K-1 from out-of-state business

[asparrow08]

Do taxpayers who receive K-1's from businesses whose income is generated in a different state need to file a non-resident return in that state (assuming there's enough income to require a return)?

For example, a Florida resident receives an 1120S K-1 (50% owner of S-corp) based out of Maryland.  All income from this business is generated in MD.  Is a nonresident MD return required?

[IRonMaN]

Yes, if the amount is over the state's filing threshold.

[BobKamman]

Sometimes

[sjrcpa]

And they are likely to get back some of the MD nonresident withholding when they file the MD return.

[asparrow08]

Withholding from what?  There were no MD taxes withheld on the W2 and there aren't any withheld on the K-1.

[asparrow08]

Sometimes as in if there's enough income to require a tax return?  Or sometimes for another reason?

[sjrcpa]

There should have been for the K-1 income.

[BobKamman]

Even if no distributions were made?

[IRonMaN]

States tax on income earned, not distributions.

[sjrcpa]

MD doesn't care. If there is income on the K-1 they want their cut and they do it with "withholding".

[asparrow08]

So you're saying that MD requires you to withhold taxes on K-1 income?  I haven't seen that.  I read that the business pays a "pass through entity nonresident tax" if they have nonresident members.  I guess the concept is the same as what you're saying, but I wouldn't consider that withholding.  

[sjrcpa]

Yes that's it. Excuse my "slang"

[sjrcpa]

If the entity filed a composite/group nonresident return your client does not have to file a MD return.