Daughter worked for American Cruise lines based out of Connecticut. We live in California. Does she have to pay Connecticut state taxes?

[DanielV01 · Accepted solution]

No.  Working on a cruise line is similar to working as a truck driver:  although the cruise ship visits many ports of call (potentially in other states as well), your income is taxed in the state you live:  California.  Where the line is based out of is irrelevant.  What matters is your daughter's state of residence.  Since it is California, she pays state tax to California.

[mymaria31]

Thank you so much! I thought as much but needed to be sure! Appreciate you answering!

[denysecba]

My son (age 28) worked on cruise ships 10 out of 12 months in 2019. He stayed with us in Virginia the 2 months he is working. He received mail at our address - so even though he is technically "homeless" is he still considered a Virginia Resident?

[KarenM90]

It depends.  I assume he is a US citizen and does not have a legal residence in another state?

If that is the case, and Virginia is the place he receives mail, comes home to when he's not working, holds a VA drivers license, VA bank accounts, etc, then Virginia would be his state of residence.

Please note in this excerpt from tax.virginia.gov explains that if they were a Virginia Resident and are simply working outside Virginia, they are still Virginia residents unless they give up their Virginia residency:

[denysecba]

Thanks. The other issue seems to be that the cruise lines did not report any Social Security or Medicare wages and did not withhold anything for those. Turbo Tax did not address this. So does he not have to pay into Social Security and Medicare for the income he made for the cruises?

[ColeenD3]

If the income was reported on a Form W-2, then no. If it was reported in Box 7 of Form 1099-Misc, then she will have to file a Schedule C and pay SE taxes.

[mwbeach81]

SO how do you file that on a 1040?  Or is there no need to address it?

[LindaS5247]

Generally, you’ll need to file a nonresident state return if you made money from sources in a state you don’t live in.

Some examples are:

• Wages or income you earned while working in that state
• Out-of-state rental income, gambling winnings, or profits from property sales
• S Corporation or partnership income
• Beneficiary income from a trust or estate
• For active duty military: non-military income earned outside your state of legal residence
• If your employer withheld taxes for the wrong state

You won't need to file a nonresident return if:

• You only have interest income from an out-of-state bank account
• The other state doesn't collect income tax (Alaska, Florida, Nevada, South Dakota, Texas, Tennessee, Washington, or Wyoming)

In these cases, you'll still need to report that income on your resident state return (assuming your resident state collects income tax) as well as your federal return.

Once you've determined that you need to file a nonresident state return, the first thing you want to do is make sure you've filled out the Personal Info section correctly:

1. With your return open, select My Info in the left-hand menu.
2. Then, on the Personal info summary screen, scroll down to Other State Income, and select Edit.
3. At the Did you make money in any other states? question, answer Yes and make sure your nonresident state(s) are selected from the drop-down.
4. Select Continue to return to your Personal info summary.

After you finish your federal return, you'll automatically move to the State tab, where you'll see your nonresident state(s) listed in addition to your resident state.

Tip: To ensure accurate calculations, always complete the non-resident return first if filing in multiple states because your resident state might give you a credit for any taxes paid in that situation.

Also:

• Select the long form (if the option is available) even if TurboTax defaults to the short form.
• Only report the income attributable to the nonresident state.
• If preparing a nonresident return solely to recover erroneous tax withholdings, enter 0 on the screen that asks for the amount of income earned in that state. This will eliminate your tax liability for that state, resulting in a full refund.
• If you live in a reciprocal state, consider submitting an exemption form to your employer so you don't have to file a nonresident return next year.

Click here for a list of states with reciprocal agreements.