Posted by John K. Haslach, CPA, MST on July 14, 2005 at 05:14:04:
The state in which you live taxes you on all your income, regardless of where you earn it.
State taxes vs. LLCs - Posted by Alex
Posted by Alex on July 12, 2005 at 19:08:17:
I live in California and have a rental in Georgia, which currently I hold in my name. I want to transfer the property under the name of my LLC-to-be, which, in my understanding, I can open in Georgia. My question is, with this setup, which state tax do I have to pay? I’m guessing that that would be Georgian for one, but how about California? Also, do I have to register the LLC with California?
Thanks!
Re: State taxes vs. LLCs - Posted by John K Haslach, CPA, MST
Posted by John K Haslach, CPA, MST on July 13, 2005 at 16:26:51:
You would pay tax to Georgia on the income earned in Georgia (where you are doing business)and pay tax in California on all your income. You would get a credit for taxes paid in GA on your Calif return.
The states are getting much more adept at catching up with those who do business in their states, live in another state and pay no taxes to the state in which they are conducting business as a nonresident.
A friend of mine just got a notice from South Carolina (lives in NJ). Has owned a rental there for 10 years. Has no idea how they finally caught up with him, but now is looking at taxes, penalties and interest.
Re: State taxes vs. LLCs - Posted by Alex
Posted by Alex on July 13, 2005 at 19:15:46:
Thank you for you reply, John.
What do you mean exactly by tax credit? Can you give an example in figures how that works? Sorry, I’m still learning the tax area and have a lot of things that are still foreign to me.
In my case this is the first year I own the property, so I still have time to figure out the right way of doing things.
I suspected that California might want to tax me as well, which is a bit wierd because, as you said, my business is located in Georgia, the property and the entity, I just hapen to live in California, so why would they tax me if the entire business is in Georgia?
Thank you again.
Any comments are highly appreciated.