Do you have to file taxes in the state you live in if you only work in another state?

Question

I live in Mississippi and I work in Louisiana. All my state taxes are for Louisiana. I recall a couple of years ago that my tax lady said since I did not work in MS and I did not have deductions or anything that I do not have to file for MS. Is this still true? Because when I e-filed with turbo tax, it told me i had to pay MS taxes of $145. Why the heck would I have to pay state taxes for MS when I pay it all year long on all my purchases?

Answer 1

na the tax lady is wrong. here is how it work

1) federal tax on every thing you have

2) state you work in tax on only the income you earn in that state

3) state you live you tax on 100% of your income minus a credit, the tax you pay to the other state. if your resident state has a higher tax rate then state you work in you may still owed ms some income tax. and if you don't file the IRS will down load your federal return to ms in about 3 years. if you has earn income and you didn't file, you'll get a nasty gram from the ms income tax department saying you live here and did not file your return with ms. 3 year time limit is the reason that your out of time for any refund so you'll get a bill with interest!

Answer 2

MS and LA do not appear to have a reciprocity agreement in place. Since you live in MS, you MUST file a MS tax return. Your state of domicile is entitled to tax your world-wide income from all sources. Since you work in LA, you must file a return there as well.

File a non-resident LA return listing only the income earned in LA and pay any tax due. Then file a MS resident return, listing all income from all sources. You will take a credit on your MS return for the income taxes paid to LA. The net effect is that you will pay state income tax on the LA income at the higher of the two state's tax rates. The income is NOT taxed twice.

If your "tax lady" told you that you don't need to file a MS return, it's time to find a new tax preparer. Here's a quote from the MS Tax Commission's website:

"Do I have to file a Mississippi return?
If you are a Mississippi resident or have Mississippi income and the income exceeds the allowable deductions and exemptions, you are required to file a return."

And here's a link to their website: http://www.mstc.state.ms.us/taxareas/individ/main.htm

Answer 3

If your tax accountant says so, great.

As for me, I live in NJ and work in NY, and I have to file in both states.

Answer 4

IF YOU WORK IN ANOTHER STATE .THAT STATE COLLECT FED & STATE TAX.AS FOR YOUR HOME YOUR MORGE PAYS FOR YOUR PROPERTY TAX OR YOU PAY A MONTHLY PROPERTY TAX IF YOUR HOME IS PAID FOR.