topic I currently live in a different state than where my employer is, how will state taxes work? in State tax filing

I currently live in a different state than where my employer is, how will state taxes work?

mdubolino — Thu, 01 Oct 2020 21:03:35 GMT

Hi there - I recently moved to MO from CA, but am still employed by a CA employer. I work from home, but my employer doesn't exactly support their employees working from another state at this time. I am curious as to how taxes will work? I am still claiming the address I used to live at in CA, so they are taking out CA taxes. I know I will have to pay MO taxes as well, so will I be paying 100% of CA state taxes and 100% of MO state taxes?

Re: I currently live in a different state than where my employer is, how will state taxes work?

Hal_Al — Fri, 02 Oct 2020 13:09:20 GMT

The general rule is: your report all your income on your home state return, even the income earned out of state. You file a non-resident state return for the state you worked in and pay tax to that state. Your home state will give you a credit, or partial credit, for what you paid the non-resident state. You will have to file a non resident MO state return and pay MO tax on the income earned there.. You will also file a CA full year resident return and calculate tax on ALL your income. CA will give you a credit, or partial credit, for the tax you pay MO. So, there will be little or no double taxation. Do the nonresident state return first.

Re: I currently live in a different state than where my employer is, how will state taxes work?

TomD8 — Fri, 02 Oct 2020 14:26:08 GMT

"I recently moved to MO from CA"

If you've literally moved to MO and given up your home in CA, then for 2020 you will file as a part-year resident in both CA and MO.

Once you become a resident of MO, the income you earn by working remotely in MO is not taxable by CA. It is fully taxable by your new home state of MO. The issue is where you actually (physically) work, not where your employer is located. CA can only tax non-residents on work income earned from work actually performed in CA. The only exception would be if you were paid as an independent contractor and you received a 1099-MISC at year's end instead of a W-2 .

You become a resident of MO for tax purposes on the day you begin living in your new domicile (your main, primary home) in MO. You remain a resident of CA - for tax purposes - until that day.

Finally, if your employer cannot or does not withhold MO taxes from your pay after your move, you should start making quarterly estimated tax payments to MO. Here's a link to the MO estimated tax form and instructions:

https://dor.mo.gov/forms/MO-1040ES_2020.pdf

MO estimated taxes can also be paid online if you prefer:

https://dor.mo.gov/personal/payonline.php

Re: I currently live in a different state than where my employer is, how will state taxes work?

mdubolino — Fri, 02 Oct 2020 16:48:20 GMT

Thank you for the response! That is very helpful info! I guess my main concern is that I currently am using my friends home address in CA as the address my employer has on their records. They don't currently support employees working out of state, so I am wondering if I can make this all work under the radar, but still keeping it legal paying all taxes that I am responsible for.