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June 1, 2019
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Is the California LLC Tax ($800) and/or LLC Fee ($900+) deductible on personal return (SMLLC disregarded)? If so, does the deduction apply to state and fed?

  • June 1, 2019
  • 1 reply
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    Best answer by PatriciaV

    Yes, according to the IRS Other Types of Business Expenses page:

    "Taxes - You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses."

    As such, they should be reported under:

    • Federal Taxes
    • Wages & Income
    • Business Items (if using TurboTax Online, you will be prompted to upgrade to Home & Business; all desktop TurboTax versions will prepare Schedule C without an upgrade)
    • Business Expenses
    • Other Common Business Expenses
    • Taxes & Licenses

    According to the California Tax Service Center:

    • "The annual tax is NOT deductible."
    • "Generally, the limited liability fee is considered a deductible ordinary and necessary business expense."

    Be sure to review your State tax return to be sure you remove the annual tax from your business expenses before you file your State return.

    1 reply

    PatriciaV
    PatriciaVAnswer
    June 1, 2019

    Yes, according to the IRS Other Types of Business Expenses page:

    "Taxes - You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses."

    As such, they should be reported under:

    • Federal Taxes
    • Wages & Income
    • Business Items (if using TurboTax Online, you will be prompted to upgrade to Home & Business; all desktop TurboTax versions will prepare Schedule C without an upgrade)
    • Business Expenses
    • Other Common Business Expenses
    • Taxes & Licenses

    According to the California Tax Service Center:

    • "The annual tax is NOT deductible."
    • "Generally, the limited liability fee is considered a deductible ordinary and necessary business expense."

    Be sure to review your State tax return to be sure you remove the annual tax from your business expenses before you file your State return.

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    WatsonAuthor
    June 1, 2019
    So BOTH the LLC tax AND the LLC fee can be deducted on the federal side, on the schedule C for a SMLLC, correct?