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Got hit with Iowa income tax on my first paycheck for new Seattle job

Posted on 7/10/15 at 2:17 am
Posted by goldennugget
Hating Masks
Member since Jul 2013
24514 posts
Posted on 7/10/15 at 2:17 am
Just hit midnight here so I checked my first pay stub for my new job in Seattle and saw I got hit with an Iowa income tax even though I had established residency in Washington before I started to work my new job. All work I had done was in Washington State. When I first started working here the first thing I did was change my address to my new Seattle address but it took a few days for the system to update from my Iowa address.

I did get a sign on bonus that I signed for when I was still living in Iowa. Does that mean that that bonus would be subject to Iowa taxes? Even then, I calculated it and they taxed all my non bonus earnings in wages as well to the Iowa income tax as well.

Do I have any kind of valid HR complaint?
Posted by Layabout
Baton Rouge
Member since Jul 2011
11082 posts
Posted on 7/10/15 at 4:07 am to
Sounds like your withholding is in error. You're probably stuck waiting until you file your return and claiming a refund.
Posted by Poodlebrain
Way Right of Rex
Member since Jan 2004
19860 posts
Posted on 7/10/15 at 8:32 am to
As an individual you are a cash basis taxpayer. So you shouldn't have income until you actually receive money, which in your case was after you established residency in Washington. The signing bonus is the only possible source of Iowa income. The company may have applied the concept of constructive receipt to the bonus if you could have taken payment while still an Iowa resident. However, you should have been able to defer receipt, and recognition, of the income until after your relocation to Washington.

The worst that will happen is you will file a part-year resident return for Iowa and exclude the income. This should result in a refund of at least some of the tax withheld, if not all. Since Washington doesn't have an individual income tax you won't have to worry about being underpaid to them.
Posted by krehn11
IA
Member since Jul 2011
1486 posts
Posted on 7/10/15 at 11:43 am to
You will need to file an IA 1040 reporting all of your income for the year. Your Iowa source income (bonus) will be taxed in Iowa. Because WA does not have an individual income tax, you will not receive an out of state tax credit because this income will not be taxed in Washington as well.
Posted by Hawkeye95
Member since Dec 2013
20293 posts
Posted on 7/10/15 at 12:38 pm to
this is always a pain in the arse when you move states for a job. Its probably any bonus or move they provided. You will get it back, and since you have to file a partial year return anyway for iowa it won't be that much extra work.

I would call HR and ask them.
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