State Tax ? Resident / Non-Resident

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harmony
Posts: 503
Joined: Sun Nov 24, 2013 1:35 am

State Tax ? Resident / Non-Resident

Post by harmony » Tue Mar 20, 2018 2:55 pm

I’m helping a family member with taxes. He is a nonresident of a neighboring state which withheld the correct amount. Normally he would file an out-of-state-credit form from his resident home state to get the proper amount transferred in. However, this year he is due a refund in the nonresident state (due to the different taxable thresholds in each state) and also must pay a small sales tax obligation calculated on their state's form. Enough was withheld to cover both the sales tax and resident state obligation. But if he’s getting a refund from the non-resident state, would there be any funds to transfer in? I've been on multiple holds with both of these states today and their call-back functions aren’t working. I also emailed one of the states, but don’t expect a timely reply.

pshonore
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Joined: Sun Jun 28, 2009 2:21 pm

Re: State Tax ? Resident / Non-Resident

Post by pshonore » Tue Mar 20, 2018 3:26 pm

Generally he owes a non-resident return to the state for wages where he worked. He also owes a return to his state of residence for all his income; they will usually allow him a credit for taxes paid to the state where he worked. He is responsible for paying any balance due in either state. If there is a refund, the state(s) normally send it to him. Not sure by what you mean by "any funds to transfer in" ? Also don't understand why he owes sales tax to the non-resident state. If he made out of state purchases, he would normally owe sales tax to his resident state

harmony
Posts: 503
Joined: Sun Nov 24, 2013 1:35 am

Re: State Tax ? Resident / Non-Resident

Post by harmony » Tue Mar 20, 2018 3:55 pm

Generally he owes a non-resident return to the state for wages where he worked. He also owes a return to his state of residence for all his income; they will usually allow him a credit for taxes paid to the state where he worked. He is responsible for paying any balance due in either state. If there is a refund, the state(s) normally send it to him. Not sure by what you mean by "any funds to transfer in" ?
The resident state would be “transferring in” from the non-resident state the amount due to the resident state. However, for 2017, his tax calculation in the non-resident state did not meet the taxable threshhold for that state, so most of it will be refunded. He expects that they will take out the sales tax due, but not what is due to the home state. In years past, he always had a tax obligation with the non-resident state, so there were funds that the home state could take from. There is a vastly different tax threshhold for these two states and this is the first year that he doesn't owe non-resident income tax. (He was a student with a job.) He's supposed to provide copies of both states' forms, but the information on them may appear to be discordant.
Also don't understand why he owes sales tax to the non-resident state. If he made out of state purchases, he would normally owe sales tax to his resident state
Since he also lives in the non-resident state (not his domicile since he intends to return to home state), any internet purchases he makes while living in the non-resident tax haven't yet paid sales tax. This particular state has a line on their non-resident tax form requiring that the filer pay any unpaid sales tax due, or the filer must check-off that none is due. When I travel to that state, I pay their sales tax rate. While he lives there and makes out-of-state purchases, he becomes obligated via their non-resident tax form.

harmony
Posts: 503
Joined: Sun Nov 24, 2013 1:35 am

Re: State Tax ? Resident / Non-Resident

Post by harmony » Tue Mar 20, 2018 4:24 pm

I read the home state out-of-state credit form over again. It says: Only residents with a tax liability in another state . . . may reduce their tax liability by claiming an out-of-state credit. While he will be filing the out-of-state form to get his refund and pay the sales tax due, he had no income tax liability; so we will go by that, and not file the form for the credit. Lucky his tax is low enough so he won’t have a late payment penalty. Thanks for reading, and thank you, pshonore, for trying to help. Much appreciated.

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