Why does my California return have a Schedule C for my LLC in another state but that state doesn't have Schedule C?

Forum|Forum|2 years ago
April 16, 2024
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I am a resident of California, but I have an LLC in Colorado. In past years, I have had no problem, but this year, TurboTax kept considering the LLC to be in California and added a Schedule C under California instead of Colorado. I have told TT that I have income from Colorado, and also, the LLC address is in Colorado, but it didn’t change anything. I also tried manually removing Schedule C under California, but TT kept adding it back.

Any idea how to resolve this?

TurboTax Online

Best answer by CatinaT1

It is my understanding as well. Just recap the situation here.

1. I have an LLC registered and operated in CO, and I am a CA resident.

2. I understand I should have Schedule C for both CA and CO

3. If I have Schedule C for CA, I am requested to pay $800 LLC franchise tax in California in TurboTax, which I believe should not.

4. TurboTax only added Schedule C in CA, not in CO.

Any comments about where I am now?

You should not have to pay the Franchise tax in California since your LLC is registered in Colorado.

The Schedule C is part of your federal return and if you allocated all of the income from that Schedule C to Colorado as Colorado source income the Schedule C will only be in the background of your California Return. That income will be taxed by California because you are a California Resident, but you will get credit on your California return for tax paid to Colorado.

When you entered your state returns in TurboTax, did you start with Colorado and then do California? If not, I would delete your state returns and enter them in that order.

CatinaT1

Where are you physically earning your money? In California or Colorado? Regardless of where the LLC is registered, you have source income from the state you are physically in when you are working.

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dolphinzyAuthor

Thank you Catina.

For example, say I have my AirBnB in Colorado as my business, so I earn money in Colorado, although I am physically in California. In this example, should the Schedule C be in Colorado or California?

DawnC

Employee

Both. You are a resident of CA that has earned business income in a nonresident state (CO). In this case, the Schedule C will be in both state returns. Your resident state taxes all of your income, but CA will give you credit for any tax paid to CO for the non-resident income earned from the Air B&B.

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