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chuckdhuff

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State Income Tax for Travelers
« on: Sep 10, 2015, 10:02 »
DISCLAIMER: I'm not looking for any sneaky ways to do things. I just want to know the actual rules and how it will effect me come April.

I'm a full time employee of the company that I work for and will be sent to work a job in a state that does not have state income tax. My company and home are in a state that does have state income tax.

Do I continue to pay my standard state income tax of my state of residence while working out of state on a temporary job that is expected to last 6 weeks, or am I not required to pay state income taxes on wages earned in the other state?

If I don't pay state income taxes while working out of state and maintaining my home state residence would I be penalized by my home state for not paying the appropriate percentage of state income tax on my annual gross income?

If I pay my home state's withholding rate will I be entitled to a refund for the amount/percentage withheld while working out of state?

Thanks in advance for any advice on this issue.

Offline GLW

Re: State Income Tax for Travelers
« Reply #1 on: Sep 10, 2015, 10:47 »
IMEE -

depends on your home state for residence, your tax home, the state of income source, and the duration of the work,...

they can all have differing definitions,...

the safe bet is to continue your state witholding as it is and then let your CPA and TA make the adjustments on your quarterly or annual return, whichever applies,...

let your CPA and TA have as much prior notice as you can for tax filing so they are not assessing your liability under any filing deadline crunch,...

if you do approach crunch time, file for an automatic extension and then let them work it over the late spring and summer,...

it's rarely the tax due that knocks people for a loop, it's the fees, penalties and "others",...

been there, dun that,... the doormat to hell does not read "welcome", the doormat to hell reads "it's just business"

Offline OldHP

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Re: State Income Tax for Travelers
« Reply #2 on: Sep 10, 2015, 05:40 »
I'm a full time employee of the company that I work for and will be sent to work a job in a state that does not have state income tax. My company and home are in a state that does have state income tax. 

In general: You are still working for the same company, in the same location, and out of the same office.  The way you describe it, it is an assignment out of town/state, not a relocation/transfer.  In which case, your state tax remains status quo.

There are some 'special situations', i.e., a temporary transfer to another location and payroll office, however, it sounds like a simple out of town/state assignment.

Perhaps the SME will chime in with his view!
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chuckdhuff

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Re: State Income Tax for Travelers
« Reply #3 on: Sep 11, 2015, 11:18 »
In general: You are still working for the same company, in the same location, and out of the same office.  The way you describe it, it is an assignment out of town/state, not a relocation/transfer.  In which case, your state tax remains status quo.

There are some 'special situations', i.e., a temporary transfer to another location and payroll office, however, it sounds like a simple out of town/state assignment.

Perhaps the SME will chime in with his view!

That was how I was reading it, but wanted a second (or third) opinion. Thanks for the input.

Lingering question as to how (or would) this effect me at filling time since the money will be earned in a state that does not have an income tax?

Offline scotoma

Re: State Income Tax for Travelers
« Reply #4 on: Sep 11, 2015, 11:39 »
All income you receive, no matter what state will be reported on your resident state tax return. Your employer will send you your W-2 which will show which states you had taxes withheld. You will have to file a tax return in any state that you worked that has state income tax. You will get a credit from your resident state, (after you complete your out of state returns), on your resident state return. Generally speaking, if you work in a state, you are suppose to pay taxes on the income you earned while working in that state. Even if you are home based in one state and you work temporarily in another state, the other state wants you to pay tax in the state that you were physically in when you earned that money. The time requirements and nature of the assignment vary by state. If you went out of state on a fact finding or contract administration type activity for a week or less, your employer (and other state) will probably not consider that out of state income. If you actually worked out of state, or worked for more than a week, they may consider it. You would see it on your pay stub if they did. If the out of state state has no income tax, then you would not see it on your pay stub, you obviously would have no tax, but you would still have to report it on your resident tax return and pay tax on it.

Offline GLW

Re: State Income Tax for Travelers
« Reply #5 on: Sep 11, 2015, 12:15 »
All income you receive, no matter what state will be reported on your resident state tax return........

IME - not true for ALL states with state income tax,...

but, once you DO file that way and then learn otherwise later, getting YOUR monies back can take a long, long time,...

I let the CPA and TA handle it,...

IME - it's $1100.00 well spent and I'd rather give it to somebody working for me than any government entity,...

been there, dun that,... the doormat to hell does not read "welcome", the doormat to hell reads "it's just business"

chuckdhuff

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Re: State Income Tax for Travelers
« Reply #6 on: Sep 11, 2015, 01:22 »
IME - not true for ALL states with state income tax,...

but, once you DO file that way and then learn otherwise later, getting YOUR monies back can take a long, long time,...

I let the CPA and TA handle it,...

IME - it's $1100.00 well spent and I'd rather give it to somebody working for me than any government entity,...

You pay $1,100.00 to have your taxes prepared?! Good lord, do you wipe with 5's or 10's?

https://www.google.com/search?q=average+cost+for+tax+preparation&sourceid=ie7&rls=com.microsoft:en-US:IE-SearchBox&ie=&oe=&gws_rd=ssl

Offline GLW

Re: State Income Tax for Travelers
« Reply #7 on: Sep 11, 2015, 01:28 »
You pay $1,100.00 to have your taxes prepared?! Good lord, do you wipe with 5's or 10's?

https://www.google.com/search?q=average+cost+for+tax+preparation&sourceid=ie7&rls=com.microsoft:en-US:IE-SearchBox&ie=&oe=&gws_rd=ssl

I have complicated returns,...

I also send everything in and let them do the collating,...

I think your search only references CPA or TP costs, not TA costs,...

I can spend two weekends of my life every year poring over forms and codes OR,...

I can spend those weekends with those I love doing what I like,...

Every minute you breath and live is spent and gone and brings you one minute closer to death,...

My life minutes are too precious to be spent on sweating details to cover my ass from the frickin' government,...

It costs 20 hours or less of overtime to get back two weekends of my life,...

And I am compelled to work the overtime regardless,...

I do my job, I pay others to do that job for me,...

To each his own,... 8)
« Last Edit: Sep 11, 2015, 01:42 by GLW »

been there, dun that,... the doormat to hell does not read "welcome", the doormat to hell reads "it's just business"

Offline SloGlo

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Re: State Income Tax for Travelers
« Reply #8 on: Sep 11, 2015, 01:32 »
call yore h.r. department. they will tell yew how the company will due the payroll in this situation. when this is known you can figure how you deal with the tacks.
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chuckdhuff

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Re: State Income Tax for Travelers
« Reply #9 on: Sep 11, 2015, 01:43 »
I have complicated returns,...

I think your search only references CPA or TP costs, not TA costs,...

I guess so, just surprised me. I tend to keep things as simple as I can. My search was just for the average cost of TP. I searched because your quoted number shocked me, thought maybe it was higher dependent upon region or something. My Tax Preparer in the past has always been a licensed family friend or someone I grew up with so I got a pretty fair deal on it. Thought maybe I was way out of touch with the cost of things.

call yore h.r. department. they will tell yew how the company will due the payroll in this situation. when this is known you can figure how you deal with the tacks.

I am in the process of that as well, but I wanted some outside the company advice. HR and payroll work for the company and it's best interests, not mine or yours.

Offline Rennhack

Re: State Income Tax for Travelers
« Reply #10 on: Sep 11, 2015, 05:14 »
You pay $1,100.00 to have your taxes prepared?! Good lord, do you wipe with 5's or 10's?

In the past, I did my own taxes and would have scoffed at someone paying that much money.  However, with the complication of being my own employer.... I hired a CPA several years ago, which costs me ~$1,800/yr.  That covers more than tax prep, and as GLW says, I have complicated finances as well.

Offline traveltax

Re: State Income Tax for Travelers
« Reply #11 on: Oct 31, 2015, 09:53 »
DISCLAIMER: I'm not looking for any sneaky ways to do things. I just want to know the actual rules and how it will effect me come April.

I'm a full time employee of the company that I work for and will be sent to work a job in a state that does not have state income tax. My company and home are in a state that does have state income tax.

Do I continue to pay my standard state income tax of my state of residence while working out of state on a temporary job that is expected to last 6 weeks, or am I not required to pay state income taxes on wages earned in the other state?

If I don't pay state income taxes while working out of state and maintaining my home state residence would I be penalized by my home state for not paying the appropriate percentage of state income tax on my annual gross income?

If I pay my home state's withholding rate will I be entitled to a refund for the amount/percentage withheld while working out of state?

Thanks in advance for any advice on this issue.

The state that taxes your global income is the state that you have a legal residence (DLN, Car Registration). Do not confuse this with a "tax home" which is a different animal that determines from where you have deductible/reimbursable travel expenses.

Your employer is only obligated to the state you work in but since the state you are assigned to has no state income tax, you can ask that they withhold for your home state. Even though there is no income tax in this work state, there is still unemployment, state disability and other items that the work state requires for your services within its borders.

If this work state had an income tax, you would be able to offset some or all of your home state tax with the amount paid to the work state for that income.
« Last Edit: Oct 31, 2015, 09:55 by traveltax »
Joseph Smith EA/MS Tax
Enrolled Agent, Admitted to Practice Before the IRS
TravelTax TravelTax Canada
www.traveltax.com info@traveltax.com

chuckdhuff

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Re: State Income Tax for Travelers
« Reply #12 on: Nov 02, 2015, 10:44 »
The state that taxes your global income is the state that you have a legal residence (DLN, Car Registration). Do not confuse this with a "tax home" which is a different animal that determines from where you have deductible/reimbursable travel expenses.

Your employer is only obligated to the state you work in but since the state you are assigned to has no state income tax, you can ask that they withhold for your home state. Even though there is no income tax in this work state, there is still unemployment, state disability and other items that the work state requires for your services within its borders.

If this work state had an income tax, you would be able to offset some or all of your home state tax with the amount paid to the work state for that income.

There's the answer I was looking for. Thanks.

 


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