California LLC Tax Extension and Estimated Tax
Ron
California LLC Tax Extension and Estimated Tax
my wife and I own a California LLC(each owns 50%).
We file jointly with our personal return.
I understand that I need to use form 1065 for federal LLC tax return
and use form 7004 for extension.
But how can I file state extensions for my LLC?
I already paid the annual $800 california LLC tax.
My LLC has made sales($2000 in the first quarter) this year. how can I
calculate the quarterly estimated tax? what forms should I use?
Thanks.
Allan
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Katie
> Hi,
>
> California LLC Tax Extension and Estimated Tax
>
> my wife and I own a California LLC(each owns 50%).
> We file jointly with our personal return.
>
> I understand that I need to use form 1065 for federal LLC tax return
> and use form 7004 for extension.
>
> But how can I file state extensions for my LLC?
>
> I already paid the annual $800 california LLC tax.
>
> My LLC has made sales($2000 in the first quarter) this year. how can I
> calculate the quarterly estimated tax? what forms should I use?
>
You know, you don't have to file a 1065 for this business; you can
treat it as a single-member LLC and file it on one or two Schedule Cs
with your joint 1040/540 (one or two depending on whether your spouse
works in the business and wants her share of the SE tax allocated to
her SSN). Rev. Proc. 2002-69, 2002-2 CB 831. However, you can put it
on a 1065 if you want to.
You do have to file California form 568 for the LLC to report the
minimum tax and fee. There is no need to file an extension request;
there is an automatic extension to October 15, 2008. This is not an
extension of time to pay; if you had not already paid the $800 minimum
tax, you would be required to make the payment by April 15 with Form
FTB 3537. See the instructions to Form FTB 3537, p. 54 in the Form
568 LLC instruction booklet.
Katie in San Diego
removep...@yahoo.com
> I understand that I need to use form 1065 for federal LLC tax return
> and use form 7004 for extension.
> But how can I file state extensions for my LLC?
>
> I already paid the annual $800 california LLC tax.
>
> My LLC has made sales($2000 in the first quarter) this year. how can I
> calculate the quarterly estimated tax? what forms should I use?
What is your income? I'm sure it was less than 2k because of cost of
goods and expenses, maybe even negative. The LLC tax is based on your
income.
http://ftb.ca.gov/forms/07_forms/07_568bk.pdf
<Quote>
Limited Liability Company Fee
In addition to the annual tax, every LLC must
pay a fee based on total California annual
income. For additional information see the LLC
Income Worksheet instructions on page 11 of
this booklet.
The LLC fee is due on or before the 15th day
of the 4th month after the close of the LLC's
taxable year. For taxable
years beginning on or
after January 1, 2006, use the following chart to
compute the fee:
If total California annual income The
from Form 568, Side 1, line 1 is: fee is:
equal to or over - but not over -
$ 250,000 $ 499,999 $ 900
500,000 999,999 2,500
1,000,000 4,999,999 6,000
5,000,000 and over 11,790
</Quote>
The fee for 2008 is due by April 15 2008, so estimated taxes don't
apply to it. I guess you could pay $200 in each of Jan, Feb, Mar, Apr
but that wouldn't make sense.
You can elect how your LLC is taxed: as a S corp, C corp, sole
proprietorship, etc. Assuming it is taxed as a sole proprietorship,
and your federal tax bracket is 33% and state is 9.3% based on all
your other income, and profit is 1k for first quarter, esimated tax is
$330 for federal and $93 for state. But you only have to pay 90% of
the tax due, so the estimated payments are 90% of 330 and 93. Also,
the $800 tax would be deductible on your federal return, so the
federal tax is only 90% of (1k - $800) = 180.
If you're expecting your income to change each quarter, then you have
to pay tax on the amount you made in that quarter. But this means you
have to track your income by quarter and fill out page 4 of form 2210
(as well as the California equivalent), which is tedious. Equal
estimated payments every quarter are easier. However, if you go the
equal estimated payments route, then pretend that $200 of the CA
franchise tax was paid each quarter.
Looks at the large of of the estimated tax forms to you see what
you're getting into if you track your income by quarter:
http://www.irs.gov/pub/irs-pdf/f2210.pdf
http://ftb.ca.gov/forms/07_forms/07_5805.pdf
Finally, the rules are different (a bit more lenient) for farmers and
fisherman, but I don't know much about that, so if that's your case
write back.