Providing Specific Information about Your Client is Important
Whether you call our 800 number, our tax practitioner line, or use our new Live Chat service, we often ask if your inquiry is regarding a personal income tax or business entity matter. We ask in order to connect you with the appropriate staff.
California law and filing requirements differ depending whether you are an individual, partnership, limited partnership, limited liability company (LLC), corporation, or S corporation.
For example, we initially are asked, “What tax forms will a partnership need to file?” But as the conversation progresses, we find the question should have been, “What tax forms will an LLC that is doing business in California need to file?”
In general, an LLC, owed by two or more members, without an election to be taxed as a corporation, is treated as a partnership. For federal tax purposes the LLC files a Form 1065, U.S. Return of Partnership Income. For California, LLCs, doing business in California, generally need to file our Form 568, Limited Liability Company Return of Income. The LLC’s income would flow-through and be reported by its members as if the income were from a partnership. Under California law LLCs are subject to an annual tax of $800, are required to pay any nonconsenting nonresident member’s tax, and are potentially subject to a fee if the LLC’s total income (defined as gross income plus the cost of goods sold) and attributable to California is $250,000 or more. Our Form 568 and instructions help guide the LLC through the process of determining these liabilities.
Besides the forms you need to file, how to file, the kinds of documentation your clients need as support, other requirements or allowances differ depending whether a taxpayer is taxable under California’s personal income tax laws or under California’s corporation tax laws. Personal and corporation tax laws differ for depreciation, interest income, illegal activity, and some tax credits.
In order for us to serve you best, the more specific your information, the better we can assist you. If you have a general question, give Live Chat a try rather than calling in.
Live Chat handles nonaccount personal income tax and business entities question, and is so much better than waiting on hold. To get real-time answers to general questions about income tax rules and general collection questions, then click on the Live Chat button in the sidebar.For specific account resolution issues for your clients, call us at our Practitioner Hotline at (916) 845-7057.