Career Path > Tax Q&A

State Income Tax for Travelers

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Ksheed:
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.

GLW:
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",...

OldHP:

--- Quote from: ksheed12 on Sep 10, 2015, 10:02 ---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. 
--- End quote ---

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!

Ksheed:

--- Quote from: OldHP on Sep 10, 2015, 05:40 ---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!

--- End quote ---

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?

scotoma:
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.

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