WA partnership, Idaho income -- K1 question on partnership return

[ajp]

Doing a partnership return for WA State partnership. This year, all income was Idaho sources. When I go to make a state return, it asks me to choose an option for the owner's K-1s. These are my choices:

Approved N/R ownership agreement (I don't know what this is)

Composite return

Affected business entity

Exempt from withholding (I'm leaning towards this choice)

Idaho resident (neither partner is an Idaho resident)

Entity paying withholding (the entity did not pay any withholding)

Anyway, I would love insight to these choices. Both partners are individuals who live in WA state. This is the first partnership return for this business and all income was sourced from Idaho. 

[sjrcpa]

The Idaho partnership return instructions should explain these options.

Basically, the partnership has to pay nonresident withholding, file a composite nonresident return or get signed agreements from the partners saying they will file nonresident returns.

[ajp]

Ok, thanks. This is their first return and they didn't do any withholdings. I will make sure they make a choice for 2026. 

[sjrcpa]

Whether they did or not does not affect whether they should.

[ajp]

I get that, but I can't go back in time. I will make sure they understand the requirement going forward. 

[sjrcpa]

I'm not familiar with Idaho, but for other states, the state withholding isn't necessarily withheld from the income or distribution during the year. It is paid with the tax return. Then it most likely reduces the next cash distribution

[ajp]

I will look into that! Thanks.