What is a composite return?
A. A composite return is a single return filed by a partnership, S-corporation, or Limited Liability Company (LLC) taxed as a partnership or S-corporation on behalf of two or more nonresident individuals, trusts or estates who are partners, shareholders of the S-corporation or members of the LLC. A composite return allows S-corporations or partnerships to compute and report the SC income and tax attributable to electing nonresident shareholders or partners on a single tax return. A composite return is filed using an SC1040 SC Individual Income Tax Return. The heading states the name, address, and FEIN of the partnership, S-corporation or LLC. There is no need to use “Composite Return for” or “Shareholders/Partners of” in the name. Mark the box for filing a composite return. Mark “Single” filing status. NOTE: Corporate partners and members may not participate in composite returns.
I suspect what the poster is referring to is the option that pass through entities sometimes have to pay the state taxes for the out of state income on behalf of a member/owner. The benefit is that the taxpayer will not have to file additional state tax returns. In my limited experience I have found that from a bottom line tax perspective it doesn’t really matter if a composite return is filed or not.