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Should I file California Form 568 LLC return of income?

SOLVEDby TurboTax377Updated 1 month ago

Form 568 covers the income, withholding, coverages, taxes, and additional financial elements of your private limited liability company (LLC).

You must file Form 568 if your LLC is registered in California, even if it isn't actively doing business in California or doesn't have a California source of income.

  • Line 1 Total income from Schedule IW: Enter the total income.
  • Line 2 Limited liability company fee: Enter the amount of the LLC fee. The LLC must pay a fee if the total California income is equal to or greater than $250,000.
    • Don’t enter your franchise tax paid here.

Typically, if the total California income from Form 568, Side 1, line is:

Equal to or over —But not over —The fee is:
$5,000,000And over$11,790
  • Line 3 2021 Annual limited liability company tax: Enter the $800 annual tax here.
  • Line 4 Pass-through entity elective tax: See instructions
  • Line 5 Nonconsenting nonresident members’ tax liability: Enter the total tax computed on Schedule T from Side 4 of Form 568.
  • Line 6 Partnership level tax: Enter any California tax change resulting from federal partnership-level audit adjustments. If that doesn’t apply to you, leave it blank.
  • Line 7 Total tax and fee: Add Lines 2-6. 
  • Line 8 Amount paid with Form FTB 3537, 2023 Form FTB 3522, and Form FTB 3536: If the LLC is a nonconsenting, nonresident owner, an amount will be entered on Line 15e of the Schedule K-1 from that LLC.
    • This is defined as partners, members, and shareholders that are non-residents of California in addition to beneficiaries of an estate or trust that are non-residents of California.
    • The amount from Line 15e of the Schedule K-1 may be claimed here too, but may not exceed the amount on Line 4.
  • Line 9 Amounts paid for pass-through entity elective tax
  • Line 10 Overpayment: Enter any overpayment from a prior year, which will be applied as a credit.
  • Line 11 Withholding (Form 592-B or Form 593): If the LLC is held by a group of individuals, the LLC can:
    • Apply some or all of the withholding credit to its members
    • Claim a portion on Line 11 (not to exceed the total tax and fee due) and then apply the remaining portion to the members
  • Line 12 Total payments: Add Lines 8–11
  • Line 13 Use tax: If you bought items out of state and didn't pay sales or use tax, note those purchases here.
    • To report use tax on your tax return, use the instructions below to complete the use tax worksheet.
  • Line 14 Payments balance: If Line 12 is more than Line 13, subtract Line 13 from Line 12.
  • Line 15 Use tax balance: If Line 13 is more than Line 12, subtract Line 12 from Line 13.
  • Line 16 Tax and fee due: If Line 7 is more than Line 14, subtract Line 14 from Line 7.
  • Line 17 Overpayment: If Line 14 is more than Line 7, subtract Line 7 from Line 14.
  • Line 18 Amount of Line 17 to be credited to 2024 tax or fee.
  • Line 19 Refund: If the total of Line 18 is less than Line 17, subtract the total from Line 17.
  • Line 20 Penalties and interest
  • Line 21 Total amount due

If the LLC owes use tax (but doesn't report it on the income tax return), the LLC must report and pay the tax to the California Department of Tax and Fee Administration. Go here for more info.

On Line 1, report purchases from California retailers subject to sales tax unless the receipt shows the California tax was paid directly to the retailer. For more on exempt purchases, visit the California Department of Tax and Fee Administration website

Do report: 

  • Handling charges
  • Only the purchases made during the year that correspond with the tax return the LLC is filing

Don’t report:

  • Vehicles, vessels, and trailers that require DMV registration 
  • Mobile homes or commercial coaches that require Health and Safety Code Administration registration
  • Vessels documented with the US Coast Guard
  • Aircraft
  • Rental receipts from leasing machinery, equipment, vehicles, and other tangible personal property
  • Cigarettes and tobacco products (if the purchaser is registered as a cigarette or tobacco products consumer)
  • Any other state’s sales or use tax paid on the purchases

If you paid tax on purchases from other states, report the credit for out-of-state tax on Line 1. An LLC may claim a credit up to the amount of tax that would have been due if the purchase was made in California. For example, if the LLC paid $8.00 sales tax to another state for a purchase, and would have paid $6.00 in California, the LLC can only claim a credit of $6.00 for that purchase.

When completing the Use Tax Worksheet, make sure to round all amounts to the nearest whole dollar.

  • Line 1 Purchases: Enter purchases from out-of-state sellers made without payment of California sales/use tax.
  • Line 2 Applicable sales tax: Enter the applicable sales and use tax rate.
  • Line 3 Multiply: Multiply Line 1 by the tax rate on Line 2.
  • Line 6 Out-of-state sales tax: Enter any sales or use tax paid to another state for purchases included on Line 1.
  • Line 5 Total se tax due: Subtract Line 4 from Line 3. Enter the amount here and on Line 11. If the amount is less than zero, enter 0.

Mail Form 568 with payment to:

Franchise Tax Board

PO Box 942857

Sacramento CA 94257–0501

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