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Hi y'all— I work in film and am moving to CA from TX next week. I will be doing work in CA on sets and will of course withhold income taxes for both the state and the federal government. That being said, I have an LLC filed in Texas and will be on a 12 month retainer to provide editing services to my Texas based-client. Am I liable to pay income taxes from that retainer if that Texas based client pays my Texas based LLC even if I’m editing on my computer in CA as a non-resident? Thanks in advance!

a year ago
5
16
I am not a tax professional, but I can provide some general information that may be helpful. It's important to consult with a tax advisor or accountant who is familiar with the specific tax laws in both Texas and California to get accurate advice tailored to your situation. In general, when it comes to state income taxes, you may be subject to taxation in both Texas and California. Texas does not have a state income tax, so you won't owe any state income tax to Texas on the income earned through your LLC. However, as you will be physically working in California, you may be considered a non-resident for tax purposes and subject to California state income tax on the income earned while working in the state. California has a concept called "sourcing of income," which determines how income is allocated to the state for tax purposes. Generally, income is sourced to California if it is earned within the state. So, if you are physically present in California while performing the editing services for your Texas-based client, that income may be considered California-sourced income and subject to California state income tax. It's worth noting that California has a minimum filing requirement for non-residents, which means you may need to file a California state tax return even if you don't owe any tax. This requirement applies if you have any California-sourced income exceeding a certain threshold. To determine the exact tax implications and any potential exemptions or deductions, it's crucial to consult with a tax professional who can analyze your specific situation and provide accurate advice. They will consider factors such as the nature of your work, the duration of your stay in California, and any applicable tax treaties between the states. Remember, tax laws can be complex and subject to change, so it's always best to seek professional advice to ensure compliance with all relevant regulations.

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Isla Fisher

a year ago

Last year, I obviously filed a return in both states, but my CPA advised that while CA taxes ALL income from all sources, they also allow you to take a credit for tax paid to another state or, in the case of AZ, I get a credit on the AZ return for tax paid to CA. I don’t personally think you qualify for foreign LLC as you’re not conducting your business in CA, but you should advise an accountant on this.

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Cassius West

a year ago

I would advise with an accountant bc I don’t think the other commentator is necessarily correct. I personally don’t think you need to register as a foreign LLC.

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Hazel Long

a year ago

Are you a single member LLC?

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Atticus Gomez

a year ago

Yes. You'd be liable for California income tax on money you are earning while in CA, even if the client and your llc are registered in TX. You will need to register your Llc in CA as well, as a foreign llc.

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4 Comments

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Last year, I obviously filed a return in both states, but my CPA advised that while CA taxes ALL income

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