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State Income Tax Question on LLC treated as pass

through/partnership. I and my partner own...
State Income Tax Question on LLC treated as pass through/partnership.
I and my partner own an LLC in Rhode Island. It is a retail operation with employees. 100% of it is in Rhode Island.
We live in Connecticut. We don't do anything in the operation besides conference calls with my manager.
I file a federal 1065, a RI 1065, and my partner and I get the K1's and file our income taxes in out home state of CT.
Are we supposed to file any sort of personal tax return in RI?
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Answered in 11 minutes by:
3/17/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,383
Experience: Taxes, Immigration, Labor Relations
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A pass-through entity (and teh partnership in particular) is required to make a Rhode Island pass-through withholding tax payment on behalf of a member where - the member is a nonresident.

If a pass-through entity makes a Rhode Island pass-through withholding tax payment on behalf of a nonresident member, is the member required to file a Rhode Island income tax return?

Yes. The member is still required to file the appropriate Rhode Island Income Tax return even if a pass-through entity makes Rhode Island pass-through withholding tax payments on behalf of that member.

In filing the appropriate Rhode Island Income Tax return, the member will claim any pass-through withholding paid by the pass-through entity on the member’s behalf.

See for reference

http://www.tax.ri.gov/misc/passthrough_entities.php

Let me know if that helps you better understand RI filing requirements.

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Customer reply replied 5 months ago
If I understand, we have to file a 1096-PT for each member? It looks like 5.99% x Rhode Island income.
Since we live in CT don't we pay CT tax first since we get the K-1 and that passes through to our personal income tax forms?

Indeed - as CT residents - you include into your gross income - all income from all sources.

So the RI income will be taxable in CT.

HOWEVER - you will be able to claim a credit for taxed paid to RI - on your CT resident tax return - thus effectively will avoid double taxation of the same income.

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Customer reply replied 5 months ago
Ok, so the RI 1096-PT is to pay and report withholding's to RI - 5.99% of income from the LLC. Then do we each have to file a RI personal income tax form? A 1040-NR (non-resident)?

As an individual - you will need to use RI-1040 for Rhode Island income tax return.

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Customer reply replied 5 months ago
RI-1040 is for residents, RI-1040-NR is for non-residents.
It looks like all income has to be reported on line 1 and then there is a schedule to allocate RI income from all other sources.So far we have had net losses for all years so.... but 2018 will have positive net income.

Yes - correct - RI-1040-NR

If you had a loss - - there will not be withholding requirements and you will not have any RI tax liability - and no CT credit to worry about.

In 2018 - situation will change - and you might have RI tax liability.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,383
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 5 months ago
Thank you for your help.
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