California Resident. Own Multi Member LLC in Massachusetts. Made No Income. Do I File Personal Massachusetts State Taxes?

[Vocstra]

Hello. Thank you for taking the time out to read my post/questions. Here we go.

I am a resident of California. I started a multi member LLC in the state of Massachusetts in 2024. In the year 2024 the LLC made no income. With the type of LLC we have, there was a Schedule K-1 (Form 1065) issued out to all the partners. My questions are as follow,

1. Do I have to file Massachusetts state taxes when I do my personal taxes even though there is no income from the LLC in the Schedule K-1 (Form 1065) and I'm a nonresident?
2. Do I have to file Massachusetts state taxes when I do my personal taxes when I do get income from the LLC in the Schedule K-1 (Form 1065) and I'm a nonresident?

Once again, thank you so much for your time and help.

[PatriciaV]

1) No. If the Schedule K-1 reports no income or expenses, you would not normally file a nonresident Massachusetts income tax return.

2) Yes. In the future, you will probably need to file a nonresident state return if the investment reports income or expenses on Schedule K-1.

From Massachusetts Personal Income Tax for Nonresidents:

If you're a nonresident of Massachusetts, you must file a Massachusetts Income Tax Return if you received Massachusetts source income [snip]. You're a nonresident if you are neither a full-year nor a part-year resident. Your Massachusetts tax treatment is based on your residency status and not the type of visa you hold.

[Vocstra]

PatriciaV,

Thank you so much for your reply. I will keep that in mind for the future. You know what I forgot to ask, which adds more complexity to the situation.

Not sure if you are from the East Coast. Particularly New England. A lot of states are within 4 hours of each other. Rhode Island being a little over an hour away from Massachusetts. Anyway, what if the LLC purchase property in Rhode Island and is getting its income from there. I am aware of needing to get the LLC registered in that state as a foreign company, but back to the original question,

Would a nonresident that gets an a Schedule K-1 (Form 1065) from a business in Massachusetts have to file Massachusetts state taxes, even if the income is completely from another state, which in this case would be Rhode Island? 

Am I to assume now I would have to file state taxes in my residential state California, in Massachusetts because the company is there, and Rhode Island if the income is coming from there through tenants?

I’m going to assume I would have to do all 3. I figured what you told me would be true, but now I added the complex part to it. LOL!!!

Thank you again if you can shed some light on that situation.

[PatriciaV]

In general, a partner would consider filing a state tax return only if the Schedule K-1 reported income sourced in that state. However, every state has its own requirements regarding income earned by nonresidents. It would be the partner's responsibility to investigate the filing requirements for that state and decide whether they should file a state return.

This article provides links to States with income tax: State Departments of Revenue

For Rhode Island, a nonresident individual with income connected with Rhode Island sources must file a Rhode Island individual income tax return. See RI-1040NR NonResident Return Instructions (2024) (PDF).

When you file the LLC tax return, be sure the Schedules K-1 come with additional information about states where the partnership operates and generates income. This will inform the partners on what state returns they may need to file.

[Vocstra]

PatriciaV,

Hey there. Once again thank you for replying back, guidance, and providing all that information. I will review it and let the partners know.