Partnership (LP) with K-1 from out of state

From  South Carolina Instructions for Form SC 1040, you are required to file a return if you "are a nonresident or part-year resident who is receiving income from rental property, businesses, or other investments in South Carolina".

 

Many (most?) partnerships are like yours, where partners reside in states other than where the business is located. Often, the tax partner (or general partner) will pay any local state tax liability on behalf of the out-of-state partners, but not always. When these payments are madd, out-of-state partners often choose not to file a return in the state where the business operates.

 

If the partnership did not make a SC tax payment on your behalf (you'd see this on the state K-1), then you have to decide whether to file your own, non-resident SC tax return.

 

 

There are a couple of items you need to follow-up on:

• SC requires that a partnership withhold 5% of tax on SC income of nonresident partners.
• SC also allows for a composite return to be filed by the partnership for SC nonresident partners.
• You need to check your K-1 to see if there is SC withholding remitted on your behalf.
• If no withholding, then you need to ask the partnership if they filed a composite tax return on behalf of the nonresident partners.
• If a composite return was filed on behalf of SC nonresident partners, then you do not need to file another SC return.
• If no composite return was filed on your behalf, you will need to file a return.
  • You need to understand if withholding has been remitted that you can claim on the SC nonresident tax return.

When @ToddL99 was referring to the "tax partner or general partner" paying the tax, he is referring to either filing a composite return or the required withholding as noted above.

The SC1065 K-1 that I received has 2 numbers on it. On line #2 (Net rental real estate income (loss)) in column A (Federal K-1 Amounts) and column C (Amounts Not Allocated or Apportioned to SC) there is:  -33.

 

On line #13(d) (Other deductions) in column A (Federal K-1 Amounts) and column C (Amounts Not Allocated or Apportioned to SC) there is:  338

 

There is not another number anywhere on this form. I've been aggressively searching to see if I need to file a SC tax return. I am not a resident of SC.

Any advice would be appreciated.

 

Mike