I am hiring someone who lives in pa. but is going to be working in NY. Who does he pay state taxes to the home state or work state?
2006-10-05 07:38:16 · 10 answers · asked by Denise F 1 in Business & Finance ➔ Taxes ➔ United States
It depends upon the employer and whether the states have reciprocity agreements. Where there are reciprocity agreements some employers will withhold and remit in the state in which you live (I don't think it's mandatory). Where there is no reciprocity agreement the employer withholds in the state where it is located and the employee files a non-resident return in NY AND a resident return in PA. Check to see if NY and PA have a reciprocity agreement with your state's taxing authority. Everybody else was wrong.
To follow up:
STEVEN F is wrong as well. Check out this link if you don't believe me. It says exactly what I said. The issue is a mute point because NY does not have a reciprocal agreement with PA. You withhold NY taxes, remit them to NY and the employee files two state tax returns. CCH is advertsing on this website so it should be legit.
http://www.payroll-taxes.com/articles/reciprocals.html
2006-10-05 09:01:41 · answer #1 · answered by porkchop 5 · 0⤊ 3⤋
The answers about 'reciprocity agreements' are wrong. If the state you work in has an income tax, you will pay it. If the state you live in has an income tax, you will have to fill a return. Most states offer a credit for taxes paid the the state in which you work. You end up paying at the higher of the two rates.
2006-10-05 12:10:06 · answer #2 · answered by STEVEN F 7 · 0⤊ 1⤋
Its amazing how many folks just make up an answer. I'm sorry but the first poster is wrong. You pay taxes to the state where you work. DCgirl is taxed in DC because she works in DC, not because she lives there. It doesn't matter where the company is based. If your employee lives in PA but works in NY, then the taxing state for his earnings would be NY.
This is directly from the instructions to NY Form IT-203-I Tax Return for Non Residents:
If you were a nonresident of New York State and received income in 2005 from New York State sources, or if you moved into or out of New York State in 2005, you must file Form IT-203, Nonresident and Part-Year Resident Income Tax Return. You are subject to New York State tax on income you received from New York sources while you were a nonresident and on all income you received while you were a New York State resident.
2006-10-05 08:50:03 · answer #3 · answered by Jeff C 2 · 2⤊ 4⤋
Does your state have a reciprocity agreement with the other state? Take a look at this link for how MN deals with the issue. Generally the state in which the employee lives will tax the worker
2006-10-05 09:06:18 · answer #4 · answered by curious george 5 · 1⤊ 2⤋
You take out taxes out on the state he will be working in (NY.), when he does his taxes at the end of the year, it will be up to him to take care of his taxes in his home state (PA).
2006-10-05 07:45:30 · answer #5 · answered by David 2 · 2⤊ 2⤋
He will still have to file two state tax returns. One as a resident and one as a nonresident. A credit will be allowed on the resident return for the other state to avoid double state taxation.
2006-10-05 07:57:55 · answer #6 · answered by spicertax 5 · 1⤊ 2⤋
Taxes are taken from the state in which the employee LIVES.
However, the unemployment tax is taken in which the employee WORKS.
confusing isn't it?
2006-10-05 07:43:00 · answer #7 · answered by words_smith_4u 6 · 0⤊ 5⤋
Best to call the Dept. of Labor to for the answer as I am sure there will be special forms to fill out...Liz
2006-10-05 07:53:22 · answer #8 · answered by lizr 2 · 0⤊ 3⤋
The first poster is correct. Income is taxed based on the address of the earner, not the address of the employer.
2006-10-05 07:51:31 · answer #9 · answered by dcgirl 7 · 0⤊ 6⤋
The state in which you receive your check from will be the taxing entity.
2006-10-05 07:43:39 · answer #10 · answered by renegadeslawdawg 2 · 0⤊ 5⤋