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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Well, here is the deal. My husband works out of a business

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Well, here is the deal. My husband works out of a business in the state of Kansas, but we live in Missouri. We asked his employer to take out state income taxes for both states (out of his pay check), but they said they only deal with Kansas and not Missouri and would not take state income taxes out for Missouri. My question is, what is going to happen this tax season. We always get a income tax refund (we itemize). But I am confused about the 2 states. Are we going to get a refund from Kansas and owe Missouri or what? I asked our usual CPA and she said to request the employer to take out taxes for Missouri. We did that and told her what they said about not doing it, she then said, she just did not know what would happen until after we filed this year. Do you have a better answer than just"we'll wait and see"?
Submitted: 5 years ago.
Category: Tax
Expert:  Merlo replied 5 years ago.
Hello tbrn,

Does your husband actually physically work in the state of Kansas or does he work in Missouri?

Did this company withhold Kansas state taxes from his paychecks?

Customer: replied 5 years ago.
Yes my husband physically works in Kansas and Missouri. He is a delivery man/truck driver. The depot/office is located in Lenexa, Kansas, just over the MO line, so his job takes him from say; Kansas City, KS into Kansas City, MO and so on.( We live in MO) Yes, the employer is taking out state taxes for Kansas, but nothing for the state of MO, even though we repeatedly asked them to take out for both states. My usual CPA, just does not know what will happen when we file this year. This similar thing happened to me years ago. I am a nurse and back then I was a home health nurse. The company was home-base in Lenexa, KS, but I physically worked out of an office of theirs in Missouri. All my home health visits were in MO. However, they only took out state taxes for MO and when I filed, I ended up having to pay taxes to Kansas, because that was where the main office and payroll came from. I did not want this to happen to my husband, because he makes way more money now, then I did then. Thank you for your help!!!
Expert:  Merlo replied 5 years ago.
Hello again tbrn,

If your husband physically works in the state of Kansas, which it sounds like he does, then he will be liable for state tax in Kansas, and he will also be liable for filing a state tax return in Missouri since he is a resident in that state.

However, since the nature of your husband's job is that he is a delivery driver, his income will all be considered as derived from the state of Kansas. This is because his company is based in Kansas and this is apparently where he starts and ends his work day. The fact that he may cross the state line during the day to make deliveries will still not attribute any of his income as being from a Missouri source. He is merely making deliveries in that state. That being the case, here is what will happen.

Your husband will file a state tax return with the state of Kansas as a non-resident, and he will pay Kansas state tax on his income from that company. At the same time he will file a tax return (or a joint return with you) in the state of Missouri since he is a resident here. However, on your Missouri return you will then claim a credit for the state taxes paid to Kansas. If the Kansas state taxes are higher than what the Missouri taxes are on that same income, then he will owe no Missouri state tax on the income from that job.

The Kansas state income tax rate for individuals is 6.45% on any income of $30,001 or higher per year. This is higher than Missouri's 6.0% rate on that same income, so the net effect is that once your husband claims credit for the taxes paid to Kansas, he should not owe any additional tax to Missouri on the income from that job.

In general, states allow you to claim credit for taxes already paid to another state in order to prevent double taxation on the same income. This will apply in your husband's situation.

When you worked for the health care company some years ago, if you physically worked from an office in Missouri and all of your health visits were in Missouri, then you should not have had to pay any Kansas state taxes. Your state taxes are not based on where the company is located. They are based on where you physically work and where you reside. Those are the two states where you have to report. But again, even though you may have to file in two states, your resident state will allow you credit for any tax paid to the state where you are physically employed to prevent the double taxation issue.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you.
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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