which state to file taxes in for income from business

[drewgale1234]

Hi,

I have a single member LLC through a registered agent in Wyoming, so the business' address is in Wyoming. The business -only- does sales online via Amazon FBA. I have no physical presence for my business in any state, it exists only online.

I do not live in Wyoming. Since moving back from Hawaii in 2022, I have been doing seasonal work in addition to the income from my business, for example Utah and Oregon. The closest thing I have to a permanent address would be my parents' address in NC, which I believe is the address I used for my federal tax return last year. But I don't live there and do not work or gain in income in NC.

So last year, I filed state taxes in UT and OR for the income earned in those states, and I believe I filed my return for the business income in NC, even though now I don't think that was correct.

So, WHICH STATE IS THE CORRECT STATE TO FILE MY INCOME TAXES IN FOR THE INCOME FROM MY BUSINESS?

Should it be Wyoming?

Thank you!

[marctu · Accepted solution]

@drewgale1234 thank you for the question.   Many businesses choose to register in states that are not their state of residence, so this question is a good one.

If you have a single member LLC it can be a disregarded entity for Federal and by extension state tax purposes.  That means that there is no business (1065 or 1120 S tax return filed).  All the income and expenses are either filed on a Schedule C or E depending on the activity. 

So, Wyoming has no entity tax for corporations, nor does it have a state income tax, so other than keeping the registration up to date with Wyoming that it is it.

So, the following is applicable if you filed as a disregarded entity.  You would file in the state that you were a resident of, which based upon what you wrote is probably Carolina.   North Carolina, Oregon, and Utah all have source income rules as well.   You would get credit for taxes paid to Oregon and Utah on your North Carolina resident return.  Your business income would have to be allocated to each state, if you did business in the state, though more than likely since it appears you were a North Carolina resident, you treated it as North Carolina source.

So, my question to you is did you file as a disregarded entity on your personal return or did you file a Form 1065, for a partnership, or an 1120-S for an S-Corp?  If you answer this, I can provide more detail.

[drewgale1234]

Thanks so much for your response...

I file as a disregarded entity on my personal return using the Schedule C.

Last year, I did my federal tax return and then a state return for OR and UT since I had W-2 from other jobs in those states. I also did a state return for NC for my business income... that is what I think I did wrong...

I didn't actually do any business in any state I've resided in during the year (NC, OR, or UT).

My business only exists in WY... and all sales are done online through Amazon FBA.

I am still not clear on which state, if any, I need to file a personal state income return for the net income from my business. That is what I need a definitive answer on.

Thanks!

[marctu]

You are filing as a disregarded entity, so there is no business tax return. You appear to have filed a North Carolina resident tax return in 2022.   If you did business (Amazon fba) or worked (W-2) in either Oregon and or Utah, that income would be subject to tax in those states, and the tax you paid in those states would result in a credit on the North Carolina tax D-400 resident tax return.   

Check to see what tax return you filed with NC.  Based upon what you wrote it should be a full year resident tax return; therefore, there is no mistake. 

**Say "Thanks" by clicking the thumbs up icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

[drewgale1234]

Ok, excellent, thank you!