Out of state tax?

[The Walk of the Penguin Mich]

Last year, I filed KY state tax as a non-resident.  I had moved out of my home and switched my driver's license over to WA.  I was collecting disability from the university, which was paid out  by an insurance company in GA.  When I switched my residency over, the disability company stopped taking KY state taxes out of my disability income.   I figured that I paid tax on the part of the year that I still had my residence in KY, according to KY's tax laws.

This year, when I filed taxes (I used Turbo Tax last year), they keep wanting me to file KY state taxes too.  This makes absolutely no sense as I no longer have a residence there and am a WA resident, and have been for over a year.  As I am no longer a resident of KY, do I have to pay non resident tax on my disability (even though once I switched my residency over in the records, they stopped taking out state tax)?

[NastyWoman]

There may be something about earning income in KY.  I don't know whether it matters that the insurance company is based in GA but it may not.

[resolution]

States will want to tax you if you live there or if your income comes from there.

I work in one state and live in another, and I have to pay income tax to both. Many states that are close together will have agreements on how to split the tax but if they are far apart you will have to check their general rules on how they handle out of state income.

My residential state will give me a tax credit for what I pay to my employer's state, so my tax comes out to the same as if I worked in state.

[resolution]

I wanted to add that I don't know if they would count the disability the same as earnings or if it would matter that it is administered in a third state. I use a tax guy to figure out all our different state incomes.

[Opti]

I'd talk to a tax professional. If you had disability income last year from a

university based in Kentucky its likely considered Kentucky income.

I doubt it would be considered Washington State income, which is how it

would need to work I would suppose for you to have just income from Washington State.

I agree, I think it matters not where the insurance company is, only where the

employer who paid out disability is.

[The Captain]

KRS
141.020(4)
An annual tax shall be paid for each taxable year as specified in this section upon the entire net income except as herein provided, from all tangible property located in this state, from all intangible property that has acquired a business situs in this state, and from business, trade, profession, occupation, or other activities carried on in this state, by natural persons not residents of this state. A nonresident individual shall be taxable only upon the amount of income received by the individual from labor performed, business done, or from other activities in this state, from tangible property located in this state, and from intangible property which has acquired a business situs in this state; provided, however, that the situs of intangible personal property shall be at the residence of the real or beneficial owner and not at the residence of a trustee having custody or possession thereof. The remainder of the income received by such nonresident shall be deemed nontaxable by this state

(0-0)

Since the disability is associated with services you performed in the state it stands to reason you would be subject to KY tax on those payments even after you moved out of the state (we see this with pension payments in some states as well BTW).

You should get a credit on your resident state return for any KY taxes paid. 

This is fairly common BTW.

[Bonny]

Apr 8, 2015 15:17:14 GMT -5 The Captain said:

KRS
141.020(4)
An annual tax shall be paid for each taxable year as specified in this section upon the entire net income except as herein provided, from all tangible property located in this state, from all intangible property that has acquired a business situs in this state, and from business, trade, profession, occupation, or other activities carried on in this state, by natural persons not residents of this state. A nonresident individual shall be taxable only upon the amount of income received by the individual from labor performed, business done, or from other activities in this state, from tangible property located in this state, and from intangible property which has acquired a business situs in this state; provided, however, that the situs of intangible personal property shall be at the residence of the real or beneficial owner and not at the residence of a trustee having custody or possession thereof. The remainder of the income received by such nonresident shall be deemed nontaxable by this state

(0-0)

Since the disability is associated with services you performed in the state it stands to reason you would be subject to KY tax on those payments even after you moved out of the state (we see this with pension payments in some states as well BTW).

You should get a credit on your resident state return for any KY taxes paid. 

This is fairly common BTW.

I don't believe WA has income tax.

We are in a similar situation with needing to file both AZ & CA tax returns. We need to file the AZ one even though we don't live there anymore because of income generated by the old house. Actually it's negative income due to the depreciation.

[The Captain]

Apr 8, 2015 15:57:21 GMT -5 Bonny said:

Apr 8, 2015 15:17:14 GMT -5 The Captain said:

KRS
141.020(4)
An annual tax shall be paid for each taxable year as specified in this section upon the entire net income except as herein provided, from all tangible property located in this state, from all intangible property that has acquired a business situs in this state, and from business, trade, profession, occupation, or other activities carried on in this state, by natural persons not residents of this state. A nonresident individual shall be taxable only upon the amount of income received by the individual from labor performed, business done, or from other activities in this state, from tangible property located in this state, and from intangible property which has acquired a business situs in this state; provided, however, that the situs of intangible personal property shall be at the residence of the real or beneficial owner and not at the residence of a trustee having custody or possession thereof. The remainder of the income received by such nonresident shall be deemed nontaxable by this state

(0-0)

Since the disability is associated with services you performed in the state it stands to reason you would be subject to KY tax on those payments even after you moved out of the state (we see this with pension payments in some states as well BTW).

You should get a credit on your resident state return for any KY taxes paid. 

This is fairly common BTW.

I don't believe WA has income tax.

We are in a similar situation with needing to file both AZ & CA tax returns. We need to file the AZ one even though we don't live there anymore because of income generated by the old house. Actually it's negative income due to the depreciation.

Ahh, I forgot which state Mich was in.

Wow, that stinks!

[billisonboard]

Apr 8, 2015 15:57:21 GMT -5 Bonny said:

... I don't believe WA has income tax. ...

It does not.

[tallguy]

I have a similar issue now.  Washington resident subject to North Dakota non-resident income tax.  Not only do I not get to credit ND tax because Washington does not have a state income tax, but I cannot even deduct it from my federal return because you can deduct state income tax or sales tax but not both.  My itemized deductions include Washington sales tax.  North Dakota income tax?  Nah.  Oh well.        

[The Walk of the Penguin Mich]

I have 0 tax liability in KY according to Turbo Tax.  I ran my numbers through the form.  Only my KY disability (which was the lessor of the amounts I received) is eligible.

So the question is, do I pay to submit my form with a 0 tax liability?  

[Deleted]

Have you posted this on the tax board?  The rest of us are guessing!

[The Walk of the Penguin Mich]

Not a lot of traffic on that board.

[milee]

Apr 8, 2015 20:54:13 GMT -5 The Walk of the Penguin Mich said:

I have 0 tax liability in KY according to Turbo Tax.  I ran my numbers through the form.  Only my KY disability (which was the lessor of the amounts I received) is eligible.

So the question is, do I pay to submit my form with a 0 tax liability?  

I'd file a KY return even if it was a 0 tax liability, just to preserve your rights. Not that I think you owe taxes, but if it turns out you do - the penalties are usually lower if you filed a return (even though it was incorrect) vs if you didn't file. 

But I wouldn't pay to submit anything, since that goes against my YM nature.  Can't you just fill out a paper form and mail it? 

[Deleted]

Apr 8, 2015 22:05:03 GMT -5 The Walk of the Penguin Mich said:

Not a lot of traffic on that board.

I suspect they're pretty busy! mwcpa has been great in answering some questions I posted but that was a couple of months ago.

I'd go ahead and file the KY return.  I have found that tax authorities can be illogical and they tend to interpret absence of information in their favor.  Examples:  our residence state decided that since I didn't attach a copy of the return to the state where I worked, the credit for taxes paid to that state would be zero.  The Feds decided that since my employer left the "Taxable Amount" field blank on a form reporting a tax-free rollover from the 401(k) to an IRA, the entire amount was taxable.   We got both of those issues fixed, but the initial demand letter was pretty scary.

The most egregious grab of money by a non-resident state:  in June, 2002 I changed jobs.  I stayed in NJ for a year, then moved to KS in mid-2003.  In 2004 I received a bonus.  NJ taxes were withheld from it.  I asked the payroll people why, since I hadn't been near NJ in 2004.  It was because the bonus was based on my performance in 2003 and I'd lived part of that year in NJ.  

[The Walk of the Penguin Mich]

Ugh!

I'll download the tax forms and file this weekend.  The idea of paying $30 to TT pisses me off!

[tallguy]

Apr 9, 2015 9:18:51 GMT -5 The Walk of the Penguin Mich said:

Ugh!

I'll download the tax forms and file this weekend.  The idea of paying $30 to TT pisses me off!

Not me.  I e-mailed ND in February and had them send me a tax package (booklet and forms.)  It'll cost me a stamp.  Do your return online, print out the forms, and mail them.

Much more YM to do that!   

[Deleted]

Apr 9, 2015 9:32:15 GMT -5 tallguy said:

Apr 9, 2015 9:18:51 GMT -5 The Walk of the Penguin Mich said:

Ugh!

I'll download the tax forms and file this weekend.  The idea of paying $30 to TT pisses me off!

Not me.  I e-mailed ND in February and had them send me a tax package (booklet and forms.)  It'll cost me a stamp.  Do your return online, print out the forms, and mail them.

Much more YM to do that!   

I tried to do that with KS in 2013 and royally messed up. (I worked in MO and didn't want to download another state return.)  I don't think KS has on-line forms that recalculate and tried to do it manually.  I'm very good with taxspeak and Excel but missed a few "gotchas" including the fact that, while KS generally doesn't tax SS, DH's was indeed taxable because we're special.  (IE our income was over a threshold I missed.) 

I guess it depends on the state and how complex their tax laws are.

[The Walk of the Penguin Mich]

Apr 9, 2015 9:32:15 GMT -5 tallguy said:

Apr 9, 2015 9:18:51 GMT -5 The Walk of the Penguin Mich said:

Ugh!

I'll download the tax forms and file this weekend.  The idea of paying $30 to TT pisses me off!

Not me.  I e-mailed ND in February and had them send me a tax package (booklet and forms.)  It'll cost me a stamp.  Do your return online, print out the forms, and mail them.

Much more YM to do that!   

Last time I tried to do this with TT, they would not let me print out the forms and send them.     I tried this last year.  I've got to find the forms on KY's state web site or pay for TT and if I pay for TT, I may as well have them electronically send them.  I have no idea as to whether or not there is any place where I can do them online from KY's state web site and submit from there, or just download and print.

Thinking back, it's almost worth the $30 to not to have to fill out the forms again.  

[tallguy]

Actually, if you can download the tax forms somewhere, and you can do the return online somewhere, you could just fill in the forms manually from where you did the return, even if that site doesn't let you print without paying.  Copy the numbers into the right box, save the filing fee.  That work for you?