Out of state

[EOGran]

My husband lives and works remotely in Texas. We have recently been taxed by the state of Louisiana for the years 2020 and 2021, Each year is over $6,000.00 with penalties and interest. We are also worried about all the other years. I have used turbotax for many years and followed the information that we do not have a state tax . We are sick with concern as my husband will be retiring in December. Do we owe Louisiana taxes?

[EOGran]

I should add he works 100% from home. His employer sent many employees to work from home several years before Covid. They have hired employees in many many areas throughout the U,S. not just those close by.

[xmasbaby0]

Please explain further----what exactly do you mean when you say he "lives and works remotely in Texas."      How is  Louisiana involved?   Did he earn income in Louisiana?   And you say "he" lives and works in TX.   What about you?   Have you been married and filing joint returns for those years?   Where did you live and/or work?

[taxlady28]

Did you mean to say lives in Louisiana and works remotely for a company in Texas?

[Opus 17]

We need some answers.

1. What is your state of permanent residence (your domicile)?

2. What is your husband's state of permanent residence (his domicile)?

3. Where does your husband physically perform his work (regardless of where the company is located)?

4. Where do you physically perform your work (if different from your state of permanent residence)?

5. How have you filed your last few tax returns?  Married filing jointly, or separately, and what state have you claimed as your residence?

Your domicile is your permanent home. You can only have one domicile at a time.  There is no single test, but some factors include where do you live most of the time, where is your drivers license, car registration and voter registration, where are your significant social and business relationships like church, doctor, lawyer, social clubs.  Where do you intend to return after an absence.  It is possible to live a long time in a temporary location and keep your original domicile if you plan to return.  And you can't establish a new domicile unless you take affirmative steps to abandon your previous domicile.

In general, your state of domicile (permanent residence) will tax all your world-wide income, no matter where you are living and working when it is earned.  If you both are domiciled in LA, then your spouse owes LA tax even though he may be temporarily working in TX.  However, if he is truly domiciled in TX, then he may not owe LA tax, but you may have to convince them.  We need more information about your situation. 

[TomD8]

If you and your husband were both full-year residents of Texas during the years in question, and neither of you actually (physically) performed any work within the State of Louisiana in those years, then your work income from those years is not subject to Louisiana state income tax.  Here is the relevant Louisiana statute:

https://legis.la.gov/Legis/Law.aspx?d=101932#:~:text=Every%20nonresident%20shall%20pay%20a,(3)%20Cor....

[EOGran]

I am retired due to health. We file jointly. He is a remote worker for a company in Louisiana but we live in Texas. He does not ever work in Louisiana. The company sent them home for the company's benefit long before Covid. They supply no office equipment or phone etc. Texas has no state tax but Louisiana does. TT has not led me to file for Louisiana. Perhaps the law has changed. This has now also has not just us but also  many workers who also live thousands of miles away from Louisiana supposedly owing several thousand dollars in their state tax

[EOGran]

No we live in Texas and he works in Texas 100%. We file jointly. I am retired.

[Opus 17]

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@EOGran wrote:

I am retired due to health. We file jointly. He is a remote worker for a company in Louisiana but we live in Texas. He does not ever work in Louisiana. The company sent them home for the company's benefit long before Covid. They supply no office equipment or phone etc. Texas has no state tax but Louisiana does. TT has not led me to file for Louisiana. Perhaps the law has changed. This has now also has not just us but also  many workers who also live thousands of miles away from Louisiana supposedly owing several thousand dollars in their state tax

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Louisiana is testing you.  They probably get payroll records from the employer, and want to know why you aren't paying state income tax.   LA does not tax remote work. Per the law cited above, you don't own LA income tax unless you physically live or perform the work in LA.  (For example, if he worked 1 week per year in LA, he would owe tax as a non-resident on 1/52th of his income.  Or, some people might live in Texas and commute across the border to work, they would be taxed in LA.)  If you receive a demand letter, you should reply with an explanation that you live out of state, never work within the state, and include whatever documents you think will help prove that. 

[EOGran]

Those documents have been filed. I believe his W2 lists his gross income from Louisiana. His employer refuses to amend W2s for many employees caught in this going back to 2020.

[TomD8]

Old W-2's can't be amended because the withheld taxes have long since been deposited with the state.  The old W-2's reflect what the employer actually withheld and deposited, so they in fact are correct.  The normal recourse for a taxpayer who's been taxed incorrectly is to seek a refund of the incorrect withholdings from the state.

A Louisiana non-resident who performed no work within Louisiana, not even for a single day, has no tax obligation to the state of Louisiana for his work income. 

Here are a couple of supporting citations from the Louisiana revenue code (https://revenue.louisiana.gov/LawsPolicies/LAC61_I_1304.pdf)

D. Compensation of Salaried Employees with a Constant
Rate of Pay. The Louisiana income from personal services is
the proportion of total compensation from services rendered,
which the total number of working days in the state bears to
the total number of working days both within and without
the state.

If the number of working days in Louisiana is zero, then the proportion of total compensation that is Louisiana income is zero.

Also, from the same source:

"Income from sources within Louisiana
includes compensation for personal services rendered within
Louisiana."

By implication, compensation for services rendered outside Louisiana is not Louisiana source income.

[Opus 17]

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@EOGran wrote:

Those documents have been filed. I believe his W2 lists his gross income from Louisiana. His employer refuses to amend W2s for many employees caught in this going back to 2020.

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There's no "getting caught" here.  If the employer made a mistake and listed Louisiana income (box 16) or Louisiana withholding (box 17), the employee should file a Louisiana non-resident tax return, declare zero in-state taxable income, owe no tax, and ask for a full refund of all tax withheld.  If the state wants to challenge that (audit) they have a perfect right to do so, and the taxpayer responds with whatever proof the state will accept to show they lived out of state and did not have in-state taxable income.  

This happens all the time, and is not unusual or uncommon.  The state presumes the income is taxable, you have to show otherwise.