My husband has a new (2022) Michigan multimember LLC that does work in both MI and OH. They provide a service (no goods sold and no employees) all members are equal owners so also no w-2’s and we had no 1099 payments to others. We filed the 1065 and also got the schedule k-1’s from that to the owners.
One member lives in MI and two in OH. What/if any filing requirements are there for the states for the business—-or is that only done when the members do their personal 1040’s. Do they need to specify amount/payments made in each state anywhere or not because they are reciprocal states.
Their gross receipts were less than 250,000.
Since the income from the partnership LLC is derived from MI and OH and less than $250,000 in gross receipts, there are no state returns to be filed for either state. The partners will report their K-1 on their respective individual returns including their state of residence.
If next year the gross receipts are more than $250k, what will be required. Also are both the OH IT 1140 and MI FTE Tax Optional---if you made a lot of money and wanted to use as a deduction to reduce your federal income taxes. Do both both these need to be elected? I feel I understand the MI FTE Tax, but the OH IT form 1140 is confusing to me.
Yes, the election to pay tax on behalf of the partners is optional in both Michigan (Michigan Flow-Through Entity Tax) and Ohio (Ohio Pass-Through Entity Tax).
Also, neither state has a true partnership tax return. Instead, partners report the partnership activity from the federal K-1 on a personal tax return. This activity flows through to the individual state income tax return.
You may need to file Ohio Form IT-1140, which reports and pays Ohio withholding on nonresident partners. You can file this return through TurboTax or online on the Ohio Tax Department website (read the FAQs here).