Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
mbpatel527
Returning Member

Reporting on NJ Tax for K-1 received from a LLC in Texas

Hi I am completing my NJ taxes using Turbo Tax. I am asked to complete reconciliation amount for business income/ losses from a LLC partnership registered in the State of Texas. Can you explain what this means? Turbo tax asks for Taxes based on income and other additions and subtractions without providing much guidance. Could you please explain?

 

Thank you

 

2 Replies
Corrlich44
Employee Tax & Finance Expert

Reporting on NJ Tax for K-1 received from a LLC in Texas

Since you are a New Jersey resident, all taxable business income you receive reported on a Form 1065, Schedule K-1 from an LLC is taxable in your state. Based on the boxes that income is reported in, which most likely will be Box 1, 2 or 3 in the top center of the form, will dictate how this income will be taxed. While it is unknown how you are participating in this business as an active member in making daily business decisions or a passive member, where only your capital investment is at risk of loss, Box 1 would usually imply this is ordinary income to be taxed at regular income tax rates on your Federal and State Tax return. If you are reporting a Net Loss, those are not deductible on the New Jersey Tax Return, as it is a Gross Income Tax State and those losses would be deferred into the future on your Federal and State Tax return, unless you are reporting passive income. Since the State of Texas does not have an income tax, there would be no tax payments or deductions to benefit from on your state tax return. The only unknown is whether this LLC in Texas is being treated as an S-Corp and any income would be reported on a Form 1120-S, Schedule K-1. More information would be needed, but for the most part, the program would normally know what to do, which would require you to have supplemental pages from your Schedule K-1 for the State of New Jersey to state how to "fill in the blanks".

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
mbpatel527
Returning Member

Reporting on NJ Tax for K-1 received from a LLC in Texas

Hello, thanks for a detailed response. I am an active member of the partnership and it is an S corporation. I am reporting a net loss.  My understanding is that, as an active member, I am allowed to deduct my losses on the Federal return. Did you mean to say the losses would be differed into the future on my Federal and State Tax return, unless I am reporting active - not passive- income? My other question is - what is reported in the reconciliation amounts.

 

Thank you

Dynamic AdsDynamic Ads
Privacy Settings
v