Already paid state taxes directly to the state of Delaware for my business (now closed). Do I need to also report them in Turbotax when doing my regular return?

[Taxes20213]

Hello, I had a small business that earned no income in 2021 and 2022. In order to close it, the agency helping me required me to pay state taxes to the state of Delaware for 2021 and 2022 already, which I did. They said I am all set from a tax perspective for the business.

I live and work in California .

My question is, since I paid the state taxes (franchise tax) for the small business directly to the state of Delaware on the delaware state website, do I need to report this for some reason in Turbotax? 

Basically is the IRS OK with it if I pay taxes directly to the state of Delaware outside of Turbotax, then file a separate return just for California and federal with Turbotax? 

Thanks,

Taxes202103

[JamesG1]

This sounds like a single member LLC reported as a disregarded entity on your personal tax return.  I would expect you to report the disregarded entity on Schedule C of your personal tax return.

Delaware state franchise taxes would be deductible on your Schedule C if you were reporting business income and expense but it sounds like you are not reporting Schedule C income and expenses.

It is unclear whether you are subject to the franchise tax for a California LLC.

See also here.

[Taxes20213]

Thanks. So it sounds like it is possible to report this business in Turbotax Deluxe? Next year, I will have $5000 of income to report for the business. Can I also do that in the schedule C section of TurboTax Deluxe?

[RobertB4444]

@Taxes20213  It all depends on how your business is structured but if it is a sole-proprietorship then yes, you will be able to report income using schedule C in TurboTax Deluxe.  However, you will have to upgrade to TurboTax Home & Business to report any expenses.