Which state do I file my personal taxes with if all my income is through a K-1 from my multi-member LLC?

[carmine88]

All my income this year is from a K-1 provided by my multi-member LLC. My multi-member LLC is based out of Texas and is subject Texas state taxes. I personally live in Michigan though. 

Since this multi-member LLC is a pass-through entity, is the K-1 income on my personal taxes subject to Texas state taxes or Michigan state taxes? 

Thanks for the help! 

[Rick19744 · Accepted solution]

You will always file a return in your state of residence.

If the LLC has activity in other states it will handle it in one of two ways; (1) include you in a composite tax return for the state(s) in which it has activity which will relieve you from having to file in that state(s) or (2) withhold state taxes for the state(s) in which the LLC does business.  In this case you will generally need to file a return in those states.

If the LLC only has activity in the state of Texas, then you do not have a filing requirement there since there is no individual income tax in Texas.

For states where the LLC either files a composite return or withholds other state income taxes on your behalf, you generally are eligible for a credit for taxes paid to other states on your state of residency tax return.