So, this is the starting point for this analysis from the State of California's Franchise Tax Board: Part-year resident and nonresident
Your fact pattern specifically falls under Scenario 4 for non-residents, which you are in 2024. This is the scenario from the link above:
Scenario 4:
You are an independent contractor/sole proprietor who relocates to another state. In addition to obtaining customers in your new state, you still perform services for California customers who receive the benefit of your services in California. Will you need to file a California return?
Answer: Yes.
California source income for independent contractors/sole proprietors is determined by looking to where the benefit of the service is received by the customer. The location where the independent contractor/sole proprietor performs the work is not a factor. Visit Market-based sourcing for independent contractors for more information.
At this point, all you income is California source income, so you will need to file a California tax return in 2024 as a non-resident and then take a credit for the taxes paid to California on the New Mexico resident tax return.
Since the LLC is a disregarded entity for Federal tax purposes there is no need to dissolve the LLC unless you want to. This is not going to have an impact on the California source income analysis. Depending upon what you do with the LLC, you would want to shift everything over to the LLC.
Thank you for the question @crajabari
All the best,
Marc T.
Turbo Tax Expert
27 Years of Helping Clients
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
