Income Tax Query?

Question

I have recently moved to Texas (about 9 months ago) from Mississippi and have been working steadily. I have to keep a permanant adress in Mississippi as I am still on my parents insurance. If my paychecks have my TX address on them will income tax be deducted for Mississippi? Or will I have to pay a lump sum at the end of the year? Or *crossing fingers* pay nothing at all? Also, what is my tax rate then? My salary is currently $35,360. Thanks in advance.

Judy- my parents checked and I can legally stay on their insurance until I am 25 or offered it by my employer. I am not 25 and my employer will not be able to offer me insurance until late next year.

Ninasgramma- Why would I ever want my own insurance if I can stay on my parent's until I'm 25? I have several health problems that would cause it to be quite expensive.

Answer 1

If you have not changed address from Mississippi to Texas, then Mississippi is still considered your permanent address (still have car registered in Mississippi? Still registered to vote in Mississippi?) and you will still have to file a Mississippi state income tax return. More than likely your employer will not withhold Mississippi income taxes from your paycheck, but you should check with your employer to be certain. If they don't withhold income tax, then you had better make quarterly estimated payments, otherwise you'll have underpayment penalties, more than likely for Mississippi. Good thing that Texas doesn't have a state income tax, so you don't have to worry about paying them. As far as your tax rate, it will be whatever the tax rate for Mississippi is, which ranges from 3 - 5%.

Answer 2

If your permanent address is in MS, then you would legally be responsible to file a MS tax return and pay state taxes there. But what do you mean by "keeping your permanent address in MS" - things like your drivers licence and car registration? States generally have a period of time after you move to change those over, and it's typically well under 9 months. You could have some explaining to do, and could get charged with additional offenses for not having them changed, if you get stopped for a traffic violation or something like that, unless you can show strong evidence that this is a temporary residence - and maybe not even then since you've been there that long, depends on state law and I don't know what it is in Texas.

Other issue though - if you haven't been living with your parents for that long, and are making that much money, it's highly unllikely that they can legally carry you on their insurance any more. If you were just away at school, they probably could depending on your age, but you don't mention anything like that. If you had a claim, it would likely be denied, and your parents could be in trouble for illegally carrying you on their policy. Check into that, and into getting your own insurance.

Answer 3

Mississippi has an income tax. Texas does not.

Mississippi will use the fact that you did not change your driver's license to say the you are still a Mississippi resident and, for income tax purposes, you never really left so they will want to tax your income earned in Texas. The company in Texas probably won't withhold Mississippi taxes even if you ask them.

Answer 4

Your permanent address is in MS. You will owe MS income tax. MS will come after you, and since you chose to keep your residence in MS, you will have to pay.

Have your parents remove you from their health insurance. You can purchase your own, probably for not much money, or perhaps through work for little or no cost.

Get a TX driver's license and change your permanent address to TX, and owe no state income tax in 2008.

If you can get this done right away, you may file a part-year resident return for MS and save some state tax in 2007.

Added later: My answer was directed at how you can avoid MS income tax. If you remain on your parents' insurance and keep your permanent address in MS, MS will tax you.

Answer 5

You would pay tax on your profit so that would be the £1000. Your accounts will be entered into your tax return showing your total income less all your expenses leaving the profit figure - which tax and ni is calculated upon. Edit : Yes it doesn't matter if it's in your personal bank account but I would recommend setting up a business account and also keeping all paperwork relating to these transactions, because if you ever got a tax enquiry you would need to provide evidence to back up your figures. And if you can't provide the right evidence they will assume it's not business related and charge you the extra tax.

Answer 6

You should be reporting the income in your state of residence which is Tx whether you want that fact known or not.