Question

Why is TurboTax showing California Schedule C and form 568 even though I was a CA nonresident in all of 2021 and had no income in my non-California SM-LLC?

Forum|Forum|4 years ago
March 1, 2022
1 reply
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Why is TurboTax showing California Schedule C and form 568 when I became a California nonresident in 2020, started a non-resident single-member LLC in 2021 with 0 income for that year, and rented and sold my only CA property in 2021?
California's law for this situation is vague to me and it does not seem like I would have to file these forms and pay the $800 franchise tax fee since my company did not own the property.

For a legal reference, see the "Doing Business in California" section in "FTB 3556 LLC MEO - Limited Liability Company Filing Information" (https://www.ftb.ca.gov/forms/misc/3556.html).

TurboTax Self Employed Online

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GeorgeM777

Based on what you have stated, you probably should not be subject to the CA franchise tax of $800. Moreover, it is not all that clear why a CA Schedule C has been created given that you apparently have no on-going business in CA, and further, no LLC incorporated in that state.

If your only current connection to CA is the fact that you had a property in CA, which you sold in 2021, go back and review your Personal info summary (TurboTax online). Given that you sold your CA property in 2021, you will need to indicate on your Personal info summary page that you had Other state income (scroll down to the bottom on the page to see Other state income) and select CA. Also, check to ensure that your resident state information is correct. Resident state information is also on the Personal info summary page at the top.

Because you are a non-resident of CA, after completing your federal return section, prepare you CA return (non-resident state) first before completing your resident state. If you owe tax on your CA property sale, you may likely get a credit on your resident state return for paying tax in CA. You won't know your CA tax from the property sale until you complete your CA return, therefore, prepare your CA return first after entering all federal return information.

You may have to delete your CA Schedule C to clear such return from TurboTax. If you are using TurboTax desktop or download, you can switch to forms mode (upper right side of your page) and select the form in the left menu and then press the delete button. If you are using TurboTax online, follow these steps to delete a form.

Open or continue your return in TurboTax.
In the left menu, select Tax Tools and then Tools.
In the pop-up window Tool Center, choose Delete a form.
Select Delete next to the form/schedule/worksheet in the list and follow the instructions.

@mmeinhar85

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shuiyicheng

I have a similar situation and would like to ask your support on this.

I had a single member LLC registered in other state and I moved to California in April and did not have any activity of this LLC in California and no any income also. Suppose I should not pay 800 dollars, right?

In my download turbo tax, the CA Form 568 automatically appear on CA state tax part, should I just delete?

Thanks

DaveF1006

Yes, according to the State of California: For tax years beginning on or after January 1, 2021, and before January 1, 2024, LLCs that organize, register, or file with the Secretary of State to do business in California are not subject to the annual tax of $800 for their first tax year.

You may delete form 568 from your list of California forms.

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