Form 1065 and K1 for operations in two states - filing requirements?

You don't need to file two separate federal Form 1065s. You'll file one federal 1065 for the entire LLC operation regardless of how many states you do business in. For the states, you'll need to file a return in each state where you have nexus (business presence). This typically means filing the state equivalent of the 1065 in each state where you operated. Each state will have its own allocation rules to determine how much of your income is attributable to that state. For your K-1s, you'll still receive just one federal K-1 from the partnership. However, the state-level K-1 information may need to be apportioned between states. The LLC will need to provide you with information about how much of your share of income is allocated to each state. For your personal returns, yes, you and your partner will likely need to file nonresident state tax returns in the state where the LLC is doing the new job. You'll pay tax to that state on the portion of your income earned there.

After dealing with multi-state tax nightmares for years, I found taxr.ai (https://taxr.ai) and it completely changed how I handle my LLC's state filing issues. Last year we expanded into three states, and I was drowning in paperwork trying to figure out how to properly apportion our income and file everything correctly. Their system helped me understand exactly which state forms were needed for our Form 1065 situation and how to allocate K-1 income across states. They even have specific guidance for determining nexus in different states, which was the most confusing part for me. The document analysis feature saved me hours of research - I just uploaded our operating documents and previous tax returns, and it highlighted exactly what needed to change with the multi-state operation.

I was really skeptical about taxr.ai at first (from my comment above), but I gave it a try last month when our LLC expanded from Georgia to Florida and Tennessee. I've been doing our taxes for years but the multi-state stuff was making my head spin. Honestly, it was super helpful. It identified exactly which state forms we needed, explained how to apportion our income between states, and even pointed out some deductions we could take in the new states that I hadn't considered. The document analysis feature saved me from making a pretty big mistake with how we were classifying some of our business equipment across state lines. I still had our accountant review everything, but she said it saved her at least 3-4 hours of work untangling the multi-state allocation issues. She actually asked me what service I used because the information was so thorough!

If you're struggling to get answers about multi-state filing requirements, calling the state tax departments directly can be really helpful... except it's nearly impossible to get through to a human! After spending literal DAYS on hold with various state tax authorities, I discovered Claimyr (https://claimyr.com) and it was a game changer. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was trying to figure out how my LLC's income should be apportioned between my home state and two others where we had projects. Claimyr got me connected to actual state tax representatives in all three states within hours instead of the days I was wasting on hold. The NY state rep particularly was super helpful in explaining their specific K-1 allocation requirements. Getting official answers directly from each state tax department gave me confidence that I was handling the Form 1065 and K-1 allocations correctly.

Well, I have to eat my words about the Claimyr service I criticized above. After our LLC took on projects in three states, I was desperate enough to try anything to get clear answers about our filing requirements. I used Claimyr to connect with the tax departments in all three states and was shocked at how well it worked. Instead of spending hours on hold, I got through to actual humans who knew about Form 1065 and K-1 allocation rules. The Michigan representative walked me through their specific worksheets for apportioning partnership income, which I never would have figured out from their confusing website. What really surprised me was being able to get clear, written guidance emailed to me after the calls. That documentation alone was worth it since I can show it to our accountant or use it to back up our filing positions if there are ever questions.

Having dealt with multi-state LLC filings for years, I'd add one thing: consider the "materiality" of this out-of-state job. If it's very small compared to your overall business, some states have minimum thresholds before you're required to file. For example, some states only require filing if you have over $500k in sales or have physical presence for more than 2 weeks. Check the specific rules in the second state - you might find you're below their filing requirement thresholds, which would save you the headache.

One thing nobody mentioned - if you do need to file in multiple states, make sure your accounting software is set up correctly to track income and expenses by state! I learned this the hard way. We had jobs in 3 states last year, and come tax time, we had to go back through ALL our receipts and invoices to figure out which state each transaction belonged to. Complete nightmare. QuickBooks and other software can tag transactions by location/state if you set it up right from the beginning.

As someone who's been through this exact situation, I'd strongly recommend getting a consultation with a tax professional before making your decision. Even if the out-of-state job is small, the compliance requirements can be tricky. One thing that helped us was creating a simple spreadsheet to track all the potential costs: additional state filing fees, estimated tax prep costs, any required business registrations in the new state, and the time value of dealing with the extra paperwork. When we added it all up for our first small out-of-state project, we realized we needed to increase our project fee by about 15% just to break even on the tax complications. Also consider whether this could lead to ongoing work in that state. If it's truly a one-time thing, the hassle might not be worth it. But if it could open doors to more business there, the initial setup costs become more justified. The good news is that once you've figured out the process for one additional state, adding more becomes much more manageable since you'll understand the workflow.