Tax question

[TranceNation]

I have a friend(who lives in CA) who interned for a company in another state (Arizona) last year. She's telling me that her 'tax consultant' said she has to pay both taxes for Arizona and CA, even though she didn't work in CA. This seems like double tax. I think she doesn't have to pay taxes in CA, what do you think?

 

[HappyPuppy]

No way she has to pay taxes in both states on money she earned in Arizona. If she worked in both CA and AZ she will owe taxes in both states.

 

If by 'tax consultant' you mean accountant, then I'd trust the accountant's judgement. They went to school to learn this.

 

[TranceNation]

I'm not sure what kind of certification or degree this guy has, but it doesn't sound right.

 

[DaWhim]

this is true

 

[woodie1]

If you live in one State and work in another you may be liable for taxes in both. Generally you will get a credit for one or the other too.

 

[C'DaleRider]

Originally posted by: woodie1
If you live in one State and work in another you may be liable for taxes in both. Generally you will get a credit for one or the other too.

That's how it works in most states. You have to file taxes in both states, but the "home" state gives a credit for the taxes paid to the "other" state.

 

[BrunoPuntzJones]

Originally posted by: C'DaleRider

Originally posted by: woodie1
If you live in one State and work in another you may be liable for taxes in both. Generally you will get a credit for one or the other too.

That's how it works in most states. You have to file taxes in both states, but the "home" state gives a credit for the taxes paid to the "other" state.

This is correct ^^

 

[pandapanda]

We had a similar situation several years ago. Lived in MO, worked in NY. Had to file taxes in both. Got a refund from NY and had to pay massive amounts to MO because they had gotten none from withholding. Sucked.

 

[TranceNation]

Originally posted by: BrunoPuntzJones

Originally posted by: C'DaleRider

Originally posted by: woodie1
If you live in one State and work in another you may be liable for taxes in both. Generally you will get a credit for one or the other too.

That's how it works in most states. You have to file taxes in both states, but the "home" state gives a credit for the taxes paid to the "other" state.

This is correct ^^

please explain, how does the 'home' state give credit to taxes paid to the other state?

 

[kermalou]

we have no double taxation, you file a tax return in your home state saying how much taxes were witheld in the working state.

 

[woodie1]

Originally posted by: TranceNation

Originally posted by: BrunoPuntzJones

Originally posted by: C'DaleRider

Originally posted by: woodie1
If you live in one State and work in another you may be liable for taxes in both. Generally you will get a credit for one or the other too.

That's how it works in most states. You have to file taxes in both states, but the "home" state gives a credit for the taxes paid to the "other" state.

This is correct ^^

please explain, how does the 'home' state give credit to taxes paid to the other state?

When I was subject to this there was a line or box where you entered the tax paid in the other state and that tax was deducted from what you owed.

 

[Double Trouble]

Yes, you could indeed end up paying taxes on the income in both states. It depends on which states, and what their respective tax laws say, but usually the state you work in will tax your income, and so will the state you live in. You usually end up getting a credit for the taxes you paid to the other state, such that you won't be 'double' taxed -- but this is NOT always the case. For example, athletes usually end up paying taxes in each state where they play. You can even end up paying taxes to the city/county/township etc you live/work in..... I'd take the tax accountant's word for it.