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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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Does the tax deduction on payroll depends on permanent residence

Resolved Question:

Does the tax deduction on payroll depends on permanent residence state or work office location? I am staying in Austin texas but my office affiliation for my company is in Phoenix AZ. Do I need to change the work location from Phoenix to Houston TX if I don't want my state tax deduction?
Submitted: 8 years ago.
Category: Tax
Expert:  MequonCPA replied 8 years ago.

DearCustomer-

 

If you are a resident of Arizona all of your income is taxable in Arizona. Normally, wages earned in another state would also be taxable by that state. However, Texas does not have an individual income tax.

 

I would recommend that you maintain the AZ withholding.

Customer: replied 8 years ago.

I have moved from Phoenix to Austin TX and my residence address is now of Austin Texas.

The tax location code has been changed by my HR from AZ to TX based on my address change. They said that the next paroll will show my tax deduction with respect to Texas.

Do I need to change my H1B visa location from Phoenix to Houston TX to get state dax deduction of texas? I could save tax in texas. But is the amendment of H1B necessary?

Expert:  MequonCPA replied 8 years ago.
Customer-

 

I read the question, but not your "Already Tried".

 

In your case if you are working in Arizona, but live in Texas, Arizona tax should be withheld. You will file an Arizona return as a non-resident (resident of Texas, not an Alien). Only your AZ earned income will be taxed in AZ.

 

I'm not sure that a change to your Visa would have any tax effect. However, if you need to change your visa to become a resident of Texas you may want to make the effort. As a Texas resident, there is no state income tax. So if you have income other than wages, the change may be warranted.

Customer: replied 8 years ago.

I am not working in Arizona. I am working in Austin TX, but was initially staying in Phoenix Arizona and my office affiliation was Phoenix AZ as my visa is tied to Phoenix AZ.

 

I moved to Austin Texas as I had to travel a lot from Phoenix to Austin on weekly basis.

Please let me know my tax will be deducted based on my residence in Austin tx from now onwards? My office affiliation is still Phoenix. Do I need to change my office affiliation from Phoenix to Houston TX by amending visa?

 

Please let me know if my question is still not clear?

Expert:  MequonCPA replied 8 years ago.
DearCustomer-

Expert:  MequonCPA replied 8 years ago.
DearCustomer-

If you are working in Texas, your withholding should be based on being a Texas resident. Changing your visa would be an additional document to support your change of status from being an Arizona resident to that of a Texas resident should Arizona dispute the change. I don't see a requirement of making the change as long as you are with the same employer, but you should review this with the HR department.

Assuming you made the moved to Texas in 2008 you will file as a part year resident of Arizona. The income earned until your move would be considered to be Arizona income. Income after the move would be Texas income.
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