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Level 1

my employer withheld wrong state tax

Lived in AZ for 6 months

moved to different state but continued to work for AZ company

AZ continued to withhold AZ tax, not new state.

So what do I report to new state because I basically have not paid anything to new state?

 

1 Best answer

Accepted Solutions
Employee Tax Expert

my employer withheld wrong state tax

Even though state tax was not withheld in your new state, you will still need to file and pay tax to the new state.  You will have also overpaid to Arizona, and will be due a refund of the amounts that are overpaid.  

 

You should file your part-year returns in both states now.  This will allow for time for you to receive your refund from Arizona in time to pay the amount due to your new state for taxes not withheld.  

 

If you haven't done so already, be sure to have your employer update your withholding for 2020 so that next year things are a little easier for you!

 

 

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Employee Tax Expert

my employer withheld wrong state tax

Even though state tax was not withheld in your new state, you will still need to file and pay tax to the new state.  You will have also overpaid to Arizona, and will be due a refund of the amounts that are overpaid.  

 

You should file your part-year returns in both states now.  This will allow for time for you to receive your refund from Arizona in time to pay the amount due to your new state for taxes not withheld.  

 

If you haven't done so already, be sure to have your employer update your withholding for 2020 so that next year things are a little easier for you!

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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Level 1

my employer withheld wrong state tax

Okay

I went through the turbo tax questions for both states and divided up my income.  Would I be correct to say that I do not take a credit for the AZ tax paid because I was not taxed twice, only once by Arizona.  I have tried it both ways, with credit and without.  The without credit seems more correct in my mind because the MA tax obligation is 700, but Im getting a 500 refund from AZ, so therefore I pay MA all of that AZ refund plus 200.  If I take the credit, I still get 500 back from AZ but I only owe MA 200. So in the end I end up with a refund of 300. Which does not seem in my mind to satisfy my MA tax obligation.  Unless the MA tax departed gets that money from Arizona themselves.  

Employee Tax Expert

my employer withheld wrong state tax

The process you should follow is:

  1. Both Arizona and Massachusetts are part year returns
  2. Since you worked in Arizona the entire time it will all be taxed in Arizona.
  3. Only the portion you earned while living in Massachusetts should be taxed in Massachusetts.
  4. You are entitled to a credit for taxes paid to other states.
  5. But only based on the percentage amount that was earned in MA.

Example:  You earned a total of $10,000.  20% ($2,000) was earned while living in MA.  All of the $10,000 is taxed in AZ because you worked there.  $2,000 is taxed in MA because you lived there pat year.  If your tax bill (not refund) in AZ was $1,000, you can claim 20% ($200) as taxes paid in another state for MA.

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