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Am I screwed
Question: California Income Tax on income from an LLC owned out-of-state? 11/6/2009 9:06PM Reply | Return to Index | Report Post
Have a feeling I might be screwed in this situation.

I am moving to California. I own an LLC in Washington State. All business done for the LLC is done within Washington State. I take personal income from the LLC annually. I looked at Californias tax code, which states that state income tax is on "all income, regardless of source."

I assume this means that income derived from work that has absolutely no connection to California will be taxed. Anyone know anything about this or any way around it?

I'm not wealthy by any means and the small amount of additional income I derive from this company may be just enough for me to buy a house.
1111w
RE: Question: California Income Tax on income from an LLC owned out-of-state? 11/6/2009 10:08PM - in reply to Am I screwed Reply | Return to Index | Report Post
Stay in washington if you don't want to pay taxes. My capital gains taxes don't have anything to do with CA but they still get their 9%+.

And if you are really unfortunate you might have to pay the CA LLC tax also:)

Am I screwed wrote:

Have a feeling I might be screwed in this situation.

I am moving to California. I own an LLC in Washington State. All business done for the LLC is done within Washington State. I take personal income from the LLC annually. I looked at Californias tax code, which states that state income tax is on "all income, regardless of source."

I assume this means that income derived from work that has absolutely no connection to California will be taxed. Anyone know anything about this or any way around it?

I'm not wealthy by any means and the small amount of additional income I derive from this company may be just enough for me to buy a house.
free legal advice
RE: Question: California Income Tax on income from an LLC owned out-of-state? 11/6/2009 10:27PM - in reply to Am I screwed Reply | Return to Index | Report Post
Your accountant can provide details but generally you will only have to pay state tax in one state: so once a CA resident you would pay CA state income tax on all income but not WA state income tax.

The LLC would likely not be subject to tax in WA. So you are going to pay state tax on the income from the LLC, but only once, not twice. You will not need to qualify the LLC in CA if it is not doing business in CA, so CA franchise tax would not apply.
Cal lawyer dude
RE: Question: California Income Tax on income from an LLC owned out-of-state? 11/7/2009 5:21AM - in reply to free legal advice Reply | Return to Index | Report Post
I have a very successful former California client who owns a number of businesses inside and outside California. He bought a house in Idaho and makes sure that he spends at least 183 days/yr outside of California to avoid CA income taxes. If you become a resident of CA, then you will have to pay CA tax on all your income without regard to its source.
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