I live and work in SD where there's no state tax, what happens if I get a 2nd job in IA, a state with taxes?

Question

Will the state of Iowa tax my South Dakota income as well? Will my South Dakota income increase me into another tax bracket in Iowa to where it makes no point in working the 2nd job due to the taxes I would be paying?

Answer 1

Iowa can only tax you on income earned in Iowa.
It is also deductible from your Federal taxes. Iowa can not increase your rate based on your earnings in SD.

Answer 2

The first part of your question is easy. Yes you will be required to file in Iowa if you earned more than $1,000. You only pay Iowa state income tax on the income made in Iowa so it should not be a large amount but will require a state return which will cost more to prepare if you have someone else do your taxes.

Answer 3

I work in Iowa and live in Illinois. I DO NOT pay Iowa income tax. My employer withholds Illinois tax for me. If your Iowa employer withholds Iowa tax, you must file an Iowa income tax non-resident return to get it refunded to you. Since SD has no income tax, there is no return to file there.

Answer 4

If you get a second job in IA, you would have to file a IA non-resident tax return. You would only report the IA income on your IA tax return. If you have your IA employer withhold taxes on your earnings, you most likely wont even owe anything.

Answer 5

I was told that you are to pay tax to the state that you physically work in. If you travel to IA to work, you pay state tax in IA. Ask your employer what kind of percentage is taken out for state tax and then make your decision.....

Answer 6

If you continue to live in SD, you'd file an IA non-resident return, showing only the income you made in IA, not what you made in SD, so you'd be OK.