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Level 3
posted Jan 30, 2024 9:41:42 AM

Multi-State Tax Filing for LLC Operating Across DE, PA, and MD

I'm trying to navigate the state tax filing requirements for a Delaware-registered LLC which operates in Pennsylvania and serves clients in DE, PA, and a foreign country. I'm the sole member, residing in Maryland.

 

Here are the specific points I'm seeking clarity on:

  • State Tax Filings: Do I need to file state taxes in Delaware, Pennsylvania, and Maryland separately, because of the client's location, my company's operation location, and my residency?
  • Apportionment of Income: If the answer to above question is yes, does the income reported in DE and PA's state tax filing allocate the company's profit based on the source of income (DE, PA)?
  • Reciprocal Agreements: I'm aware of the reciprocal agreements between PA and MD for individuals who live in one state and receive wages from another. Is there a similar provision that applies to LLC income, where the owner resides in one state and the business operates in another?

Thank you in advance for your assistance and guidance.

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1 Replies
Expert Alumni
Jan 30, 2024 11:02:48 AM

The address of your business is the state that you need to file.  You have income coming from out of state sources but it is earned at the address of your business and that is the only state that you are required to file for EXCEPT for Delaware.  

 

You must file an out of state return for Delaware as a corporation registered in Delaware and you are required to report one hundred percent of your income to them.  You will be able to deduct the taxes paid to Delaware on your Pennsylvania return.  Here are the Delaware requirements.

 

The reciprocity agreement between Maryland and Pennsylvania applies to wages earned in the other state, not to corporate income.  

 

@ndc24075