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View Full Version : If I lived in one state but worked in another, who would I pay state income taxes to?


joebuck20
04-14-2009, 01:11 PM
If I work in one state but live in another, to whom do I pay state income taxes? Say if I lived in Hammond, Indiana, but worked in Chicago, what state would I pay taxes to?
Or howabout if I lived in one state but also owned a house in another and only worked there part of the year? I'm thinking of Rush Limbaugh's scenario, where he spends most of his time in Florida, but has a condo in New York and occasionally broadcasts from there. He recently said he was leaving New York because the taxes were too high.

t-bonham@scc.net
04-14-2009, 01:26 PM
Ask Al Franken! (But not his accountant -- the first one.)

He paid taxes here in Minnesota, but then found that he should have paid in each of the states where he worked. Got some political attacks over that, claiming that he was 'cheating' on his taxes.

Actually, in correcting that, he came out better -- he paid less taxes than he had paid to Minnesota, so he got a refund. Because the income was spread over several states, he was in a lower tax bracket in each of them. Also, Minnesota has higher taxes than some of these states, so paying taxes there rather than in Minnesota reduced his taxes.

picunurse
04-14-2009, 01:41 PM
When I lived in Missouri but worked in Kansas, I had to pay taxes to both states.

Dallas Jones
04-14-2009, 01:45 PM
Some states get you coming and going. If you live in Oregon and work across the river in Washington where there is no income tax you still have to pay income taxes to Oregon on that money.

If you live in Washington (no income tax) and work in Oregon, you also have to pay Oregon income tax.

suranyi
04-14-2009, 01:48 PM
The rules in these situations are complicated. The answer will depend on your exact circumstances. Often you will owe taxes to both states. However, in general you won't owe taxes on the same piece of income to both states -- that is, you'll owe taxes on some income to state A, and taxes on some income to state B. Figuring that out can get complex.

Ed

LateComer
04-14-2009, 01:51 PM
When I lived in Pennsylvania and worked in West Virginia PA taxes were withheld for me. I didn't have to do anything special. WV and PA have a reciprocal agreement. (http://www.payroll-taxes.com/articles/reciprocals.html)

Daddypants
04-14-2009, 02:09 PM
I believe that most states have a law that says if you work a certain number of hours per week or moth or year in that state, than you have to pay taxes to that state, even if you don't live in it.

ZipperJJ
04-14-2009, 02:14 PM
My business is based out of Ohio but my partner lives and works in Georgia. I (the business owner) had to sign us up for a Tax ID for the state of Georgia and pay 100% of his state and local taxes there (he doesn't actually owe city tax because they don't have city tax there, just here, but he doesn't owe here).

Not sure if that's a usual practice or what but that's what Georgia and my Ohio-based accountant had us do.

joebuck20
04-14-2009, 02:23 PM
When I lived in Missouri but worked in Kansas, I had to pay taxes to both states.

Did you have to pay the same amount of taxes to each state that one would have to if they both lived and worked in one of them, or did you get any sort of tax credit?

anson2995
04-14-2009, 03:21 PM
What if I'm a Major League Baseball player (or a salesman), and I spend more than half of my working time out of state? A guy who plays for the Philadelphia Phillies, for example, will work in 16 different states plus Canada this year.

RealityChuck
04-14-2009, 03:36 PM
What if I'm a Major League Baseball player (or a salesman), and I spend more than half of my working time out of state? A guy who plays for the Philadelphia Phillies, for example, will work in 16 different states plus Canada this year.That's why they hire accountants. (http://www.dailycamera.com/news/2009/apr/12/the-taxing-life-of-a-pro-athlete/)

Mama Zappa
04-14-2009, 05:15 PM
The rules in these situations are complicated. The answer will depend on your exact circumstances. Often you will owe taxes to both states. However, in general you won't owe taxes on the same piece of income to both states -- that is, you'll owe taxes on some income to state A, and taxes on some income to state B. Figuring that out can get complex.

Ed
Not necessarily true, I fear - the same income may be taxed in both places.

The simplest answer to the OP, is that it depends on the laws of the two states.

New York City (and NY State) have "commuter taxes". If for example you live in NJ and commute into the city to work, you have to pay in both places. I don't know what NJ's rules are regarding getting credited for tax paid to NY.

In the early 90s, I worked on a project in Manhattan for 2 years. I commuted down to Virginia on the weekends. Taxes were withheld, and paid to NY/NCC. IIRC, I had to file both NY city and state as non-resident, and pay taxes there on my withholding. Then I had to file with Virginia, but got a credit for the portion of the income that was NY-based.

IIRC, if the taxes paid to NY/NYC were 10%, and VA taxes were 6%, I could claim a credit to VA for the 6% tax I *would* have paid them. I believe that if NYs tax rate was lower (say, 4%) I'd have still owed the difference to VA.

As my husband was still working in the DC area, his income was NOT reported to NY/NYC, and we simply paid the 6% tax on his income, directly to VA.

The DC area has a large number of people who live in one locale and commute to another. All three (DC/MD/VA) have you pay taxes to the state you live in. DC periodically makes noise about implementing a commuter tax similar to NYC and while I can see their point (when I work in the district, I do use police / water / sewer / roads etc.), it's proven to be so HUGELY unpopular with workers and Congress that they've never been able to implement it.

Mama Zappa
04-14-2009, 05:18 PM
That's why they hire accountants. (http://www.dailycamera.com/news/2009/apr/12/the-taxing-life-of-a-pro-athlete/)
Heh - and partners in the accounting firms themselves have a very complex tax situation - as they are partners, not employees, they have ownership interest (and therefore income from) an entity that has a presence in many states. Their returns are.... interesting. (speaking from hearsay - I used to work for one of the Big Eight but not as an accountant and there was no chance I was going to become a partner, so the details didn't matter to me).

N9IWP
04-14-2009, 06:48 PM
I live in Minnesota but work in Wisconsin. Luckily the two states have reciprocity so I just file (and pay) MN state income taxes.

Brian

carlb
04-14-2009, 06:57 PM
The simple answer - you will probably pay taxes in both states (well, you will probably have to file in both states). How much you pay gets more complicated.

I just got finished filling out non-resident tax returns for both California and New York, even though we live in Illinois. My wife works for one of the Final Four accounting firms, and travels a lot working on multiple clients. Apparently, some of that world this year took place in CA and NY, so we need to file non-resident returns there. In previous years we've had to file similar returns in Missouri and Virginia. Next year I'm letting her firm do the paperwork for us - California's forms were a royal pain in the kiester.

FoieGrasIsEvil
04-14-2009, 07:25 PM
Hrm. I live in southeastern Indiana and work in Cincinnati. I pay Indiana state taxes and my county taxes where I reside. I do also pay a city of Cincinnati tax, but it is miniscule. My tax refunds for state are filed with Indiana.

I don't think you have to pay state taxes in both states. Isn't that some kind of double jeapordy?

Guinastasia
04-14-2009, 07:29 PM
I don't think you have to pay state taxes in both states. Isn't that some kind of double jeapordy?

I doubt it-taxes aren't a penalty, or a punishment for anything. (Please, no political remarks!)

Ruminator
04-14-2009, 09:02 PM
That's why they hire accountants. (http://www.dailycamera.com/news/2009/apr/12/the-taxing-life-of-a-pro-athlete/)

What about airline pilots and interstate truck drivers? Do they pay taxes in every single state they "work in" (pass through) ?

If they don't, the tax treatment seems inconsistent with the pro athlete.

Also, how about the President of the USA? Does he also file state taxes in every state he visits/works in? I realize the President under normal circumstances doesn't spend time away from DC but hypothetically... what if the White House was not safe because of terrorist threat and Obama had to work in Maryland or Illinois? It seems like there's no rule to exclude paying state taxes.

Really Not All That Bright
04-14-2009, 09:16 PM
What if I'm a Major League Baseball player (or a salesman), and I spend more than half of my working time out of state? A guy who plays for the Philadelphia Phillies, for example, will work in 16 different states plus Canada this year.
Traveling employees (which includes professional athletes) pay income taxes in their state of employment and state of residence, if applicable.

Yankees players don't pay California income taxes unless they live there, any more than a sales professional based in Oklahoma pays taxes in Idaho because he sold something there.

It's why so many pro athletes live in Florida when they play for teams elsewhere- no state income tax. :cool:

MLS
04-14-2009, 09:23 PM
I don't know if this is still true, but at one time New York state and IIRC New York City taxed the full annual income of anyone who worked in NYC even one day. At the time the company I worked for had many offices in both NJ and NY, and when this law came into effect, there was a blanket policy that NJ employees would no longer attend any meetings in NY, unless their normal work required them to go there anyway. There was also a time when NY somehow was able to tax not only the wages of a person who worked in NY, but if they filed a joint return they had to include their spouse's income on their NY tax return.

Ruminator
04-14-2009, 09:24 PM
Traveling employees (which includes professional athletes) pay income taxes in their state of employment and state of residence, if applicable.

Yankees players don't pay California income taxes unless they live there,

Your statement contradicts the cite from RealityChuck.

Tom Tildrum
04-14-2009, 09:30 PM
Heh - and partners in the accounting firms themselves have a very complex tax situation - as they are partners, not employees, they have ownership interest (and therefore income from) an entity that has a presence in many states. Their returns are.... interesting. (speaking from hearsay - I used to work for one of the Big Eight but not as an accountant and there was no chance I was going to become a partner, so the details didn't matter to me).

A friend of mine made partner at a law firm in DC, and now he has to pay taxes in France.

Desert Nomad
04-14-2009, 09:55 PM
My dad was an airline pilot and quite a few states asked him to pay for time spent in their airspace. His company had a form letter to send them to tell them to jump in a lake. He lived in Nevada where there is no state income tax.

Ruminator
04-14-2009, 10:09 PM
My dad was an airline pilot and quite a few states asked him to pay for time spent in their airspace. His company had a form letter to send them to tell them to jump in a lake.

What if the NASA Space Shuttle was in geo synchronous orbit over New York? Should the astronauts pay New York state income tax?

How about NTSB accident investigators who spend a few months out of state investigating a crash. Do states hunt them down too?

jackdavinci
04-15-2009, 03:08 AM
I don't think you have to pay state taxes in both states. Isn't that some kind of double jeapordy?

It seems to me like it should violate the whole "no taxation without representation" thing and therefore be unconstitutional. If I live in New Jersey but am paying income tax in NY I should be able to vote out of office the people creating that tax to make them accountable. On the other hand, you could probably make a similar claim about sales tax and that would be a logistical nightmare.. :D

t-bonham@scc.net
04-15-2009, 03:21 AM
It seems to me like it should violate the whole "no taxation without representation" thing and therefore be unconstitutional.That was a political slogan used by the colonists in their rebellion against the English King. But that is NOT in the Constitution they wrote for themselves after winning their rebellion.

Really Not All That Bright
04-15-2009, 09:10 AM
Your statement contradicts the cite from RealityChuck.
Huh... so it does. My bad.

carlb
04-15-2009, 09:58 AM
I don't know if this is still true, but at one time New York state and IIRC New York City taxed the full annual income of anyone who worked in NYC even one day. At the time the company I worked for had many offices in both NJ and NY, and when this law came into effect, there was a blanket policy that NJ employees would no longer attend any meetings in NY, unless their normal work required them to go there anyway. There was also a time when NY somehow was able to tax not only the wages of a person who worked in NY, but if they filed a joint return they had to include their spouse's income on their NY tax return.That's not true today; I just finished a NY non-resident return. It's a little more complicated than this, but essentially the return calculates your NY income as a percentage of total, and then figures taxes based on that. There are various adjustments to your deductions to account for differences in NY v. federal law, but it's not outrageously complicated or onerous.

I've not really ever had a significant financial hardship due to working in states I didn't live in. The worst part is the paperwork, but as for the dollars I give (or get back) to the various state governments, it usually works itself out.