Employer is incorporated in VA but I never physically worked there -- how to answer an income question

[siebertclan]

I am filling out a non-resident VA state return. I live in Ks. and work door to door sales and have worked in several states.  Box 16 on my VA W2 has my "State Wages, Tips, Etc." as $30,114... even though we never have physically worked in VA. My assumption is that this is in box 16 due to my employer being incorporated in VA.  They did withhold VA state taxes -- box 17 has $1290.  Now I'm being asked "VA wages, salaries, tips (if different)" than the $30,114 that's in box 16.  What do I put here?  $0 since I never PHYSICALLY worked in VA?  Or put the $30,114 simply because my employer was incorporated in VA, which I guess then makes my $13,114 "VA Source" income".  This all gets SO confusing when employers become incorporated in other states and they don't put the actual state where we did most of our work on the W2. Why put VA when we never physically worked in that state?  That seems almost negligent on the employer's part. My hubby works for Pfizer and they are incorporated in NY, but they correctly put the state of KS on W2.  Common sense to me.  Arrgghh.....

[MaryK4]

In General, you only have to pay income taxes to the state where you worked; so put zero Virginia income.  

[siebertclan]

With your answer are you also taking into account the fact that the employer is incorporated in VA??  Which makes it a "VA income source".  These types of details is what I need the Turbo Tax experts to pay close attention to before answering my tax preparation questions.  This is important so I can do my taxes correctly! This is what I found on another post and it gives lots of suggestions that I've not gotten on this question of mine.  Your thoughts?

Even though you do not live or work in VA, you will still need to file a VA return to get the taxes withheld back.  

You will also need to file a MO Non-Resident return and a KS resident return. You will need to do the MO Non-Resident return first, then you will claim a credit for taxes you paid to KS on your resident return.  

Your VA return can be done in any order, however, when you do your VA Non-Resident return, you will enter $0 for your income and then the $411.09 as taxes withheld.  This will result in a full refund of your taxes withheld for the wrong state.

If your employer has not already made the change, be sure they change your withholdings to MO and/or KS.  if they only withhold for one of the states, then you can have them withhold for MO and if you have a tax liability this year after you get the MO credit on your KS return, you can make quarterly payments to KS.  

In general, your home state will tax all in come from all sources.  What you will do is you will file a nonresident return for the states that you do not reside in, but you visit for work and earn money in.  When you file, you will fille out your nonresident states first.  Then you will fill out your resident state, claiming a credit for taxes paid to the nonresident states on your home state return.  You may or may not still end up owing money to your resident state depending on whether or not their tax rate is higher or lower than your nonresident state.  If the non resident state had a higher tax rate than your resident state, your credit will be limited to the amount of tax you would have paid to your resident state.  They will not give you a refund of the taxes you paid to the nonresident state. 

Multiple States

File Non Resident State Return

Still have questions?

[KeshaH · Accepted solution]

For the most part, income from personal services is sourced where the work is being done - for you, that's Kansas. There are a handful of exceptions in states that have a convenience of the employer rule. Virginia is not one of those states, so in your case, all of your income would be Kansas source. 

Your employer erroneously withheld state tax for Virginia when they should be withholding state tax for Kansas, since you don't actually have any Virginia sourced income. Them simply being incorporated in Virginia doesn't make your income Virginia source. Unfortunately, we see this a lot at tax time and it can be confusing for taxpayers.

Since they did withhold the tax in Virginia, you're correct that you need to file a nonresident return to get a refund of the tax withholding. Because you didn't physically work in Virginia, you would indicate that $0 of your income is Virginia sourced as @MaryK4 mentioned above. This should zero out your Virginia return and show all of your tax withholding as a refund.

You will need to pay tax to Kansas on this income since there hasn't been any tax withholding. Going forward, you can request that they stop withholding Virginia tax from your pay and instead withhold Kansas. If they refuse to withhold tax for Kansas, I recommend making estimated tax payments to Kansas to avoid having a balance due on your tax return.