For business owners, performing tax filing for their New Mexico LLCs is one of the most important responsibilities. If you understand the tax liabilities for your business, know what are the filing requirements and the deadlines you will meet both state and federal tax laws.
Even if you have a multi-member LLC or a single-member LLC, this guide will help you understand the tax filing procedure to minimize penalties and optimize deductions.
As a New Mexico LLC owner, you must comply with the federal tax requirements of the IRS, but you also have state-specific requirements such as Gross Receipts Tax (GRT) and employee withholding taxes.
In this article, we will discuss the process of IRS tax return filing for New Mexico LLC, focusing on classifying the taxes, reporting the taxes, deadlines, and other relevant details.
Federal Tax Filing for New Mexico LLCs
The IRS categorizes LLCs depending on the number of members and the preferred method of taxation. This is how the various types of LLCs are taxed on a federal level:
Single Member LLCs
Default Tax Treatment: Single-member LLCs are treated by the IRS as disregarded entities. This means the LLC’s income is included in the owner’s tax return.
Tax Form: The owner files Form 1040 Schedule C to detail business income and expenses.
Self-employment Taxes: The owner of the LLC must pay self-employment taxes (15.3%) on net earnings using Schedule SE.
Estimated Taxes: If your LLC earns income, you might be required to file quarterly estimated tax payments using Form 1040-ES.
Multi-Member LLCs
Default Tax Treatment: Multi-member LLCs are by default treated as partnerships.
Tax Form: Employ Form 1065 (U.S. Return of Partnership Income).
Schedule K-1: Each member is provided a Schedule K-1 that indicates the member’s portion of the profits and losses of the LLC, which must be included in their income tax return.
Self-Employment Taxes: Members may incur self-employment tax liabilities depending on their participation in the activity of the trade or business.
LLC’s Electing Corporate Taxation
S Corporation (S-Corp) Election: An LLC can be taxed as an S-Corp if Form 2553 is filed.
- Benefits: Could eliminate some self-employment tax if owners are paid a reasonable salary with remaining earnings taken as distributions.
- Tax Form: Form 1120S
C Corporation (C-Corp) Election: An LLC may also elect to be taxed as a C-Corp by filing Form 8832.
- Tax Form: 1120
- Corporate Tax Rate: 21% (as of 2024)
Important Tax Documents for New Mexico LLC Owners
If you own an LLC in New Mexico you should understand the following important tax documents to remain compliant.
Form 1040 Schedule C: For single-member LLCs who report business income.
Form 1065: For multi-member LLCs, this form is necessary.
Schedule K-1: This is given out to all members of an LLC.
Form 1120 or 1120S: For an LLC that has chosen to be taxed as a corporation also known as an S-Corp.
Form 2553: Used to elect S-Corp taxation.
Form 8832: For corporate tax elections.
Form 1040-ES: For extension estimated tax filings.
Form TRD-41413: For the declaration of New Mexico Gross Receipts Tax (GRT) payment.
Form CIT-1: For the income tax return of the corporation based in New Mexico.
Form PIT-1: For income taxes that an LLC member pays individual.
New Mexico State Tax Filing Requirements
Gross Receipts Tax (GRT)
Unlike others that impose sales tax, New Mexico State applies the Gross Receipts Tax (GRT) for businesses providing goods and services.
- LLCs are required to register with the New Mexico Taxation and Revenue Department (NMTRD) and receive a CRS Identification Number.
- The different GRT rates depending on the region can be found on the New Mexico Gross Receipts Tax Rate Map.
- Businesses need to submit Form TRD-41413 to report and pay GRT on a monthly, quarterly, or annual basis.
New Mexico State Income Tax
- There is no state income tax applied to LLCs in New Mexico. The business income is reported by the members of LLCs through the individual state tax returns (PIT-1)
- Any LLC that opts for corporate taxation will also be required to file Form CIT-1 (New Mexico Corporate Income and Franchise Tax Return).
Employee Withholding Taxes
If your LLC has employees, you must:
- Pay state employee wage tax and send it to the NMTRD.
- Register for a withholding tax account using Form ACD-31015.
- Make quarterly payments of withholding tax using Form RPD-41072.
Key Tax Deadlines for New Mexico LLC Owners
| Tax Obligation | Due Date |
| Federal Income Tax (Single-Member LLC) | April 15 |
| Federal Partnership Tax Return (Form 1065) | March 15 |
| Federal S-Corp Tax Return (Form 1120S) | March 15 |
| Federal C-Corp Tax Return (Form 1120) | April 15 |
| New Mexico Gross Receipts Tax (GRT) | Varies (monthly, quarterly, or annually) |
| New Mexico Personal Income Tax (PIT-1) | April 15 |
| New Mexico Corporate Tax (CIT-1) | April 15 |
| Estimated Tax Payments (if required) | April 15, June 15, September 15, January 15 |
Tax Deductions and Credits for New Mexico LLCs
These payments can be reduced using the following credits and deductions:
Common Business Deductions
- Operating Expenses: Rent, utilities, office supplies, and business trips.
- Depreciation: Business asset depreciation can be deducted under Section 179.
- Self-Employment Tax Deduction: The proportion of self-employment taxes can be deducted by half.
- Health Insurance Premiums: Self-employed individuals may deduct their premium costs.
New Mexico-Specific Tax Incentives
- High-Wage Jobs Tax Credit: Available to businesses that provide high-wage paying jobs in the state.
- Technology Jobs and R&D Tax Credit: Intended for businesses within the scope of the R&D sphere.
- Rural Jobs Tax Credit: For businesses operating in rural areas of New Mexico.
Consequences of Failing to File Taxes
Not submitting federal and state tax returns on time can incur penalties and interest. Below are a few consequences:
- Federal Late Filing Penalty: 5 percent of the unpaid tax against the total account owed for each month it’s late for up to 25 percent of the tax.
- New Mexico Penalty for Late Filing: 2% every month unpaid tax is not paid (maximum of 20%).
- Unpaid Taxes Interest: The Due Taxes Interest is levied by the IRS as well New Mexico government.
Tips for Hassle-Free Tax Filing
Accurate documentation: Keep a log of all transactions, income, and expenditures about the business.
Consider Accounting Software: You should try accounting automation tools like QuickBooks and EasyBooks from EasyFiling.
Tax Professional Friendly: The CPA or Hash expert can now do wonders in maximizing your tax deduction and meeting your tax compliance.
Stay Informed About Tax Changes: Changes are made to tax laws in New Mexico which can be checked from the website NMTRD.
Estimate Advance Payments: Don’t estimate surprises by paying quarterly taxes in anticipation.
How EasyFiling Can Help New Mexico LLC Owners
Filing of taxes can get cumbersome so EasyFiling has developed a solution for New Mexico LLC owners and these include:
Tax filing services: Timely and accurately complete Federal and State Income tax returns.
Bookkeeping services: Keeping a record of money received or spent, and business transactions Simple tracking of income, expenses, and deductions is provided by EasyFiling.
GRT Filing Assistance: Makes it easier to file for New Mexico’s Gross Receipts Tax.
Registered Agent Services: This Act keeps a business compliant and in good standing with the state by ensuring documents are always updated.
Personalized Tax Consultations: Take advantage of the LLC tax structure and get expert guidance.
Let EasyFiling handle the tax filing for your LLC so you can concentrate on expanding your business. Start at EasyFiling today.
Conclusion
The fulfillment of tax responsibilities is key for New Mexico LLC owners.
Whether filing as a disregarded entity, partnership, or corporation, being compliant with the IRS and New Mexico tax regulations enables you to avoid penalties while capturing available deductions and credits.
If help is needed, consult a tax professional, or use bookkeeping EasyBooks from EasyFiling to ensure proper tax filing.
For specialized bookkeeping and tax filing services, go to EasyFiling right now.
Frequently Asked Questions (FAQs)
Do New Mexico LLCs pay state income tax?
No, LLCs do not pay state income tax. The profits are passed through to the members who declare them as income in their tax returns.
Is Gross Receipts Tax required for all businesses?
Yes, most businesses offering goods and or services in New Mexico qualify to pay GRT instead of sales tax.
Can a New Mexico LLC be taxed as S-Corp?
Yes, an LLC can be taxed as an S-Corp by filing Form 2553 to reduce self-employment tax.
What are the consequences of late filing taxes for an LLC in New Mexico?
If you do not file your LLC New Mexico taxes in time, you might be penalized, incur interest fees, and even lose your good standing with the state.
What assistance does EasyFiling offer for preparing taxes?
EasyFiling assists with bookkeeping, tax prep, and compliance services, ensuring that your LLC remains compliant.
Nabin Adhikari
