Tax Question

Discussion in 'After Hours Lounge (Off Topic)' started by SethH, Feb 6, 2006.

  1. SethH

    SethH Cinematographer

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    I'd like to ask a couple questions and then maybe rant a little [​IMG]

    Background:
    I'm a graduate student and a full-time Virginia resident. I spent my summer in Connecticut for an internship and earned about $10,000 in CT. My wife did not earn anything in CT last summer. We both have some income in the state of VA for '05.

    Questions:
    1) Do I have to pay VA state taxes on the money I earned in CT? I've been using TurboTax online and I've either screwed something up or I do have to pay VA state taxes on that money. The way things are currently showing up I actually will end up paying more in VA state taxes than in federal income taxes.

    2) Could someone help me with the definition of Resident, Part-Year Resident, and Non-Resident? I believe I am considered a non-resident of CT since I lived there for only 3 months with no intention of staying there. My driver's license and voting registration all remained in VA. Am I correct about this, or would I be considered a Part-Year resident in CT?

    2a) Do I claim Resident status in VA or Part-Year? I have assumed Resident, but I guess that might change depending on the answer to question #2.

    Rant:
    If I'm correct that I'm a non-resident of CT, then I would like to register a quick complaint. My wife and I filed our federal tax return as "married filing jointly." However, if you're a non-resident of CT and your spouse does NOT have any income from that state, then you must complete a new FEDERAL tax return as "married filing separately" and submit that to CT. You can still file to the IRS however you'd like. So, if I'm correct that I'm a non-resident, I will have to complete a new federal tax return which is pretty annoying.

    Thanks in advance for any help.
     
  2. David Williams

    David Williams Cinematographer

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    I'm not any kind of tax professional, but I'm pretty sure the answer is yes. I don't think your home state cares where the heck you earn your living as long as you pay a set amount of it to them. At least, that's the way it works where I live. [​IMG]
     
  3. SethH

    SethH Cinematographer

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    Right, well the problem is that I have to pay taxes on it in CT as well. CT state taxes were withheld from my paychecks. I'll be getting most of that back thanks to some capital losses, but I still ended up paying some to CT. So isn't that double-taxation if I have to pay on it in VA as well?
     
  4. Michael Harris

    Michael Harris Screenwriter

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    In theory, you should pay state income tax to the state where you earned it. At least that was my experience when I moved from CT to VA in the middle of a tax year. You are not supposed to be double taxed. It is a pain to do it right, though.
     
  5. CameronJ

    CameronJ Stunt Coordinator

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    Seth,

    While I don't know the tax laws in VA, all states that I've ever dealt with (I file returns in about 10 states a year) allow residents to claim a credit for taxes paid to other states. Basically, if you would have paid 1,000 in taxes to VA had all the income been earned in VA, but you paid 400 to CT as a non-resident (which it sounds like you would be), then VA would only require you to pay 600.
     
  6. Jason Goodmanso

    Jason Goodmanso Stunt Coordinator

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    I had that happen to me when I moved from California to Washington about eight years ago. Even though I lived in California for two months, they wanted 1/6th of what I made all year to count towards my CA state income tax. The bummer part is that I got a huge raise when I moved, so I ended up oweing CA when I filed my taxes.
     
  7. Johnny Angell

    Johnny Angell Played With Dinosaurs Member

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    That doesn't sound right. I had this same situation when I moved to AR and if memory serves, this is what I had to do.

    Say I lived 4 mo in Ca and 8 mo in AR. CA wanted me to take the $ I earned in CA and multiply by 3 and use tht amount to determine what my tax rate would have been if I had been there the whole year. My CA tax was then computed on the 4 mo of earning at the computed yearly rate. I had to do the same thing with AR.

    The states don't want you to count 4 months of earnings as if that was all you earned for the year. This way they get to tax you in a higher tax bracket.
     
  8. mattCR

    mattCR Executive Producer
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    I admit, I may get stumped by this this year.

    I have already filed, all things collected, and then, this morning, I receive a 1099 I did not expect (small money, $631) however, I'm now a bit puzzled. Since I've already filed - and already received my refund - I'm unsure of where to go with this? Do I ammend my previous return?

    I was sure that people were required to get this stuff to you by Jan 31.
     
  9. Johnny Angell

    Johnny Angell Played With Dinosaurs Member

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    Yeah, I think you have to file an amended return. If you used software, I'm sure the good ones allow for that.
     
  10. DaveF

    DaveF Moderator
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    I am somewhat familar with this, having dealt with the first of the bottom two common scenarios.

    1) You move during the year. You file a state tax return for both states, claiming the income earned for the respective locations.

    2) You are a full-time resident of one state but work part of the year in a different state. The key is whether the states have a reciprocal tax agreement. If so, there should be a way to receive a credit for taxes paid in the second state. But if not, you may be required to pay taxes in both states.

    This last case seems crazy, but I know it can happen with sales (use) tax issues. NY and IN have no agreement on sales taxes. So if were to buy a car in IN, I'd pay IN sales tax. But upon returning and registering it in NY, I'd have to pay full NY use taxes. And I almost did this. Fortunately, I passed on the car in IN before learning about this unfortunate tax situation.
     
  11. Jason Goodmanso

    Jason Goodmanso Stunt Coordinator

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    Your way may have been better explained that mine - of course, I don't exactly remember since it was eight or nine years ago that I had to do the dual state tax thing. Now that I live in Washington, no more state income tax to worry about.
     

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