Tax Filing LLC/ S Corp in NY

[Aaron Vergason]

I recently moved from NY to NC. I have a LLC. that files taxes as an S Corp. Will I need to file a personal tax return in NY for the pass through LLC income (or loss). Or can that be placed on my North Carolina Tax Documents?

[Ashish Acharya]

Originally posted by @Aaron Vergason:

I recently moved from NY to NC. I have a LLC. that files taxes as an S Corp. Will I need to file a personal tax return in NY for the pass through LLC income (or loss). Or can that be placed on my North Carolina Tax Documents?

If you also plan to do business in NC, a state might require you to register your NY entity as a foreign entity (If you incorporated in NY) in the NC as well.  Please check the state website. If you are not doing business in NY, you can dissolve the entity and create a new one in NC too to avoid fees to two states. Dissolving an S- corp might have some tax implication too, please consider that too. 

if you don't dissolve because your S corp is producing revenue from the NY, you need to file NY state tax return. NY Income that you paid taxes in NY, is not double taxed via tax credit and/or income exclusion in NC. 

[Matthew Stacey]

If the LLC files within the State of New York and has NYS sourced income/(loss), you will have a filing requirement in NY.

[Aaron Vergason]

The LLC holds rental properties. I should have made that more clear :)

So I estimate my 2018 Tax return in NY to be a loss of $9,000. 

Where does that $9,000 go? Does it slide down to my earned income NC tax return somehow?

[Matthew Stacey]

Originally posted by @Aaron Vergason:

The LLC holds rental properties. I should have made that more clear :)

So I estimate my 2018 Tax return in NY to be a loss of $9,000. 

Where does that $9,000 go? Does it slide down to my earned income NC tax return somehow?

The NYS amount will be claimed on NYS IT-203 page 2 Line 11 in the NYS sourced column. You will have a loss, so no NYS tax. In regards to NC, you will also claim the $9,000 loss there as it is now your resident state. 

In the future if you have income in NYS and pay tax in NY you will get the amount of tax paid to NY as a credit in NC so you aren't double taxed.  

[Aaron Vergason]

Good deal. Seems fair! Thank you guys. And yes Ashish, I will be starting a new holding company here in NC for real estate under a new LLC.

[Vlad K.]

@Aaron Vergason, from the information you have provided, nothing will change for your S-Corp.

However, here is what has to happen on your personal income tax side - VERY IMPORTANT:

 - For the year that you moved from NY to NC (2017), you will have to file 

1) New York tax return as part-year resident, and

2) North Carolina tax return as part-year resident.

3) With each return you will have to file allocation schedule to split your income by each income category (wages, interest, dividends, business income, capital gains, and so on) between both states.

Depending on your total income for the year, and whether you qualify as a "real estate professional", your rental losses may or may not be deductible. 

NEXT YEAR, you will have to continue filing in both states, but you will have to file non-resident in NY and full-year resident in NC. 

Feel free to reach out, and I can explain in more details.

[Aaron Vergason]

Thank you Vlad!