How do I fix previous returns for states we never should have paid taxes in?

[user17515633536]

My company had me paying AL taxes instead of MS for the past several years. Because of this, we've had to owe MS & get a small amount back in refund from AL. How do I fix this?

[Mike9241]

file amended returns for AL. if the income was reported on w-2's or 1099s.  You may want to call AL dept of revenue to find out what they want as proof the income is not taxable there. They may want the employer to file corrected tax forms and you to include copies with the amended returns.  

[Hal_Al]

For a more specific answer, you need to provide more details of your situation.

This is the general rule: The income is work state (WS) source income since it was earned there. Resident States (RS) tax all their resident's income, regardless of where earned. You will file a non-resident tax return for the WS and report the WS income. You will file a full year resident return for the RS, reporting all your income. The RS will give you a credit, or partial credit for any tax paid to the WS.

Based on what little info you have provided, your company may be doing it correctly (withholding AL tax because you work there).

Q.  Because of this, we've had to owe MS & get a small amount back in refund from AL. How do I fix this?

A. Assuming you're a MS resident, working in AL, it sounds like you failed to claim the credit for AL tax paid, when you filed your MS state return. 

[NCperson]

@user17515633536 you don't state it directly, but I assume you work in AL and live in MS.

You first pay tax to the state where you work (AL), so you must file there.

Then, you pay tax to the state where you live (MS) so you must also file there. 

Generally, MS will give you a credit for the lower of a) what your tax liability in AL is or b) what the tax would have been had you earned it in MS.  That way you are not taxed on the same dollar twice. 

Best for your employer to withhold in the state where you work.  

There are a few ways of fixing this:

1) be sure you are taking the credit on your MS tax return for the AL tax liability.  (Turbo Tax should be doing this automatically)

2) if you still owe MS, ask your employer if they will withhold in both states (they may not)

3) if you still owe MS, you can make quarterly payments to MS so that you do not owe comes April. 

[Hal_Al]

Q.  Because of this, we've had to owe MS & get a small amount back in refund from AL. How do I fix this?

A. Assuming you're a MS resident, working in AL, it sounds like you failed to claim the credit for AL tax paid, when you filed your MS state return.