Out of state investing Tax Considerations- Illinois

[John Blanton]

I am looking at investing in either a turnkey rental or promissory note as an out of state investor (NC) in Illinois. The LLC/Corp is based in Illinois that I will be investing with/in.

I want to make sure I fully understand the tax consequences before making this investment. Will I have to pay state income tax in both Illinois and North Carolina? Or just in NC as that is where I reside?

Will I have to file both an NC and Illinois state income tax return?

Appreciate the help!

[Lance Lvovsky]

You will have to file a return in IL and pay income tax in IL on income apportioned in IL. If your LLC is a single-member, then no entity level return is required. If your LLC is taxed as a partnership, you will need to file an entity level tax return. I would recommend speaking to your CPA as depending on the type of investment, a different structure may be well suited.