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Yes3832 wrote: ↑Wed Jun 08, 2022 12:26 amIm not a law firm partner but I used to be a tax manager at a big 4 accounting firm focusing primarily on PE funds. Partners file tax returns in all states in which other partners are residents of. Also, if a firm has a significant enough operation as to create an economic nexus within a state, additional state filing requirement with that state as well on apportioned/allocated income to that specific state.
Sourcing also predicated on the location of clients, not just where partners are, e.g., you don't get to source a ton of income for the partnership overall if everyone moves to Florida unless you can credibly say the clients are in Florida! (Looking at you, firms coming to Miami...)Yes3832 wrote: ↑Wed Jun 08, 2022 12:26 amIm not a law firm partner but I used to be a tax manager at a big 4 accounting firm focusing primarily on PE funds. Partners file tax returns in all states in which other parters are residents of. Also, if the firm has a significant enough operation as to create an economic nexus with a state, additional state filing requirement with that state as well on apportioned/allocated income to that specific state.
You hire a professional accountant and it’s a gigantic pain in the ass and you pay out the ass.Attorney12305 wrote: ↑Fri Apr 29, 2022 8:58 amAny law firm partners on the board who live in a state without income tax? Just wondering how paying state taxes works in all the states the firm does business if you live in a no-tax state. Do you end up paying a good chunk of change in state taxes that other employees in your state never have to pay?
It depends on the structure of your firm. Generally, partnerships and LLPs have each and every partner pay state income taxes in every state in which an attorney is actively practicing, regardless of whether the partner's home state has income taxes. I believe corporations and PCs pay the taxes themselves, so the shareholders don't have to do get a CPA to do a bunch of out-of-state stuff.Attorney12305 wrote: ↑Fri Apr 29, 2022 8:58 amAny law firm partners on the board who live in a state without income tax? Just wondering how paying state taxes works in all the states the firm does business if you live in a no-tax state. Do you end up paying a good chunk of change in state taxes that other employees in your state never have to pay?