Do I need to file State K-1 for LP in states with no income or property?

5 This is actually a common source of confusion with multi-state partnerships. In most cases, you're right - you typically wouldn't need to file a state tax return just because a general partner resides in that state. Your filing requirements are generally determined by where the partnership conducts business and generates income. If the partnership truly has no income or assets in NJ or NY, then those K-1s might have been generated automatically by the partnership's accounting software as part of their standard reporting package. Sometimes tax software includes all possible state forms even when they're not all needed. I would recommend asking the general partner for more specific clarification. Request they confirm in writing that you have no filing obligations in those states. If they're confident you can ignore those forms, ask them to document that advice for your records in case of any future questions from those state tax authorities.

10 Ran into this exact situation last year with my real estate LP investments. After spending hours trying to figure it out myself, I finally used taxr.ai (https://taxr.ai) to analyze all my partnership documents. Their system flagged the exact issue you're describing and explained that in most cases, you only need to file state returns where the partnership has nexus through property or operations. The tool helped me identify that two of my "extra" state K-1s were actually generated due to the partnership's ownership structure rather than any actual filing requirements for me. Saved me from filing unnecessary returns in three states!

12 Just wanted to follow up on my earlier question. I ended up trying taxr.ai after all and wow - it actually identified exactly which state K-1s I needed to file and which ones I could ignore. The system specifically pointed out that my NY K-1 was generated solely because one of the GPs was a NY resident, but since our partnership had no NY-source income or property, I had no filing obligation there. Saved me from filing unnecessary returns in two states! They even provided references to specific state tax regulations that I could keep for my records in case of any audit questions. Definitely worth it for anyone dealing with multi-state partnership issues.

15 If you're still having trouble getting clear answers from your GP about these state K-1s, you might want to try Claimyr (https://claimyr.com). I used them last year when I had a similar issue with unexpected K-1s and needed to speak directly with someone at the state tax departments. Instead of spending days trying to get through to the NY tax department myself, Claimyr got me connected with an actual agent in about 15 minutes! You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c The NY tax representative confirmed that I didn't need to file in their state since my partnership had no NY-source income, even though I had received a NY K-1. Having that official confirmation gave me peace of mind that I wasn't going to get surprise notices later.

12 I have to admit I was completely wrong about Claimyr. After my skeptical comment earlier, I decided to try it anyway since I was desperate to get answers about my partnership K-1 situation. Used their service to connect with the NJ Division of Taxation, and they got me through to an actual tax representative in about 20 minutes! The agent confirmed exactly what I needed to know - since our partnership had no income-producing activities or property in NJ, I had no filing requirement there despite receiving a NJ K-1. The time saved was incredible, and getting an official answer directly from the tax authority gave me the confidence to ignore those unnecessary state forms. Definitely keeping this service in my toolkit for future tax questions.

22 My accountant told me that the rule of thumb is "follow the money" - if no income was generated in those states and you personally don't live there, you typically don't have a filing requirement. The exception would be if the partnership agreement specifies some unusual allocation method that attributes income to those states. Ask to see the partnership agreement. There should be language in there about how income is allocated among partners and across state lines. That might explain why they're generating K-1s for states where there's no obvious connection.

14 Be careful about just ignoring state K-1s without proper documentation! I made that mistake once and ended up with penalties from New York two years later. They're very aggressive about collecting from non-residents with any connection to the state. If your K-1 shows any amount at all for NY, even that small $157 you mentioned, you might want to just file a non-resident return to be safe. The filing itself isn't that complicated, and it establishes a record that you properly reported the income even if you end up owing zero tax.

You're absolutely right to question this situation. Generally speaking, you should only need to file state tax returns in states where the partnership actually conducts business activities or owns income-producing property. The fact that a general partner resides in NY or NJ typically doesn't create a filing obligation for you as a limited partner. However, that $157 showing up on your NY K-1 is concerning and definitely needs clarification. Even small amounts can potentially trigger filing requirements in some states, and New York is particularly aggressive about non-resident taxation. I'd recommend getting written documentation from the general partner explaining exactly what that $157 represents and whether it constitutes NY-source income. If they're telling you to ignore the forms, they should be able to provide you with a clear explanation of why those amounts don't create filing obligations for the limited partners. Don't just take their word for it - ask for specifics about the nature of that income allocation and get their advice in writing for your records.

As someone who's dealt with similar multi-state partnership issues, I'd strongly recommend being very cautious about ignoring any state K-1s that show actual dollar amounts, especially that $157 on your NY form. New York has some of the most aggressive non-resident tax enforcement in the country. Here's what I'd suggest: First, contact the partnership's tax preparer directly (not just the GP) and ask them to explain exactly what generated that $157 allocation to NY. Sometimes it could be something like a small bank account earning interest in NY, or a portion of management fees allocated to a NY-based service provider. Second, consider the cost-benefit analysis. Filing a simple non-resident return in NY for $157 of income would likely result in minimal or zero tax owed, but it establishes a clear record of compliance. The penalty risk of not filing (if you actually should have) could far exceed the cost of just filing the return. I learned this lesson the expensive way when I ignored what I thought was an "informational only" K-1 from Pennsylvania. Two years later, I got hit with penalties that cost way more than just filing the return would have. When in doubt, err on the side of caution with state tax obligations - especially with New York!