Tax Experts...Live/Work in Separate States?

[galaxy]

So I'm starting a new career next week and doing my initial W4 and other paperwork, and I'm stumped.

I am a resident of, and physically live in one state and will be driving across the border to work in another state. Who do I pay state taxes to and how do I file at the end of the year? The employment form seems like it lets me choose. It asks "indicate which State tax is to be withheld for". So I need to input a state here and not sure which one.

And then how do I file at the end of the year?  Do I have to file for both states? Does Turbo Tax account for situations like this?

There are others at my company doing the exact same thing, so I will be asking them as well, but thought I'd see if there's a tax expert floating around here as well. Thanks guys

[funkymonkey1111]

https://money.howstuffworks.com/personal-finance/personal-income-taxes/10-tax-tips-for-people-working-and-living-in-different-states.htm

 

https://turbotax.intuit.com/tax-tips/state-taxes/multiple-states-figuring-whats-owed-when-you-live-and-work-in-more-than-one-state/L79OKm3jI

 

 

 

 

[8675309'SS]

I’m not an expert, but good articles above. Your HR/ Payroll department should have some guidance for you especially if this is a common practice.  Check out if there is a non-resident local tax in the city in which you are earning your income. See also from a different perspective: https://hr.cch.com/hhrlib/issues-answers/Multi-state-income-tax-For-which-state-must-employers-withhold.asp?date=December-21-2015 

 

 

[funkymonkey1111]

also, while not exactly your situation, i have lived in two separate states during a tax year and been self employed in one but a regular employee in another.   Turbotax had no problem with that. 

 

as you likely know, there are different levels of turbotax, and the more expensive ones handle more complex situations.   i don't know if your situation is particularly complex, but it might be worth a call to turbotax to ask which would be the best product for your situation

 

 

Edited March 16, 2018 by funkymonkey1111

[Rich]

Geez. I tried doing my own taxes today and ended up saying forget it and called the accountant.  It used to be so easy.  They mailed you a book and form, you filled it out in ink, and mailed it in. Simple.  Now you have to be a damn genius!   I don't envy you figuring that out.  Good luck to you with your new job sir. 

[galaxy]

Turbo Tax fan here...been using it forever.  Very familair.

 

Meh, it's not that bad.  Just a little homework.  I apply my golden rule to taxes like I do anything else in my life...if it's going to affect me, I'm going to become an expert on the subject.  I've done my own taxes over some complicated years; divorce, rental properties (with shortsales), insolvency, bla, bla, bla.  This will be a stroll through the park once I get it down.  Turbo Tax is quite impressive also.  There's some glitches with some of the complicated stuff, but for the most part it's about 98% spot on.

 

Funny story...the year I had a short sale and insolvency I got pretty stumped on one item that I just couldn't wrap my brain around (For the record, Turbo Tax covered me that year also).  I got to a point where I didn't necessarily throw my hands up, but I decided to pay a real tax person to help me out with this one hurdle.  We did a phone interview and long story short that phone interview ended with no fee, no office visit, and him asking me "why the hell did you call me?" because I had it down pat to begin with, LOL.  In fact, now that I look back on it, I think he offered me a job, LOL.

 

But know this about some of these tax locations...those ****ers working in there around tax season are not tax experts or CPA's...they're some college kid or (fill in the blank) that took some crash course on the basics of filing.  Granted when you pay someone you get the liability protection, but you can get that in Turbo Tax as well.

 

Sorry...back to our regularly scheduled program already in progress....

Edited March 16, 2018 by galaxy

[galaxy]

And at this point, I'm not too worried about how to file at the end of the year...I've got until NEXT April to figure that out.  Main homework right now is mainly which state to claim on the paperwork, and it sounds like it should be the state I live/residence of vice the one I work in.

 

And thanks Rich...it's exciting.

[DieselDude]

Good question......You do have a good idea ask people who you work with.  At one point I lived in one state and worked in another state.  I paid state income tax to the state where the wages were earned not where i lived. 

[Liralen]

Definitely not an expert here as live in a state where we do not have state income tax (although there are some crazies trying to make that happen)...that being, usually you will want to file the taxes in the state that you live in/own a home/pay rent in....as it is truly where you reside.  Have also seen this often with friends/acquaintances who live in towns that border Washington/Idaho and Washington/Oregon.  Difference there is Washington has no state income tax, but has sales tax, whereas Oregon has a state income tax but no sales tax.  So each has to figure out which works for them in the long run....now if you are doing business dealing across borders it is an entirely different beast!  BTW...I do taxes for our three businesses - one which is a retail business with inventory & state sales tax reporting, one with employees & the reporting of employment taxes, as well we have two business rental properties.  We of course also have personal taxes (which include stocks/bonds/mutual funds, 401ks, IRAs, military retirement, disability pay, and three residential rental properties)....so do have a bit of broad experience... just do not like stating am an expert in anything because we all can always learn more.   Have also been known to help friends do their taxes (found over $20K by going back and doing 4 prior years of taxes for a friend).  Speaking of which...I really need to finish our taxes!

[pirahnah3]

As a person who lives in one state and works solely in another. 

 

They take the taxes out of my paycheck where my office is. 

 

When I file my taxes, I file as a non income resident of my residing state, and then file as a non resident of the state I work in. I tend to owe some small volume of tax to my residing state but it is much less than the refund I get from the state I work in.