Yahoo! Answers

Question

I joined a consulting firm organized as an LLC. It is charging me for out-of-state taxes. Should it?

I received 70% of what is billed for my services to the client - the LLC retains the balance for its overhead and general partners. If I didn't work, or the client didn't pay, I didn't get paid. I left the firm, earlier this year due to lack of work - but now they've come back to me demanding I pay state taxes. I performed services in Washington State for a client business situated in Washington and never left the state, but the LLC is insisting that I pay taxes on income from California, Georgia, New York, etc. The firm apparently has individuals providing similar services at other client businesses in other states, Apparently the firm's tax preparer is trying to associate my earnings with those other states. I paid self-employment and federal income taxes directly from what I received. I received a K-1 and filed tax returns properly for federal purposes. Washington has no income tax. It seems wrong on multiple levels. What am I missing?

1 month ago - 1 answers

Best Answer

Chosen by Asker

As a partner, you shared in the income of the firm--not just the money you brought in. Since some of that income is sourced to California, Georgia, etc, you owe taxes to each of those states. The fact that Washington doesn't tax you is moot.

by the tax lady

1 month ago

Asker's Rating: