How can my new state know I'm not having state taxes deducted from my pay?

Question

I have moved to a state with a state income tax from one that does not. I still own property in the previous state as well as my new one. My company which is based in my old state has not started to take out state taxes. How will this be detected from my new state?

Answer 1

if you keep your "home address" with your company as the state with no income tax, and have your pay direct deposited, with the stubs sent to the address with no income tax, then you should be fine. your W-2 will reflect your "income state" as the one with no income tax.

Answer 2

If an employer has a place of business in a state or employees based in a state apart from the main office, they are generally required to report wages paid to the state's employment dept.

Most, if not all, states, like IRS, match w-2 reported income with that reported on your state tax return. If you have nothing withheld, you may owe big time come April 15.

That's how they'll know.

Now, if your stay in the new state is temporary, you may not be liable for state income tax, depending on which state (pardon the pun but you left that unstated) it is. However, if you have established residency, you will be liable for filing an income tax return and paying income tax.

Don't fall for the previous responder's idea; there is a difference between doing it right and doing it wrong but not getting caught. Besides breaking the law it's bad karma.

Answer 3

Your employer is violating the law. Virtually all states having an income tax impose taxes on money made in the state as what is called "source income." Residents of a given state are also taxed on income they receive from sources outside the state. And most states allow at least a patrial credit for taxes paid to another state as an offset to the domestic tax liability.

The State of California has even gone so far as to assert that taxes are due from flight crews who only fly through California airspace. California also tried imposing taxes on people who moved to another state but were collecting retirement pensions earned while residing in California.

I was one of the people who helped put a stop to that. Congress acted swiftly to slap California's greedy hands from violating the sovereignty of other states.

Answer 4

Most departments of revenue cross reference property tax, driver's license and registration records, voter registration records, etc. with income tax records. Once you show up on the rolls somewhere, they can query the IRS for data on your income from your Federal return and will then assess income tax (plus penalties and interest of course) on the income earned within the state or while a resident thereof.

Answer 5

The state has their own revenue department and they track it that way.