I live in Ohio in 2023 and am moving to Idaho in 2024. I received a signing bonus in 2023 for my new job in in Idaho in 2024. Where do I pay state taxes on it?

[michael-walawend]

The new job is with a different company than the one I am currently employed at. The bonus will be paid completely in 2023. I am not doing any work for the new company currently. I start work for the new company in 2024.

[DoninGA]

You should be receiving a 2023 W-2 from the new company in Idaho with Idaho state income taxes withheld for the bonus income received in 2023.

You are going to need to file an Idaho non-resident state income tax return reporting the income and state income taxes paid.

You will also have to file a resident Ohio state income tax return reporting the income received from the Idaho company.  You will get a credit on your Ohio return for the Idaho state income taxes paid.

Complete the non-resident Idaho state tax return before the Ohio resident state tax return.

[NCperson]

@DoninGA why? the OP never set foot in ID in 2023.  

https://tax.idaho.gov/taxes/income-tax/individual-income/idaho-source-income/

see definition of Income in Idaho: 

"Work only outside Idaho during the year: You have no Idaho compensation"

[DoninGA]

It all depends on the tax form sent by the Idaho company.  If they issue a W-2 with Idaho state taxes withheld then a non-resident Idaho return would be required.

[NCperson]

@DoninGA 

<<You are going to need to file an Idaho non-resident state income tax return reporting the income and state income taxes paid.

You will also have to file a resident Ohio state income tax return reporting the income received from the Idaho company.  You will get a credit on your Ohio return for the Idaho state income taxes paid>>

But why would it work as you state above? .

If the ID company withholds ID taxes and the OP did not step foot in that state, then agreed there is a non-resident income tax form required to return the withholdings.  However, why wouldn't the income be reported on the OH return (and NOT the ID return)?  Doesn't your post suggest the tax is due to ID? 

To me, what needs to occur is the OP submits a non-resident tax return to ID for the sole purpose of getting a refund of the withholdings.  THen the income is reported to OH and taxes are paid there.  There is no credit from ID on the OH tax return.  Why isn't that the approach? 

[Opus 17]

Idaho does not have a convenience of the employer rule.  It appears that this bonus is not considered Idaho-sourced income as long as the taxpayer neither lived nor worked in Idaho in 2023.

https://tax.idaho.gov/taxes/income-tax/individual-income/idaho-source-income/

Therefore, the income does not appear to be taxable to Idaho.

If the employer gets a W-2 showing Idaho income and/or withholding, they will have to file an Idaho non-resident return and report zero Idaho income.  (In Turbotax, you have to manually allocate your income to each state.  You would allocate zero income to Idaho.)  With zero income, you would be due a full refund of any withholding.  However, the issuance of a W-2 with Idaho withholding may cause Idaho to question the circumstances and send a letter to the taxpayer asking for more information and proof, so keep copies of emails, contracts and so on, that demonstrate that you did not work or live in Idaho.  (You can visit Idaho for interviews and house hunting and that by itself will not make the bonus taxable to Idaho.  But you will want proof that your actual job didn't start until 2024.)

Alternatively, the bonus may be reported on a 1099-NEC or 1099-MISC.  That could complicate matters, since a sign-on bonus is considered wages and should be on a W-2, and that would be easy to to if the job started in 2023, because the taxpayer would already be getting a W-2.  If the employer issues a 1099 and not a W-2, we can discuss that further.

@michael-walawend Did you receive the entire gross amount of the bonus or a net amount after tax withholding?  Do you know if there was withholding for federal income tax, state income tax, social security tax, and/or medicare tax?

[michael-walawend]

Finally received the W2.... 

We received the net bonus after taxes. Federal, SS, Medicare, Idaho State Income Tax was withheld. 

As a summary of our situation: This is a signing bonus received in 2023, for a job beginning in 2024. In 2023 we lived in the state of Ohio all of 2023. We are relocation to Idaho in 2024. 

@Opus 17 - Sounds like we will file in Idaho for all of state income tax withheld to be returned to us and submit this as Ohio Income on our Ohio Income state tax return and remit the taxes there if I follow you correctly? 

[Hal_Al]

Before preparing your state returns, you may want to call the Idaho tax people and get a clarification.

I'm of the opinion the you do have ID source income and that income is taxable by ID. You report it on both you OH and ID tax returns and take a credit (for the ID tax) on the OH return. I base that opinion on the more common scenario: you retire at the end of 2022, from your job in OH, and move to AZ (or anywhere else). Your employer pays your 2022 bonus to you in 2023 and issues a separate 2023 W-2 for the bonus.  Taxable by OH or AZ?  Both. OH will take the attitude that the bonus was for work performed in OH and is thus OH source income.  AZ will tax it, because it was received while an AZ resident. In your case, the work, in ID, will be performed in the future, not the past, but the principal is the same.  

[TomD8]

The Idaho tax website is specific with regard to compensation (income reported on a W-2 is compensation):

"Work only outside Idaho during the year: You have no Idaho compensation."

Idaho Source Income | Idaho State Tax Commission

The bonus is definitely taxable by Ohio, since you received it while a resident of Ohio.  It seems to me that it is not taxable by Idaho, since by Idaho's own criteria it is not Idaho compensation.  I think this would particularly be true if no Idaho taxes were withheld on the W-2 that reported the compensation.