Jump to Navigation
Over 30 Years of Experience handling tax controversies & tax disputes

Residency and state taxes, part 2: proposed federal law has not passed

In the first part of this post, we discussed some of the detailed rules on residency status affecting state income tax returns. We focused, in particular, on part-year residents and what state tax obligations they may have in Massachusetts.

In today's post, let's look at how states tend to treat people who live in one state but earn income in another. More specifically, we will take note of a proposed federal law to encourage more uniform standards for this type of taxation.

The proposal we are referring to is the Mobile Workforce State Income Tax Fairness Act. It is has been introduced several times in Congress in recent years. Though it has not yet passed, Congress has held detailed hearings on it.

The proposed law would impose limits on the authority of state and local governments to impose taxes on mobile workers. If you are an employee with income from multiple states, you could face income tax in both your state of residence and another state (or states). But this would occur only if you were physically in the other state working there for a specified amount of time. In each tax year, that amount of time would be more than 30 days.

The 30-day guideline would bring much greater clarity to the law because states vary considerably on how they tax - or try to tax - out-of-state residents.

Historically, taxing out-of-state employees is not something many states have made a priority. In part, this is because of the logistical challenges for both employers and employees. For employers, it can be difficult to determine withholding obligations for work that employees do in other states.

As an employee, you may be able to take an income tax credit in your state of residence for taxes you paid to other states for work performed there. But as a Forbes contributor noted in a recent article, having to deal with multiple returns is obviously a hassle.

No Comments

Leave a comment
Comment Information
Have a Question? Ask an Attorney:

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close
Visit Our
Tax Law Website
Contact Information

Levins Tax Law, LLC
1671 Worcester Road, Suite 304
Framingham, MA 01701

Framingham Law Office Map

Levins Tax Law, LLC
38 Newbury Street, 6th Floor
Boston, MA 02116

Boston Law Office Map
By Appointment Only

Phone: 508-435-0118
Toll-Free: 888-333-9501
Fax: 888-333-0291