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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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I am a New York employer that has hired salaried employees ...

Resolved Question:

I am a New York employer that has hired salaried employees who live and work in thier respective states (nj and md) How am I to deduct and forward state and possibly city income witholding taxes, or am I obliged to do so?
Submitted: 6 years ago.
Category: Tax
Expert:  Ed Johnson replied 6 years ago.

DearCustomer

You may have to withhold state taxes for New York.

Can you tell me more about the job and relationship. for example:

1. what kind of business is it?

2. What are the employee jobs?

 

Customer: replied 6 years ago.
Reply to Ed Johnson's Post: We publish children's safety books and sell ad space onto these products. These employees are sales people who receive a set salary, commission and medical benefits. They reside and sell primarily in thier respective states, however, in speaking with ny witholding state officials, they state that they have no requirement by my firm to deduct state or city witholding since they live and work elsewhere. They told me to contact each separate state regarding witholding regs, but they are too busy and not responding to calls due to excessive vol.
Expert:  Ed Johnson replied 6 years ago.

Dear studentlifline,

Based on the information you provided, I would tend to agree with your adviser. However, the reason you need to check is because of each states definition of a nexus.

If you have established a nexis in the state, then you are obliged to withhold taxes for that state.

Essentially if you are xploting the state market place, so for example, by sales, then you would be required to register in the state and withhold taxes.

For NJ> See, e.g., NJ Rev. Stat. [section] 54A:7-1(a) (employers maintaining an office or transacting business in the state and making a wage payment subject to New Jersey personal income tax to a resident or nonresident individual must withhold taxes).

Explanation: all wages earned in NJ are subject to NJ taxes. If you were to withhold NY taxes instead, that is ok, but the employee would have to pay any difference at the end of the year. (nj giving credit to ny) If you do not withhold NY taxes, you have to register with and pay taxes to nj.

for maryland, the following activities establish a income tax withholding nexus: my adivice is that if two or more conditiosnn exist that you should be registering wtih and filing taxes in Maryland.

  • Maintaining a business location in Maryland, including any kind of office.
  • Ownership or use of property in Maryland, real or personal, whether the property is rented office space or equipment used in the manufacture and distribution of goods.
  • Employees soliciting and accepting orders in Maryland.
  • Installation or assembly of the corporation's product.
  • Maintaining a stock of inventory in a public warehouse or placement of the corporation's inventory in the hands of a distributor or other non-employee representative.
  • Sales persons making collections on regular or delinquent accounts.
  • Technical assistance and training with Maryland offered by corporate personnel to purchasers or users of corporate products after the sale.
  • Corporate personnel repairing or replacing faulty or damaged goods.
  • Mobile stores in Maryland (such as trucks with driver-salesmen) from which direct sales are made.
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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