A Partnership LLC was opened and dissolved within the same year in Michigan, do I still have to pay state taxes to Michigan?

[mdpalmer91288]

Hello,

I have an unusual circumstance that I'm looking for insight into. I opened and dissolved a Partnership LLC outside of my home state, in Michigan all within the same year (2022). Profits made were $400, my partner and I split up the money and officially dissolved the business. My question is, do I still have to pay state tax to Michigan for this?

[ShirlynW]

Yes. If your LLC operates in a state with a state income tax, then your LLC will be required to pay state income taxes. Michigan is one of these states. The tax rate for Michigan LLCs depends on the amount of income the business earns and how it is taxed.

[mdpalmer91288]

Thank you for clarifying that Shirlyn. This may sound silly, but just so I understand, not only do I enter the Partnership LLC under my personal, federal income tax return but then again would file a separate state tax return for the state of Michigan since I am an NJ resident, correct? And the amount made, which is less than $400 would not matter? I would still be required to file that separate state income tax? 

Thank you so much!!

[AliciaP1]

Your Partnership LLC is required to file federal Form 1065 and if it operated in MI then it will also need to file MI Form 5460 regardless of the amount of income or loss.  The partners are issued a Schedule K-1 to report each partner's share of the income or loss and other appropriate costs.  When you enter the Schedule K-1 into your personal return, you will enter the details of your participation in the partnership and TurboTax will help you determine if you need to file a MI individual tax return (which is unlikely, but could be necessary depending on the business transactions).

You will need TurboTax Business (not TurboTax Home & Business) to complete your Form 1065 & MI 5460.  Once that is complete you can enter your Schedule K-1 to your personal return by following these steps in TurboTax Online:

1. Sign in to your TurboTax
2. Open or continue  your return
   • Choose a section from the TurboTax menu and select Pick up where you left off
3. Using the search bar, type K-1 and select the Jump to link from the search results
   • Note: If the Jump to link doesn’t work, select the Federal tab, then under S-corps, Partnerships, and Trusts, select Wages & Income
   • Select Revisit or Start next to Schedule K-1
4. Answer Yes to Do you want to review Schedules K-1 or Q? and follow the prompts
   • Note: You may be prompted to upgrade to Premier, if you're not already using it
5. This will take you to the Schedules K-1 or Q screen
6. We’ll ask some questions about your K-1, and then you’ll enter the data from the form

To enter in TurboTax CD/Download:

1. Sign in to your TurboTax
2. Open or continue  your return
3. Using the search bar, type K-1 and select the Jump to link in the search results
4. This will take you to the Schedule K-1 and Schedule Q screen
   • Note: If the Jump to link doesn’t work, select Personal, then Personal Income
5. Select I’ll choose what I work on and continue until you reach the screen, Your 2022 Income Summary
6. Select Start next to Schedule K-1 under Business Investment and Estate/Trust Income
7. Answer Yes and follow the prompts
8. We’ll ask some questions about your K-1, and then you’ll enter the data from the form

@mdpalmer91288