Temporary work in another state, both states income tax?

Forum|Forum|5 years ago
March 24, 2021
1 reply
11 views

I was hired for a new position and live in New Mexico and will be working in New Mexico. The company sent me for a training in Arizona for four weeks at which point I will return to New Mexico and work the rest of the time from there.

I just received my first pay statement and they charged me both Arizona and New Mexico state income taxes and when I asked the payroll specialist about it (who is outsourced). Her answer for me was that since I am a resident of one state but chose to work at a facility in another state I have to pay both. She suggested I request a transfer to a position in New Mexico. But I was hired for a position in New Mexico, I am just temporarily training in Arizona.

Am I required to pay both New Mexico and Arizona state income taxes?

TurboTax Online

ErnieS0

Level 15

Yes. Even though you are in New Mexico temporarily for training you are earning money so your wages are taxed by NM.

New Mexico says:

"New Mexico imposes a tax on the net income of every resident and on the net income of every nonresident employed or engaged in business in, into or from this state or deriving any income from any property or employment within this state."

Arizona will give you a tax credit for tax paid to New Mexico on your double taxed income. You will have to file two tax returns next year - an Arizona resident tax return and a New Mexico nonresident tax return.

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SteamTrain

Level 15

@akrutzler

Ok.....just Reverse the states in the above answer.....then it will be your situation....but the same general tax situation will apply. You will get a credit on your eventual NM resident tax return for the taxes you end up having to pay to AZ as a non-resident.

.....though, You will have to file an AZ non-resident tax return next year when you file your 2021 taxes. (assuming the temp training in AZ occurred this year/ 2021)

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

akrutzlerAuthor

Level 2

Does the minimum amount required for filing a nonresident tax return not apply. When I looked at it on the Arizona nonresident tax form instructions it said the threshold would be $24,800 for married filing jointly. So if I don't earn over that amount then why would withholding apply?