Oil & Gas in either Colorado or Oklahoma. You will have to file state tax return in both states. Then there are quarterly estimated tax payments based on last years taxes.
Usually oil companies automatically withhold Oklahoma state income tax for royalties for wells in that state. Same for New Mexico production. You have to file a nonresident tax return to get a refund of overpaid state income tax. You will receive a property tax statement from the Texas county where the wells are located.
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joint venture shares = working interest? I’ve never heard of Colorado, Kansas or Oklahoma withholding working interest investments. I get Oil production income from the purchaser who has no idea of the operating costs. Usually the operator collects the gas revenue and nets it against the expenses. I then cut a check for the leftover operating costs. I guess you could not sign a W-9 and they would take 28% of the gross income. But that wouldn’t make sense because say you have 10,000 in sales and they take 2,800 in withholding. After depletion of 15% and operating costs you might net less than 1500.
Better to just pay last years quarterly taxes. Take Total taxes divide by 4. Then keep track of your current withholding and write a check for the different. If your Oil & Gas income are up, set aside that amount times your highest tax rate into a 5.2% savings account. Quarterly income after depletion up $3000. 25% tax bracket = 750 added to saving. I have an excel spreadsheet. Gross gas income, taxes and deductions, Net Gas income, Gross oil income, taxes and deductions, Net oil income. operating expenses. Net income. If it is positive I take 15% depletion of the Gross gas and oil amounts. That gives me the taxable amount.
I do this for every lease in a given state. Then combine the reports for the IRS return. Contact an accountant who does Oil & Gas for your returns. Once they do it right the first time you can use your local guy for the following returns. Or do it yourself.
It is my understanding that there is withholding tax in the following states: CA MT ND NM UT
If I have missed one please let me know
And I missed OK for state withholding
Oklahoma does not withhold any funds for working interest revenue. Only for royalties or ORRI’s for out of state entities.
2022 was the last time we saw $85 oil & $5 nat gas. At this stage, I don’t foresee much higher than were we are today. We have drilled our way out of another boom.
PA has a non-resident withholding law
I have been digging this is what I was able to find…
ND, CA, OK, UT, MT, NM, CO have withholding tax on Mineral Royalties for Non-residents
OK - does not for working interest
PA - I can’t find anything for PA NR Withholding on Mineral Royalties please help or direct also KS