How does working in a state and living in another affect your taxes?

Answer 1

It depends on whether the state you work in taxes non-residents. New York State, for example, taxes the income of people from other states. Those people also may owe income tax in their home state, although usually the home state lets them deduct the income tax paid to NY. They would have to file three tax returns, one federal, one for NY, and one for their home state. In my area, each jurisdiction (Maryland, Virginia, DC) just charges income tax on their own residents. That's much easier, although DC keeps trying to get Congress or the courts to give it permission to tax non-residents. (States don't need permission to do this.) If DC ever gets that through, I assume Maryland and Virginia will start taxing workers from other states too.

Answer 2

Ditto Molly.

Your home state generally allows a credit for taxes paid to other states. You don't usually end up paying double, but the higher of the two rates.

Most states tax non-resident workers. I am not familiar with the reciprocity on the east coast, but California and Oregon have something similar. You still have to file in both states.

Get CPA help.

Answer 3

It depends on the state and the type of income.

Many states offer their neighbors reciprocity, which means they allow you to work and claim the income in your home state.

Other states will require you to file an income tax return in both the residence and income earning states.

Check the state instructions for your home state or contact a CPA to guide you. Good luck!!

Answer 4

Some states have tax reciprocity. I live in Ohio and work in Michigan. My employer reports my wages as Ohio wages, and deducts Ohio taxes. I do not have to pay anything to Michigan.
Check your state's website, usually www.yourstatename.gov.
They should have links to answer your question.

Answer 5

it depends in the state u live and work at. in NYC they have a commuter tax. so u pay double tax.
u will be taxed in both states but u will be refunded so of the taxes

Answer 6

I work in MA and live in RI.
MA deducts their state income tax from my paycheck.
In my MA income tax report I write what percent of the year I lived in MA which is zero percent.
Then I get a full refund from MA.
I pay income tax to RI.

Answer 7

Because when you, say you live in Alabama, (like me)..lol, and u work in, say Georgia, you have to fill out both Alabama's state taxes and Georgia's state taxes. But honestly, if you ask me, I think it's stupid (in a way). hope i could help. ~*Bye*~

Answer 8

sometimes you have to pay taxes to both states