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Brandon, Esq.
Brandon, Esq., Lawyer
Category: California Employment Law
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Experience:  Has received a certificate of recognition from the California State Senate for his outstanding legal service.
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Hello, I am currently employed in Massachusetts, part-time,

Resolved Question:

Hello,

I am currently employed in Massachusetts, part-time, under a W2. I can perform 100% of my responsibilities online.

What would happen if I were to take another part time opportunity in California?

Would my overall taxes be higher or lower or relatively the same? Would I have to file state taxes in both MA and in CA or can I just file in the residing state?

Am I missing any information or other important considerations?

Thanks for your help!
PB
Submitted: 1 year ago.
Category: California Employment Law
Expert:  Brandon, Esq. replied 1 year ago.

Employment-LawExpert :

Hello and thank you for your question today.

Employment-LawExpert :

Are you online with me?

Employment-LawExpert :

Taxes are based on income. If you were to make more income, you would pay more overall in taxes. When you pay taxes, you pay taxes to the federal government, as well as state and local taxes. As to how much more, and who you would owe would depend on the job you get in California. If you work as a W2, then you would owe California Income Tax. If you were however set up a company and be paid as an independent contractor, then even if the money was paid out of California, you would only have to pay taxes in Massachusetts if that was where your business was incorporated. The tax requirement in this situation would depend on the legal structure of your business. For example, if your business is a Limited Liability Company (LLC), the LLC gets taxed separately from the owners, while sole proprietors report their personal and business income taxes using the same form. You would file in both MA and in CA, but where you file will largely determine what you were paid and how. You would want to do your state tax returns in California first, then in MA second (assuming you live in MA - you would want to to the tax return for the state you live last) The reason behind this is that you would want to have taxes from the nonresident state flow to the resident state to maximize credits or deductions for taxes already pain in other states.

Employment-LawExpert :

You are required to pay taxes on income you made while living in a state, as well as income earned from sources within that state. So, depending on where your primary place of residence is would make a big difference in how taxes are calculated.

Employment-LawExpert :

So, for example, lets say you make $10,000 from working in California. You would have to report that income to California and pay $1,000 in taxes. Since you are a MA resident, MA would also tax the $10,000, but they would give you a $1,000 tax credit for the tax you already paid in California

Employment-LawExpert :

The alternate would be true if you moved to California

Employment-LawExpert :

If you lived in both places during part of the year, then you would not only pay tax on income earned from work performed in the state, but also pay tax on all other income received while residing in the state. If you only lived in one state while working online for the other, then you would only pay tax on income earned from work performed in the state, and on income received from other sources within the state.

Employment-LawExpert :

Depending on where you lived, and what the working arrangement was, would determine exactly how your apportionment schedule was used.

Employment-LawExpert :

Depending on which state you use as your home state, and which city you move to, how much you are paid and how you are paid, will depend on how much more you pay, if at all. In California, there is a tax rate range. In MA there is a flate rate of federal adjusted gross income. If your nonresident state has higher taxes than your resident state, then you will end up paying more in total taxes because your resident state won't allow you a full credit.

Employment-LawExpert :

Additionally, if you have enough deductions to significantly reduce your taxes for your resident state, but don't have any of those for your non-resident state, you may have to pay higher taxes overall. This is because you may not have enough resident state taxes to use the full credit from the nonresident state.

Employment-LawExpert :

So, as you can see, there are a lot of considerations in this situation. I could talk for hours about all of the possibilities. However, without more specific questions or facts, I don't know if that would necessarily benefit you. The simple solution is to use a program like turbo tax who will do all of this stuff for you, or, depending on how much you make, get a CPA to get you the best return.

Employment-LawExpert :

If all of the above fully answers your question, I would be most grateful if you would remember to provide my service a positive rating, as this is the only way I will receive credit for assisting you. However, if you have any additional questions or concerns regarding anything above, please do not hesitate to ask as I will be more than happy to assist you further.

Employment-LawExpert :

Good luck!

Employment-LawExpert :

and have a wonderful rest of your day.

Customer: replied 1 year ago.

Thank you - that is quite a lengthy response. And of course, I see you have included a lot of details, but now let's see if we can simply it for Dummy 101 :)


 


1) out of all the options, which would be the best thing for me to do:


 


a. work full time in MA, reside MA, take part time contracts in CA


b. work part time in MA, reside MA, take full time contracts in CA


c. work part time in MA, reside MA, take part time contracts in CA


d. work part time in CA, reside in CA, take part time contracts in MA


e. work full time in CA, reside in CA, take part time contracts in MA


 


basically if you were to order the list above in terms of maximizing my tax rate, which would it be?


 


assume the full-time (120K) and part-time (50K) compensation is the same regardless of where the contract is happening.


 


thanks!


 

Expert:  Brandon, Esq. replied 1 year ago.

The below answers are in order of lowest amount paid in taxes given the information you have provided:

You will pay the lowest amount of taxes by working part time both places, as your total compensation will only be 100k. And, if you were only making 100k, then the option that would pay the lowest taxes is:

c. work part time in MA, reside MA, take part time contracts in CA

then:

d. work part time in CA, reside in CA, take part time contracts in MA

However, as I am sure you would prefer to be making 170k, and because while you will be paying more taxes, you will also be making more income, the way to pay the lowest taxes and receive the highest income would be:

a. work full time in MA, reside MA, take part time contracts in CA

then:

e. work full time in CA, reside in CA, take part time contracts in MA

then:

b. work part time in MA, reside MA, take full time contracts in CA

Hope that helps!

Customer: replied 1 year ago.

Thank you! That makes it really easy for me to understand what to do... basically what actions to take in order to make the most money (after taxes).


 


Also, what about the real estate tax? Would buying a property in MA or CA change the equation? Or does that not have any impact?


 


Assume a home of 400K in value.


 


Thanks so much!

Expert:  Brandon, Esq. replied 1 year ago.

You would be able to take the same deduction either way, however, the amount you would pay in property tax would actually depend on the county in which the property is located in. So, what county you buy the property in, in MA or CA would determine how much you pay, but as the rates change from county to county, it is impossible for me to give you an accurate response as to which state would be better given that regard. That being said, certain counties are much more preferable to live in than others, though of course, you may end up with a much larger home for the same money with less property tax in Riverside than in if you were to buy in Boston. Where you would rather live, however, should be something to consider.

Brandon, Esq., Lawyer
Satisfied Customers: 1851
Experience: Has received a certificate of recognition from the California State Senate for his outstanding legal service.
Brandon, Esq. and other California Employment Law Specialists are ready to help you
Customer: replied 1 year ago.

Wow, you are so thorough.


 


I guess the right question - or the actionable item for where to buy a house in either states is :


 


What are the top 4 counties in CA SF bay area to live in regarding lowest property tax?


 


And what are the top 4 counties in MA Boston area to live in regarding lowest property tax?


 


thanks so much - basically i am considering a relocation to CA from MA, but wondering whether to keep my PT job in MA (if it's even worth it) and I want to buy a house (establish a primary residence) and if so, where that should be?


 


If I worked PT in MA and full time in CA, could I still register a MA home as my primary address or residence?


 


thanks so much! i am loving this service!


 


 

Expert:  Brandon, Esq. replied 1 year ago.
I am glad that I am able to help you. However, please remember that the only way that I receive credit for assisting you is if you remember to leave a positive rating. Without one, the website will not pay me for my time with you. Additionally, please remember, that the websites terms of service ask that you only ask one question per question thread. Additional questions not relating to the original question should be asked in the same manner as the original question, or if you would prefer, by asking for me specifically here:

http://www.justanswer.com/law/expert-accident-expert/

Concerning your follow up questions, San Francisco county has a property tax rate of 1.1718%. Boston, has a property tax rate of 3.196%. Thus, it would be cheaper to live in the surrounding area of San Francisco (property tax wise) than it would be to live in the Boston are (tax wise). However, you will get a larger deduction from the real estate tax payments by living in Boston. Again, because the areas are so vastly different, it doesn't make much sense to determine where you are going to live based on the property tax when there are much larger considerations to take into account. You can live in Waban, or in San Jose, and you will pay less in property tax, but you will have to commute two hours to get into the county where you want to be.

When you talk about it being worth it, that is entirely up to you. While taxes do eat up a large chunk of salary, you are still always left with more income paid to you then paid to the government. You can absolutely register a MA home as your primary address and pay taxes that way. However, you have to be careful, because if you "move" fully to California, then they may come after you for the remaining taxes. They determine where you live by looking at where you are registered to vote, what the address on your driver's license is, if your primary residence is being rented out, etc. While it is not something that oftentimes gets audited, it is possible and it is looked at on a case by case basis.

In its regulations, the IRS states that "the mere fact that property is, or has been, rented is not determinative that such property is not used by the taxpayer as his principal residence... If the taxpayer purchases his new residence before he sells his old residence, the fact that he temporarily rents out the new residence during the period before he vacates the old residence may not, in light of all of the facts and circumstances of the case, prevent the new residence from being considered as property used by the taxpayer as his principal residence."

They have made clear that you do not have to live there, but that you should use the property the majority of the time as concerned to a different property. However, as long as you have an address where your drivers license is registered, they usually do not check into it.

It really all comes down to two things. One, where will you be able to make the most money, and two, where will you be happiest. Having lived in both San Francisco and Boston myself for a time, I can tell you that it is VERY expensive to live in San Francisco and that you will miss the seasons that you get on the east coast. That being said, I will always miss the clam chowder from Legal Seafood in Boston, and going to the wharf in San Francisco. So, ultimately, the choice is completely up to you.

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Brandon, Esq.
Brandon, Esq.
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Has received a certificate of recognition from the California State Senate for his outstanding legal service.