In US, If my employer is in CA and i m on contract in IL. which state tax shud be applicable on salary.?

Question

I want more info on the TAX deduction system of USA. Which state tax is applicable on my income like the state in which my employer is in or the state in which i m working. And what are the optional tax deduction like medicare, state withholding, disability, unemployement .... etc which i can choose to pay or not to pay. And if i have to pay then how can i take max benefit out of them.

Answer 1

Federal withholding tax and Social Security/Medicare tax is taken from your pay regardless of where you live. State withholding tax is taken for the state that you work in or live in, if different (or sometimes both, depending on the states). In Illinois, at least the last time I did payroll for IL employees a few years ago, there are no employee deductions for unemployment or disability.

All taxes that apply are mandatory, not optional. You get the benefit from them through federal and state government services.

Answer 2

your wages would be taxable in IL and the state you live in (if other than IL). if you are an employee, you dont have an option not to pay social security, medicare, disability. when you filled out your Form W-4 you can choose to have less federal tax withheld by claiming more exemptions. zero exemptions means tax will be withheld at the maximum rate. there is probably also a similar form for the state you work in for state withholding purposes.

im assuming you are an employee. if you are receiving a 1099, your employer will not withhold any taxes for you. you are responsible for paying in your federal and state taxes, as well as 15.3% for social security and medicare.

Answer 3

Illinois. That is the state you are working in and I presume your home.

Answer 4

yo pay taxs in the state that you have live in the longest and do partical for the rest.