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If I live and work in Arizona and I also work in Utah how do I owe Arizona tax

Why do I owe Arizona so much money when I live
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5 Replies
bwa
Alumni
Alumni

If I live and work in Arizona and I also work in Utah how do I owe Arizona tax

I'm guessing AZ rates are higher than UT's rates.

The normal rules for interstate taxation are -

·         you file a non-resident return for the states where you worked but did not live, reporting only the income earned in that state.

·         you file a resident return for the state you live in reporting all of your income, no matter where it was earned. You claim on your home state resident return a credit for taxes paid to other states that you worked in. If the out of state income was from a state without an income tax, you would have no credit.

The result of these rules is that you will pay tax on the income, but only once, and the net result is it will be at the tax rate in the higher tax state.

·         If the resident state is a non-income tax state like Florida, Texas and others, the result will be that you still will owe taxes in your non-resident state.

·         If the non-resident state is a non-income tax state like Florida, Texas and others, the result will be that you still will owe taxes in your resident state.

There are some exceptions to this rule, but  can handle them. Exceptions are in "Reciprocal Tax Agreement" states (a list is here http://taxes.about.com/od/statetaxes/a/reciprocal-agreements.htm ). This URL provides information on filing multi-state returns here: https://ttlc.intuit.com/questions/1900021


If I live and work in Arizona and I also work in Utah how do I owe Arizona tax

Thank you for helping. Is there any other way of helping me understand it in flat terms. I can not seem to understand why I owe so much Arizona state tax? I live in Arizona and work part time in Arizona but I also work in utah full time.
bwa
Alumni
Alumni

If I live and work in Arizona and I also work in Utah how do I owe Arizona tax

In AZ you would be taxed on your income in AZ and UT.  You would be allowed a credit for taxes paid in UT up to the amount that would have been taxed in AZ.

(When in doubt, print the returns and review them before filing.)

If I live and work in Arizona and I also work in Utah how do I owe Arizona tax

So because I made enough in utah to pay both states, thats why im getting back from utah and because I didnt make enough in Arizona, I owe Arizona? But if I make enough in 2016 in both states, then next time I wont owe? Sorry if im a pain but I just wanna make sure im understanding correctly. This is my third time doin this but first time having to file two w2's from two states. And I have never had a problem in the past. Thank you for your patient's with me.
bwa
Alumni
Alumni

If I live and work in Arizona and I also work in Utah how do I owe Arizona tax

I'm not sure exactly what you said but:
Your home state taxes all of your income, and
Your non-resident state taxes only income earned there, and
To avoid double taxation, you get a credit in your home state for taxes paid in the non-resident state.
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