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New Member
posted Mar 14, 2021 10:51:16 PM

Texas LLC (File as S Corp), do I need to pay income tax for other states??

Hello,

 

We have a small business in Texas.  We're starting to receive letters from other states stating that we owe income taxes - such as CA, PA and NY.  We do not have locations or employees in any of those states but do work with a third party logistics company in PA. 

 

Would we owe income taxes to any of those states, and if so, how would we determine how much?

 

We are already familiar with sales tax by state (which was another nightmare) but just starting to hear about income taxes.

 

Please help and advise.

 

Thanks,

HL

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1 Replies
Expert Alumni
Mar 15, 2021 12:08:06 PM

You may owe income tax to those states depending on the amount of sales made in those states. 

 

You should prepare state S-Corp returns for any state outside of Texas where you do business to generate Form K1 for that state for individual's income tax filing. 

 

New York State will allow the S-Corp to file a composite income tax return on behalf of all shareholders in lieu of each shareholder filing a separate individual New York State tax return as part of their tax filing. 

 

Gross income for each jurisdiction con be computed using various methods; for the states where you are paying sales tax, using the sales tax base amount as a measure of income is one method.