Limited partner K-1 nonresident state

Forum|Forum|3 years ago
March 22, 2023
2 replies
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I am an individual, limited, non-contributing domestic partner in a family owned business in Arkansas. I live in Georgia. I have never been prompted by TurboTax to file an Arkansas non-resident tax return for this until this year. (My sister who also lives in Georgia was not prompted to file this year.)

Do I need to file an Arkansas state tax return to report this money?

TurboTax Home & Biz Windows

Best answer by Rick19744

@FI60 it appears that Arkansas wants a nonresident to file if they have any taxable income from Arkansas sources.

In order to determine that, a nonresident would need to complete the return, allocate the Arkansas income to Arkansas, determine if there are any prorated deductions and see where that comes out. There is a specific form that nonresidents must complete and they must attach a copy of their federal tax return.

Most resident states, Georgia in your case, provide for a credit for taxes paid to other states. This, in most cases, avoids the double tax issue you are concerned about.

Since you have not filed in past years, the statute of limitations in Arkansas has never started. Depending on what the income level is in Arkansas, this may be an issue.

I would advise you to consult with a tax professional to assess your exposure. This individual could request a voluntary disclosure with Arkansas before you actually file. This may minimize any penalties. I would not suggest you start filing in Arkansas until you discuss this matter with a tax professional. Sometimes states only allow for voluntary disclosure if the taxpayer has not filed any returns.

DavidD66

Yes, if the amount of income is above the filing requirement, then you need to file an Arkansas non-resident tax return. The Arkansas income is also taxable by Georgia, but they will issue you a credit for the tax you pay to Arkansas. I recommend you prepare the Arkansas non-resident return first, and then prepare your Georgia resident tax return. Do them in that order makes calculating the credit for taxes paid to other states easier.

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