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Out of State Tax Question
Posted on 5/25/18 at 11:19 am
Posted on 5/25/18 at 11:19 am
So I’ve got a question that I’ve been scratching my head about. My brother who recently graduated has a federal job lined up in California. The job is supposed to be for one year and then there is a possibility to stay on longer but no guarantee. My question is what would his state tax situation be if he intends on remaining a Louisiana resident since the job is supposed to only be for a year? I’m assuming he would pay California State taxes then when he files he would get a refund. Would he then have to file in Louisiana since that’s where his residency is at or should he officially make his residency California?
3
Posted on 5/25/18 at 11:58 am to damonster
Since he is working in California, then he will have to pay California state taxes. He will not get a refund when he files. When I lived in Texas, I had to file multiple state income tax returns because I traveled to neighboring states for several weeks at a time for work.
Posted on 5/25/18 at 12:21 pm to DumpsterFire
My dad lives in Louisiana but works in Mississippi. He pays Mississippi income tax then when he files he gets a refund that he has to pay to Louisiana. I’ve never really understood that but that is what H&R Block does for him.
Posted on 5/25/18 at 1:03 pm to damonster
Technically he'll be taxed in both states. He will, however, get a credit from Louisiana on tax paid to another state so he won't owe anything to Louisiana.
Let's say he moved to Alabama. Their rate is 4% as opposed to 6% LA rate. He would pay the 4% to Alabama and the remaining 2 percent that Louisiana charges he would have to pay.
Louisiana taxes all income earned, no matter where. They offer a credit, though, to taxes paid to other states. Whatever he does, make sure he files with Louisiana if he is a resident, even if he won't owe anything.
Let's say he moved to Alabama. Their rate is 4% as opposed to 6% LA rate. He would pay the 4% to Alabama and the remaining 2 percent that Louisiana charges he would have to pay.
Louisiana taxes all income earned, no matter where. They offer a credit, though, to taxes paid to other states. Whatever he does, make sure he files with Louisiana if he is a resident, even if he won't owe anything.
This post was edited on 5/25/18 at 1:04 pm
Posted on 5/25/18 at 2:03 pm to damonster
Mingo is right... but just for clarity...
1) He will file a nonresident CA return. He may or may not get a refund from CA, depends on his withholding.
2) He will file a resident return for LA. He will take a credit (there are limitations and calculations for this credit) based on the tax he paid to CA.
If all of his income is in CA, he probably will not owe any LA tax, as the tax rates in CA are higher than LA.
If he was working in, say, Texas, he would not file anything for TX (no state income tax), still file an LA resident return, and then owe taxes to LA. Worse, there would be no withholding, so he would need to make estimated tax payments to LA, or owe a big chunk at tax time.
1) He will file a nonresident CA return. He may or may not get a refund from CA, depends on his withholding.
2) He will file a resident return for LA. He will take a credit (there are limitations and calculations for this credit) based on the tax he paid to CA.
If all of his income is in CA, he probably will not owe any LA tax, as the tax rates in CA are higher than LA.
If he was working in, say, Texas, he would not file anything for TX (no state income tax), still file an LA resident return, and then owe taxes to LA. Worse, there would be no withholding, so he would need to make estimated tax payments to LA, or owe a big chunk at tax time.
Posted on 5/25/18 at 2:11 pm to LSUFanHouston
quote:
If he was working in, say, Texas, he would not file anything for TX (no state income tax), still file an LA resident return, and then owe taxes to LA. Worse, there would be no withholding, so he would need to make estimated tax payments to LA, or owe a big chunk at tax time
I interned in Texas while in college and this wasn't the case. My firm withheld Louisiana state tax for me. We have an office in Louisiana though so that may have made a difference.
Posted on 5/25/18 at 2:14 pm to Mingo Was His NameO
quote:
I interned in Texas while in college and this wasn't the case. My firm withheld Louisiana state tax for me. We have an office in Louisiana though so that may have made a difference.
They probably set you up as a Louisiana employee. That's good, for sure.
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