State Taxes?

Question

If you live and work in one State but declare another State as your State of residence. Do you have to pay taxes in both states?

OK let me clear this up a bit. I live and work in TX but for License issues I declared VA my home state. So the question is this. Even though I'm not living in VA nor working there do I have to pay any taxes there?

Answer 1

Texas has no state income tax; but since you declare VA as your state of residence you will have to pay VA tax on your total earnings. If Tx had a state income tax you would get a credit in VA for TX state tax paid; however with no TX state tax to pay you have no credit. You could always change your state of residency to TX since you live and work there.

Answer 2

To be a resident of a state you must have a permanent place of abode in that state (VA).

You would file a non-resident return for TX (Texas does not have a personal income tax) and you would file a resident return for VA and pay taxes in VA (from the tax owed to VA you would be allowed a credit for taxes paid to other states (which you did not pay any on in TX).

If you failed to file a return in VA, at some point they will come looking for you, because you said you have a license in VA. If this is a professional license they expect that you are living there and must file a personal return. Do not forget the IRS and the states share information. If you only have a drivers license in VA then change your license to TX and declare TX as your principal residence.

Be aware that if you are a ICC Truck Driver your employer is required to withhold VA taxes from your paycheck as that is your resident base.

Answer 3

Yes...you have to pay in both states. At Least file and the state you are not a resident of. You usually get it back. That depends on the state though.

Unless you are Military then your state taxes go to your state of residence

Answer 4

The answer is maybe. It depends on your state of residency.

The reason being is that some states have agreements with other states that their residents may work in that state and NOT pay taxes to the state they worked in. For example, Pennsylvania residents may work in Maryland but are not required to withhold and/or pay Maryland taxes. But the taxpayer is still required to report that income earned in Maryland on their Pennsylvania tax return.

Other states require you to report and pay taxes on income earned in that state even if you are not a resident. But your home state may allow you to take a credit for portion of the taxes paid to that other state. For example, Pennsylvania residents who work in Delaware are required to file a Delaware tax return and pay income taxes to Delaware. But Pennsylvania allows them to take a credit on their Pennsylvania tax return for a portion of the taxes paid to Delaware.

Hope I didn't lose you, but it truly depends on what state you are in and what agreements that state has with other states.