State Income Tax Question

[Podunkadunk]

I am in the I.T. business. I work from home in Alabama. My employer is headquartered in Virginia. Do I have to file Alabama State Income Tax?

Here's another wrench in the equation - Even though I work for a company HQ'd in Virginia, the branch I work for is in Florida (which pays no state tax).

Any tax pro's out there? I really don't need any more speculation...

Thanks,
Podunk

 

[n8wrl]

Which state do they withhold for?

I am not a tax attorney so this IS speculation, but I've done what you do and ALWAYS paid income tax in the state in lived in. MI, MA, and SC. My employer withheld for me and I filed.

-Brian

 

[randy41]

Just as a general rule i'd say you have to file in Alabama. But i really don't know anything about Alabama taxes since I live in VA and do taxes here...i am a CPA.
If I were you I would go to the Alabama state tax website, find the form for filing resident income tax returns, and read the instructions....especially looking for the part that says 'who must file'.
If you lived here in VA you would have to file a resident VA income tax return.

 

[Podunkadunk]

Thanks guys. I live and work in Alabama, although it's from home. My employer takes out Alabama State Income Tax. I just moved here from Florida (no state income tax) and am really p.o'd about the whole state tax thing. They absolutely rape me! Anyhow, I appreciate your time. Looks like death isn't the only thing for certain here in 'Bama...

 

[DUMBDOG]

That is correct that if you live and work in Alabama that you pay state income taxes there. Do not know how long you have been in Alabama, but I do not hear you complaining how low the real estate taxes are there compared to Florida. I have a nephew that lives up there, his house is much bigger than ours down here, close in value, however his real estate taxes are about one fourth of ours down here.

 

[ronjhall]

I am retired now, but do consulting work for the same company. The place is in OH. Corporate office are in IL. I live in MI. I pay MI taxes only. Your place of residence is where you pay taxes. There may be other conditions that will require you to pay taxes in other states.

 

[AlanB]

I would really suggest hiring a CPA, when things go wrong, and you are sitting across from the IRS guy who say's...

"I need to see every reciept from your business for the last year"

It would have been VERY comforting to have a CPA sitting there not a book keeper.

And let me add, that AFTER you get that note from the IRS, it will be EXTREMELY difficult to find a CPA that get's within 10 feet of you on that years taxes.

I use to live in TN, and Work on Ft. Campbell KY, but more then half of FTCKY is in TN, so I worked in TN, my company headquarters where in Reston VA, but the Field Team HQ was in Fort Worth.... and I had a small business.... I hate taxes... (and we payed KY state tax for years, until we filed a lawsuit and got that changed)

Anyway, my experience has been that our CPA saves me far, far more then he costs me. And too be honest, just having him beside me if we get audited again is worth every penny. That is one sinking feeling in your stomach when you get that notice.

 

[MadReferee]

I am retired now, but do consulting work for the same company. The place is in OH. Corporate office are in IL. I live in MI. I pay MI taxes only. Your place of residence is where you pay taxes. There may be other conditions that will require you to pay taxes in other states.

Actually, your palce of residence is where you pay taxxes, and the place where you physically work is also where you pay taxes. For example, I live in NH and sometimes work in Mass. When I physically work in Mass I am liable for MA state taxes and I have to file a non-resident tax form. If I work at home for a MA client I pay no MA taxes because the work was physically done in NH. However, in this case, I usually get a 1099 for the work at home. The Feds always get their cut.

 

[Podunkadunk]

That is correct that if you live and work in Alabama that you pay state income taxes there. Do not know how long you have been in Alabama, but I do not hear you complaining how low the real estate taxes are there compared to Florida. I have a nephew that lives up there, his house is much bigger than ours down here, close in value, however his real estate taxes are about one fourth of ours down here.

Dumbdog:
I was wondering how long before someone would bring up Alabama's low, low property tax. At the risk of "hijacking" my own thread to a tangient far, far away...here goes an impromptu state to state comparo.

Florida:
-Property taxes are high
-Home insurance can be high (dependent on where you live)
-No state income tax
-Roads are in pretty good shape
-Tags for vehicles/motorcycles dirt cheap, I was paying 30-40.00 a tag
-County sales tax 7% (the county I lived in)

Alabama:
-Property taxes are dirt cheap, I pay 1/3 what I did in FL
-Insurance rate didn't change from FL to here.
-State income tax
-State tax on all groceries
-State tax on prescription medicine
-Tags for vehicles/motorcycles cost 10% of the value of your vehicle! I just payed 180.00 for a tag that last year in FL it was 42.00. It won't be so bad next year they told me...only 162.00!
-Roads are an absolute mess.
-County sales tax 9%.

I love it here, don't get me wrong. My point being, I'm no CPA, but it doesn't take one to do the math and see that it costs a heck of a lot more to live in Alabama that Florida. I know this from EXPERIENCE. I was a FL resident prior to moving here.

Every time I mention something about taxes or expense in AL, whether on this forum or with a friend (still in FL), I hear the same thing..."property taxes are so cheap there"...yada, yada, yada.

I'll take those outrageous property taxes in FL again, to not have to pay the others listed for AL that FL doesn't tax!

 

[DUMBDOG]

I know that the sales tax on food and prescriptions can add up real fast. Our problem down here is that we only live here three months of the year, so we do not get the homestead credit and receive unlimited tax increases on our home here. They have doubled in the last seven years since we have purchased the home here. In fact, if you take the real estate taxes for the year on the house and divide by the number of months that we are here, that is equal to the rent we paid on a condo for a month in 2000 when we were looking for a house.

The other advantage that Florida has over Alabama is all the tourists who help subsidize the economy through hidden or add on taxes that they pay when they come here on vacation.