California Form 568: Limited Liability Company Return of Income
Form 568 is the official return used by Limited Liability Companies (LLCs) in California to report income, deductions, gains, losses, and other financial information. It serves as the primary tax form for LLCs that are classified as partnerships or disregarded entities under California tax law.
Purpose of Form 568
- Determine and report the LLC fee based on total California income.
- Report and pay the annual LLC tax.
- Report and pay any nonconsenting nonresident members’ tax.
- Report income, deductions, gains, losses, and other financial data from the operation of a multi-member LLC that has elected partnership classification.
Who Must File Form 568?
LLCs that are classified as partnerships or disregarded entities under California law must file Form 568. This includes:
- Multi-member LLCs that have elected to be treated as partnerships.
- Single-member LLCs that are disregarded entities (treated as sole proprietorships).
- LLCs that have California source income.
LLCs that do not have California source income may still need to file Form 568 if they are registered or doing business in California. In such cases, they must complete the form with supplemental schedules, attach California Schedules K-1 (568) for members with California addresses, and write “SB 1106 Filing” at the top of Side 1 of Form 568.
Key Instructions and Requirements
- Line 1 - Total Income: Enter the LLC’s “Total California Income” as computed on line 17 of Schedule IW. The amount entered cannot be negative.
- Schedule K (568): Report members’ shares of income, deductions, credits, etc. Column (b) should reflect amounts from federal Schedule K (1065), while column (c) includes adjustments due to differences between California and federal law. Column (d) reports worldwide income under California law.
- Nonresident Members: If any member is a nonresident of California, the LLC must file Form FTB 3832 with Form 568 to show consent to California’s jurisdiction for taxing their distributive share of California-sourced income.
- Withholding Requirements: California requires withholding on certain payments or allocations of income. If withholding is required and not performed, the LLC may be liable for tax and penalties. Withholding is reported on Forms 592, 592-B, 592-F, and 592-PTE.
Filing and E-File Information
Taxpayers can file Form 568 electronically using Online Taxes (OLT) software. To add Form 568 in the software:
- From within your tax return, click on “State” in the left menu (or tap the three dots on mobile devices).
- Select “Start or Revisit California State.”
- Under the Form 568 section, click “Start or Edit” near Form 568 General Information.
- Follow the on-screen instructions.
Tax forms and publications can be downloaded from the Franchise Tax Board website at ftb.ca.gov/forms. Federal forms are available at irs.gov.
Additional Resources
For more information on business e-filing and related forms, visit ftb.ca.gov and search for “business efile.”
Source:
Form 568 -Limited Liability Company Tax Booklet
Disclaimer: Always verify information with official Federal or State Department of Revenue Forms and Instructions.