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Question

I have lived in TX for 11 years and enjoyed no State Income Tax. I have been asked to move to Kansas by my employer. Is there anyway I can keep my residency in Texas and move to Kansas? I look forward to your answer. Please advise to XXXXX@XXXXXX.XXX. Thx!

Submitted: 25 days and 17 hours ago.
Category: Tax
Value: $15
Status: CLOSED
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State/Country relating to question: Texas

Already Tried:
Talked to my accountant but told me to talk to a tax atty

Posted by LEV 25 days and 16 hours ago.

Answer

You can keep your residency in Texas.

However if your purpose is to avoid Kansas state income tax - that will not work.

Generally state income taxes apply based either on the residency or source of income.

Even if you will not be a resident of Kansas - wages you will earned in Kansas will be from Kansas sources and taxable for that state regardless on your residency.

Kansas state income tax rates are vary based on the income from 3.5% to 6.45%.

State sales tax is 5.3% - lower than in Texas.

You may consider to negotiate with your employer to compensate your additional tax liability by increasing your wages.

Let me know if you need any help.

 

 

 

25 days and 15 hours ago.

Reply

Thank you for your response. I'm curious...I currently make my income from national sales. Our company does restoration work on businesses that have suffered building damage from storm, fire, etc. I have accounts all over the country and I receive a commission on all work performed for my clients anywhere in the country. I pay Federal tax only (because I live in Texas), even though my compensation was a result of work we did throughout the country (many different states). If I moved to Kansas and kept my residency in Texas, how would the sales that I generate be necessarily considered from Kansas sources? My company, which is headquartered in Houston, pays me via direct deposit. I'm not challenging you, I'm just trying to understand how this is different or how the IRS would see this as different. My goal, was to keep TX residency, keep my current business accounts, live in Kansas, and yes, avoid Kansas state taxes, legally. By the way, what is the definition of "residency?"

Accepted Answer

As I mentioned - the taxability of the income is mainly based on two qualifications - the source of income and the residency.

 

If you work in a specific state (physically perfom the job) - your compensation should be considered from that state sources and thus - taxable for that state (unless the state doesn't have income tax)

In additional - if you will be a resident of Kansas - all your income regardless its source is taxable for Kansas.

If the same income is taxable for another state (based on the source of the income) - you will claim a credit for taxes paid to other states on your Kansas income tax return.

 

There is no single definition of residency - each state has its own laws this matter.

A Kansas resident for income tax purposes is anyone who lives in Kansas, regardless of where he or she is employed.

You are considered a part-year resident of Kansas if you were a Kansas resident for less than 12 months during the tax year. As a part-year resident, you have the option to file your Kansas return either as a resident or as a nonresident.

If you are not a resident of Kansas, but you received income from Kansas sources, you must file a Kansas return regardless of the amount of income received from Kansas sources.

If your employer withheld Kansas taxes from your wages in error, you must also file a Kansas return in order to receive a refund, even though you had no income from Kansas sources. A letter from your employer on company letterhead and signed by an authorized company official explaining the error must accompany your return. The letter must state the amount of wages and withholding applicable to Kansas.

 

To qualify for a refund of sales tax paid on food purchases, you must meet the qualifications for residency, taxpayer status, and qualifying income.

Residency: You must have been domiciled in Kansas for the entire 12 months of 2008. To be "domiciled in Kansas" means you have established a permanent residence in Kansas and intend to remain in Kansas.

 

See for reference - http://www.ksrevenue.org/pdf/forms/ip08.pdf

Please feel free to ask for clarification if needed.

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Expert: LEV
Pos. Feedback: 99.3 %
Accepts: 
Answered: 10/28/2009

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