![]() "Jock tax": Location, tax rates can have big impact on contract's value This holds true, too, for lawyers, consultants and construction workers who may go to a different state for months for a job. In an extreme example, professional athletes must keep track of their practice and games in different states because they’re required to pay income tax in each state where they earn income. More than half of the states that have a personal income tax require employers to withhold tax from a nonresident employee's wages beginning with the first day the nonresident employee travels to the state for business purposes, but other states allow you to work there for 30 days or more first, according to the Mobile Workforce Coalition, a group of 280 organizations to advocate for simplifying nonresident state income tax rules. ![]() Split time can complicate taxes further because states vary in how many days a nonresident employee can work in a nonresident state before withholding is required. Wait: IRS warns taxpayers to hold off filing returns in 20 states as it checks if it can tax special refunds What if I split my time between states? No worries: These 9 states don’t have an income tax. To get the credit, you’d have to file an income tax in both states. That means filing a resident state income tax form for your home state with all your income sources and a nonresident tax return with only your employment income. If there isn’t reciprocity between the two states, some states allow you to get a credit for taxes paid in the state where you’re not living and working. Employers would only withhold taxes where the employee resides, and the employee files that state’s tax return. Some states offer reciprocity, which allows taxpayers to only pay in the state where they’re living and working. ![]() It’s more complicated when they are in two different states. That’s simple when employees and employers are in one place. Generally, state and local income taxes should be withheld where the employee performed the services. How do state and local taxes usually work? regardless of whether they’re there or not,” said Jared Walczak, vice president of State Projects at The Tax Foundation think tank. “Several states still have rules that tax the income of employees in offices.
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