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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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I recently accepted a job in Georgia and moved from Washington

Resolved Question:

I recently accepted a job in Georgia and moved from Washington state to work in GA. I still have a house in wa state and my wife still lives there (we file joint income return). We are waiting for the house in wa state to sell so at the moment we are in two different states. I am renting an apartment in GA but still paying my mortgage for my house in WA state. Am I still considered a resident of WA state for tax purposes? How does it work for state income tax purposes (WA state doesn't have state income tax and GA does). My employer is withdrawing state income tax from my paycheck, but can I get a credit back from WA state?
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.

Hello JA Customer,

 

Regardless of whether you consider yourself still a resident of WA state or a resident of GA, you would still owe GA state taxes on income you earn from physically working inside of that state's borders.

 

State taxes are due in the following instances:

 

1. All income is reported from all sources to your resident state (assuming that they have a state tax, and

2. Any income you have from a state where you physically work is reported to the state where you work, and that's state income tax applies to that income.

 

Normally the way it would work if you reside in one state but live in another is that you would file a nonresident return with the state where you work and report your income from that state and pay taxes on that income. You would then file a return with your resident state and report all income earned from all sources, but your resident state would then allow you a credit for the taxes paid to the other state.

 

In a situation where you reside in a state that does not impose a state income tax, then there is no resident return to file and no credit to apply. When you reside in a state that has no income tax, you lose the benefit of not owing state taxes on your earned income, when that earned income is from a state other than where you live and work.

 

 

Thank you JA Customer

 

 

Customer: replied 4 years ago.
Just a clarification on your statement reported in quotes below:
"When you reside in a state that has no income tax, you lose the benefit of not owing state taxes on your earned income, when that earned income is from a state other than where you live and work".

I lose the benefit of not owing state taxes because I reside in WA state (no income tax) but my wages were earned in GA (with income tax).
Expert:  Merlo replied 4 years ago.

Hello again JA Customer,

 

Yes, that is correct. When you reside in a state that imposes no state income tax, but you work in a state that does impose a tax, then you still must pay taxes to the state where you work. This is really a quite common situation, and apparently just one that you have not encountered until now.

 

There are many people who live in an area where they are right near state borders and live in one state but work in the other. When that happens, you must pay tax to the state where you work. You then report that same income to your resident state if they impose a state tax, but the resident state then allows you a credit for state taxes paid to the state where you work. In the case where your resident state does not impose a tax, there is no return to file and no credit which applies.

 

I realize this is not likely the answer you were looking for, but these same rules apply to all states, not just WA state or GA state. They are designed so that you are not double taxed on the same income by two states. But if one of those two states does not impose a tax to begin with, then you still pay tax to the one state where you work or reside.

 

If this was helpful please press the Accept button. It is the only way we receive credit for helping with these questions.

 

Thank you JA Customer

 

 

Customer: replied 4 years ago.
Thank you.
Are there any tax benefits at all to keep my residency in WA state for the period of time needed to sell the house in WA state and while my wife still lives there or you believe I should establish residency in GA as soon as possible?
Expert:  Merlo replied 4 years ago.

Hello again JA Customer,

 

As long as you still keep your residency in WA state, then the only income that is subject to GA income tax is the earned income you have from your job there. Any other income you have other than earned income, such as interest or investment income, would still not be taxable in GA. So from that standpoint you are better off to maintain your WA residency for as long as you can.

 

Once you become a full time resident of GA, all of your income from all sources will be subject to GA state taxes, and not just the income from the job you have there.

 

 

Thank you JA Customer

 

 

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and 2 other Tax Specialists are ready to help you

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