State Club Tax Warnings

States increasingly require e-Filing from business and partnership filers, sometimes based on the size of the partnership by asset size or number of partners. Partnership returns prepared using myICLUB Club Tax State will comply with state filing requirements. This often means that printable forms generated by myICLUB contain data on the return in a format that may not be used for filing.

Some states have additional requirements beyond e-Filing mandates, including the following:

California

If your investment club is organized as a Limited Liability Company (LLC) in the State of California, it must use CA Form 568 ("Limited Liability Company Return of Income") to file its required annual tax return. However, ICLUBcentral does not support CA Form 568 and so you may not use the Club Tax software. If your club is organized as an LLC in California, you may download Form 568, related schedules, and instructions from the California Franchise Tax Board website.

Illinois

Investment clubs in Illinois are generally exempt from state filing requirements that apply to general partnerships. However, clubs with members who reside outside the state and that have non-Illinois source income may be required to file partnership returns and to withhold and remit tax payments for their non-resident partners. BetterInvesting-style investment clubs that invest in common stocks would generally be exempt from these filing requirements. Investment clubs that hold partnerships or other securities in which non-Illinois source income is generated should contact an accountant or tax preparer for assistance. myICLUB Club Tax State does not support state filings for Illinois. Download our memo with a more detailed explanation.

New Jersey

All clubs in New Jersey must file an annual tax returns. Partnerships with ten or more partners must file electronically. However, investment clubs are exempt from state filing fees and required non-resident partner payments that apply to other general partnerships in the state as long as the market value of their total assets is less than or equal to $432,300 or $60,600 per partner (amounts as of tax year 2024 and subject to change).

2024 Instructions for NJ-1065: "If an investment club meets the following criteria, it will be exempt from the $150 per owner annual partnership filing fee and from the requirement that a partnership make payments on behalf of its nonresident owners. The investment club must be an entity that is classified as a partnership for federal income tax purposes, all of the owners are individuals, and all of the assets are securities, cash, or cash equivalents. The market value of the total assets do not exceed, as measured on the last day of its privilege period, an amount equal to the lesser of $432,300 or $60,600 per owner of the entity. The investment club is not required to register itself or its membership interests with the federal Securities and Exchange Commission."