Forums

You have to request a refund from each state.But your accountant is correct if you were a W-2 it will be held out.

Spoke with my CPA today, they said if you work in a state that has state income tax, then you owe that state the $$$$$.

Posted By claims_ray on 06 Feb 2010 02:30 AM
Then you spoke with the wrong CPA. You only owe taxes in your resident state if that state has state income taxes.

dholman stated that he is a TX resident, and TX does not have a state income tax.  In your opinion, does that trigger paying income taxes in those other states?

 

I read some articles on this too and it looks to me like you owe taxes in the state where you worked. But there are sometimes credits from one state for the taxes you pay in another.

It doesn't see to me that it matters what your home state taxes or doesn't tax. It's not like you are an ambassador from Texas with diplomatic immunity in California- California sees you simply as a non-resident with taxable income earned in California. You could be from Afghanistan and they would want you to pay Calif. income taxes.

I remember reading about people coming home to California from foreign trips and being told they had to pay sales tax on their overseas purchases.

Now ironically, or perhaps because of the taxation, California is due to run out of cash (again) in April. After the first few times the State issued IOUs the banks here will no longer accept them as deposits. So don't do any work for the State if you want to get paid. Schwarzenegger will be asking Washington for some bailout money.

This is why the State is so eager to give you a driving ticket or put sales tax on your internet purchase etc. We are now at 9.75% sales tax on materials in Xactimate for LA County losses- it is a huge amount of money in my opinion.

You folks in Texas have less services but WAY less taxes and you should be proud of how your state is run with a part time legislature. I don't blame you guys for wanting to secede.

And speaking about Texican Ambassadors, any of you Texans know about the Texas Embassy (Legation) in Paris (Paris France, not Paris Tx). ? It is now a bar. I have see the French embassy in Austin, from when TX was a separate country. Believe it or not, most non-Texans have NO IDEA that Texas was ever a separate country.

If one is a resident in state "A", working for a vendor out of state "B" and is sent to do inspections in states "C", "D" or "E", the money earned is generated out of state "B", not states C, D or E.   Does doing an inspection in states C, D and E actually constitute "Working" in that state since the income generated is paid out of state "B"?

Posted By Meg on 07 Feb 2010 08:32 AM

If one is a resident in state "A", working for a vendor out of state "B" and is sent to do inspections in states "C", "D" or "E", the money earned is generated out of state "B", not states C, D or E.   Does doing an inspection in states C, D and E actually constitute "Working" in that state since the income generated is paid out of state "B"?

As a resident of state "A", working as a W2 employee for a vendor in state "B", and working claims in state "C", my W2 shows the income I received from the claims I worked in state "C" separate from other income.  I then go to the state's website to determine if I have to pay taxes on that income. 

Also, I asked a vendor for whom I've worked as a 1099 employee and received this response:

"Each contract laborer who earns more than $600 would receive a single 1099 from his/her employer. If work were conducted in state(s) where state income taxes are imposed, then the contract laborer should consult www.irs.gov or his/her tax consultant as to how best to file taxes. Each state is different. If a ******* employee worked in multiple states for us, I would be happy to breakdown earnings by state. I would assume that other employers would be accomodating as well."

Posted By Meg on 07 Feb 2010 08:32 AM

If one is a resident in state "A", working for a vendor out of state "B" and is sent to do inspections in states "C", "D" or "E", the money earned is generated out of state "B", not states C, D or E.   Does doing an inspection in states C, D and E actually constitute "Working" in that state since the income generated is paid out of state "B"?

in 2009 I was a resident of California, worked 4 months in Michigan for a vendor based in Alabama.

Michigan is one of about 5 or so "taxing states" that demands income tax be withheld (from W-2 Employees) working IN THAT STATE regardless of your residence or company point of presense.  I spoke with the payroll dept of my vendor, as well as the actual State of Michigan tax dept to get a grip on it, because tax was deducted every week for 4 months from my checks.  No way around it if you are on a W-2.

I will be exploring getting some of that money back with a tax form for Michigan, and do happen to reside in one of the other taxing states which also wants their income tax...

I operate as an LLC, but this is a disadvantage if the pay split is based on the vendor withholding 7% for self employment (SE) tax. For example, if a vendor pays 60%, and 7% on top of the 60% is withheld for the feds for SE tax, then using the LLC would result in a net loss of 7%. The SE tax would not be paid by the vendor since the adjuster is actually a corporation and not an employee. If the vendor uses 1099s, then I will use the LLC. The LLC is important for risk and expense management purposes.

How are you? Are you really 51? make me feel young. For an adjuster you don't look that wrinkly. Coming to Ontario NFIP class?

I think I can answer a few of these questions. Since the mid 70's, all indpendent consulting, adjusting, and operating a computer systems engineering business has been through one of my sub s corporations in Texas. I now also have an LLC in Oklahoma but Texas is my residence. The LLC has an OK tax ID number and reports its income annually to OK. If it makes a profit, it pays a tax. As the owner I have two choices. 1. File a personal tax return showing the profit from the OK LLC on the tax return and pay taxes only on the profits earned from that LLC or 2: there is a fixed rate fee I can pay (I don't remember the formula as I have never done it) that can be considerably lower than the income tax I would pay through method 1.

I have researched this question several times over the years because we were developing software, installing and supporting point of sale systems in several states including Oklahoma.  If you just call and ask, you will get a variety of answers, some of which don't fit what the law is.  I also talked with my cpa's and tax attorneys to get the straight answer.  It was always this: We were involved with interstate commerce, being based in Dallas, delivering into the other states, and not considered a resident of that state, therefore we did not have to pay or withhold any taxes for any of the states. Some of these trips were not just for a few days.  Likewise when I was in corporate management, we often were on site in other states for 1 to 6 months installing and maintaining phone systems, but never were taxes withheld in any of those states for Texas employees.

As to the 7% fica figure, I have only run into that one time.  The IA firm paid my corporation 67% instead of 60% that he paid to those on a W-2.  You have to negotiate it, although there are a couple of well known IA firms that will not ever use an indpendent on a 1099. Using a corp or LLC eliminates many problems working as self employed including some additonal limitation of liability, but primarily is a tax advantage in many ways.