Let’s say I live on the border of North Carolina and Virginia. My home is in North Carolina, but I work over in Virginia. Where must I pay income taxes?
Harder question: Let’s say that my permanent residence is in North Carolina, but I go to school 9 months out of the year in New York. After class, I work at the local Stop and Rob for minimum wage. Do I owe income tax to North Carolina, New York, or both?
Other harder question: My permanent residence is in Florida, a state with no income tax. I go to school in New York with the same deal. Pay state income tax in New York, or none at all in Florida?
These types of things used to happen to me 20 years ago when I resided in Ohio and contracted/traveled to jobs in Indiana, Kentucky and Pennsyvannia; so my experiance may be outdated. The general rule is that you pay taxes to the state that you claim residency. That said, your employer may deduct taxes from your check to the state in which you work. You then need to file in both states, one to pay your taxes to the state of your residence that the employer didn’t deduct and the other to claim a refund.
In MA, if you earn your money in the state you pay taxes to MA. Lots of folks live in tax free NH and work in MA - it’s the worst of both worlds: high property taxes in NH and income tax in MA.
You need to file in both states. Usually, you don’t end up double-billed. IME, I’ve had to deal with similar situations – residence in Michigan, went to school and had a part time job in Ohio. In that case, MI and OH had a reciprocity agreement where only one state would collect the taxes – in my case, OH kept 'em since they had the withholding. I probably could have taken a refund for the total amount from OH, and then paid 'em to MI, but I’m not sure. You still had to file in both states.
Now, I work in RI but live in MA. In this case, RI withholds income tax, MA also charges income tax, but gives a credit for the taxes I’ve paid to other states. The net result is basically I have to pay the difference between the two state tax rates, if any. You end up paying the highest rate between the two states. In my case, MA charges a higher income tax rate, but has a number of deductions and credits that I can claim, so it ends up a wash. I expect that I’ll have to write a small check to MA next year.
I’ve heard that there are some state combinations where you have to pay taxes TWICE – they get withheld from your work state, but when you file in your resident state they expect you to pay income taxes there as well.
Now, the actual rules will depend on the state, and I have no knowledge of the tax situation in any of the states you mention…
You file in both states. You should get an income tax credit in North Carolina for taxes paid in Virginia. Since you earned your wages in Virginia, they should receive the taxes. Your employer should also be withholding and remitting taxes to Virginia as that is where you are employed.
You file in both states and in NY, you also will be required to file in NYC if you worked in the City, as they have a separate city income tax. Again you should receive a income tax credit in NC for taxes paid in NY. As the income was earned in NY, they should receive the taxes. Your employer should also be withholding and remitting taxes to NY, as that is where you are employed.
You should file in NY as that is where you earned the income and and had taxes withheld. Since Florida has no income tax, you don’t have to worry about filing there.
Be aware there are also local income taxes in some cities / counties / school districts. Sometimes they have different rates for residents vs. non-residents.
You don’t file taxes in New York City. You pay NYC taxes only if you are an NYC resident.
You only have to pay income taxes in the states where you permenantly live or earn an income. For example, as a consultant, I may travel and work in other states for extended periods of time. If I work in a state long enough, I may have to pay taxes in that state. You get a credit for it though and if you earn money in FL you aren’t earning it in NY so you don’t taxes in two states.
NY and NJ also have some sort of special deal since so many NJ residents work in NY. Because I live in NY and work in NYC, I payed taxes to NY but no tax to NJ.
This is me. I have VA withholding, and none for NC. I get a refund from VA, and it’s usually enough that when I apply it and the NC credit for VA withholding, I break even.
A buddy of mine is Federal Civil Service, which uses a different mechanism, and he has direct NC withholding and none for VA. He doesn’t have to bother with VA taxes at all. That is a function of being a Fed, however. I work for a for-profit company.
Some states have cross-border agreements that change the situation (Indiana and Michigan come to mind) that make my buddy’s situation available for everyone.
From the consensus, I would get taxes withheld in the other state. But let’s use #3 from Florida. Nobody files state income taxes, so how would one get the NY money back?
The state you work in has a valid reason to tax you – you’re using their roads and infrastructure, and can receive benefits from the local government. Of course, same goes for your state of residency. So both states want to tax you. For the most part, state legislators have decided that it’s not reasonable to double-tax people in this situation. But in this case, NY gets the withholding, and they’re keeping that money. They’re certainly not sending it to FL, and why should FL cut you a check?
Now, again I’m not familiar with the tax situation in FL, but it’s conceivable that residents file a tax return for other miscellaneous taxes. You might be able to claim a credit for your NY taxes there, but that won’t do you any good if you don’t owe taxes to FL in the first place…
