Monday, October 15, 2007

Work in Another State

June --

Just came across you site. My husband is going to Arizona to subcontract for a Wisconsin company. We live in Texas. Presumably, we have to pay all we earn on this 1099 as AZ state Taxes. New to this travelling thing!

Diane from Spicewood, TX



Hello Diane,

State income tax is paid to the state where the work is done. That's the nonresident state. A nonresident state tax return must be prepared. [Of course, this is not the case for states that do not have an income tax, such as Texas and Florida.]

If the state where you live -- the resident state -- has an income tax, then you must file a resident state tax return. On your resident return you will receive a credit for taxes paid to the nonresident state.

In your case, you'll need to pay and file for Arizona, not Texas.

Best,
June

5 comments:

JamesBrown said...

I am in a similar situation except I work from home in Texas for an Arizona company. Do I still need to pay Arizona taxes even though I never actually set foot in the state and if not should my employer be withholding AZ state taxes from my check?

June Walker said...

Hello James,

You called the AZ company that you work for, your "employer." If your use of that term is correct then you are not self-employed.

I am going to assume you used the wrong term. If my assumption is correct -- be careful. An employer means you're an employee and that's a whole different ballgame.

As an indie, if you never set foot in AZ you do not have to pay AZ income tax.

-- June

venkata said...

Hello June,
I work in CA and residence in NV. I commute from NV. I shared appartment with friend(lease with his name). My employer paid NV taxes. How should I file taxes? Do I need to pay CA taxes? please let me know. Thanks for u'r help

June Walker said...

Yes, venkata, if you work in California you must pay income tax to California.

Read the posts in the category "taxes -- nonresident state" for more info.

-- June

Eric N said...

Hi June, I have a similar situation that I would love your input on. I live in Texas (no state tax) and work from Texas out of my home but am employed by a California company but working from Texas. Should my company withhold CA state taxes from my paycheck?