Wow that’s awful. And that’s interesting because I recently was made godfather of my nephew and the godmother lives in Ohio and described it as a nice place to work and raise a family. I wonder if she hires an accountant…
New York has special rules. Certainly if you’re physically working inside NYC 20% of your work time then you would still owe them some tax. A couple of days for a conference / convention is ok, but not 20% or even 10% probably.
It’s on your employer to withhold the taxes correctly and correctly report it on your W-2 so make sure that payroll knows when you’re working where. You want your W-2 to be accurate. Then you’ll fill out the forms using what’s on the W-2.
Ah ok makes sense. Thus far I’ve worked in NYC 0% since occupancy has been so low and had thought I might do a day every week or two but that hasn’t happened yet. If it does become a thing then I imagine I’ll need to update payroll to withhold it correctly.
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I think only around 10% of school districts tax, maybe fewer. But the municipal taxes are a lot more common. Still, some unincorporated areas don’t have municipal taxes so it’s possible to avoid both.
Certainly all the cities you’ve heard of (Cincinnati, Cleveland, Columbus, Toledo, Dayton, Akron) and a huge number of smaller cities & villages have income tax for people living and/or working within their borders.
agreed
In the last 5 years or so I have only been in the office 15% of the time (give or take). I filed as a non-resident, based on a time pro-rata and that was deducted from my resident state tax.
Going forward I intend to go to the office maybe 5 times a year for “events” I want to be seen at (All EE meetings, retirements, holiday celebrations, summer outing - and the like)
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The really crazy one is Pennsylvania municipal taxes. There are seriously complex rules on how they share the tax if you live in one and work in another. And unlike Ohio, every square inch of Pennsylvania is incorporated, so if you’re in PA you are definitionally also in a taxing city.
But the rules there are so insanely complex they don’t even want you or your accountant to attempt to figure it out. You pay the higher tax rate (where you live or where you work) to one of several agencies (selected based on where you live IIRC) and then they figure out how to divvy up the spoils for you. After taking their cut, of course!
Five times a year might be considered incidental. And if one of them is an offsite summer outing then even sketchier if you need to count it. (Are you working or are you socializing with people that you happen to work with?)
I am counting that as incidental. Especially, since it is one day at a time.
I have some client company cities, where I may spend more time then my own office.
I am curious what our truly remote people do, who may come in for a week or so a few times a year.
Unless this is new, since I retired, I don’t understand. I lived in PA my entire career. I paid a wage tax while living and/or working in Phila, but no local tax based on income or wages after that. I did and still do pay local taxes, but they are all property-based.
Philly & Pittsburgh are the easy ones. If you live or work in either city, they get it all. Their tax rates are higher than anyone else too, so they are definitionally the highest rate. (I’m not quite sure what happens if you live in Philly while physically working in Pittsburgh or vice versa, but obviously that scenario virtually never happens as the cities are too far apart for that to be practical.)
But if you live in King of Prussia and work in Malvern or vice versa… now it’s a lot more complicated. For them, not for you. You just pay the higher of the two rates and you’re done, but how the money gets divvied up between King of Prussia and Malvern is more complicated. Or I guess it’s not technically King of Prussia, it’s Upper Merion township. But you get the idea.
Ohio local taxes are awful. I moved out of a RITA area into just Columbus to avoid having to file a local tax return. Well, and for a few other reasons…but I sure am glad come tax time that I don’t have to file a damn RITA return.
And it’s been a while since I did a Pennsylvania return, but my recollection is that the cities are just taxing Medicare wages, not investment or retirement income. That’s obviously a lot simpler because for employees the employer just withholds the correct amount, the end.
It’s only the small business owners that are really paying it as part of their income tax return.
RITA is easy for tax preparers to work with but they are a bitch for taxpayers. You get behind on a $37 estimated payment and they slap you with a $150 penalty.
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Help me out with this one.
Person lives (permanently (owns a house, all the vehicles are registered there, etc., etc., etc.)) in a non-income-tax state (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming).
He has a 100% remote job where the company headquarters are in an income-tax-state. He never steps foot in the income-tax-state. That’s just where the paychecks come from. The company has no business-presence in the person’s residence state.
Does he have to pay income tax to that state?
I was reading up on this a bunch of years ago when I was contemplating a Philly employer.
The different cities have different classes… I think 4 classes. Class A is Philly & Pittsburgh, then the next biggest cities (Scranton, Allentown, maybe Harrisburg & a few others?) are Class B then Class C and then the tiny guys are Class D.
So if you live in a Class B and work in a Class C the revenue sharing is different than if you live in a Class C and work in a Class B. There are, of course, 16 different possibilities… 24 if you count out-of-state. I certainly don’t remember them all, but I do remember that Class A trumps all else.
But then Philly did reduce the rate for nonresidents at some point, but I think even the nonresident rate is higher than the suburban cities, such that your municipal income tax dollars still 100% go to Philly.
IMO, no
No, but he should ensure that payroll is not withholding to the other state. You definitely want the W-2 to be accurate.
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+1
I agree that it’s far better to get your financial arrangement with your employer correct up front; but, you should check the W-2 to see what was done.
If taxes were withheld for a state in which you don’t own income tax, then there’s the “hassle” of filing in that state to get the full refund. YMMV in terms of just how much of a “hassle” that would be.
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To close the loop:
I submitted the paperwork to get a new check for my late parents’ 2015 tax return in mid-October 2021.
I received the check in today’s mail.
Better late than never. I didn’t need “drive 90 minutes to the closest branch of the credit union where the estate account is, and then go pester the estate attorney to start the process to close the estate (and make the probate judge less grumpy)” as additional to-dos this week…but that’s life.
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I have a very wealthy friend (8 figure net worth) who files paper returns for spite since it will create work for someone to go through all the supporting docs.
Same friend thinks we’re grossly under taxed, mainly for those who have $1 more than he does.