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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4066
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I live in Kentucky and work in Ohio. Company I work for is

Customer Question

I live in Kentucky and work in Ohio. Company I work for is based in California. I have worked for them going on five years in April of this year. There is reciprocity agreement between Ohio and Kentucky on state taxes. Up to now my company has been paying state taxes to Kentucky. Now because of a cost cutting effort by company they are refusing to pay Kentucky state tax and either pay Ohio tax or have me sign paperwork to not take any state tax out at all and I pay the KY state tax.

Can they do that after setting precedent of taking out KY state taxes for the last four years? There are other people in the company who do not work in Ca or OH and their respective state taxes are taken out. The difference is that they work at home and I commute to another state. I am the only one in Kentucky that works for the company.

My other question is that if I let them take Ohio state taxes out I understand that I need to file two state income taxes at the end of the year, one to get full Ohio refund and another to pay KY. Going this route from now on, am I be obligated to make any quarterly state tax payments to KY as well?
Submitted: 3 years ago.
Category: Tax
Expert:  Stephen G. replied 3 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

I think you have it pretty well figured out.

Stephen E. Grizey :

but why have them take out Ohio taxes?

Stephen E. Grizey :

You don't owe Ohio because of the agreement between Ohio & Kentucky; otherwise, working in Ohio you would owe Ohio taxes, correct?

Stephen E. Grizey :

You'll need to make estimated payments to Kentucky as you state, so you don't want to pay in both Ohio & Kentucky unless for some reason you want to make an interest free loan to the state of Ohio..................

Customer :

Can they refuse to pay KY like they are doing to me?

Customer :

keep in mind they were paying KY for last 4 years

Stephen E. Grizey :

How much trouble do you want to cause with your employer?

Customer :

sounds like law suit correct?

Stephen E. Grizey :

Their problem would be with Kentucky & enforcing it would be hard

Stephen E. Grizey :

The general rule would be that they withhold Ohio taxes because that's where you are working

Customer :

So my best option is to accept it sign the paperwork and just make the quarterly payments to KY

Stephen E. Grizey :

The tax treaty comes in at the individual level

Stephen E. Grizey :

So, I think they are within their rights & they were withholding Kentucky as an accomodation

Stephen E. Grizey :

I don't see what the big deal is for them to do it.............

Customer :

How many payments are typically made 3 is my guess and the 4th is with your return at the end of the year right?

Stephen E. Grizey :

Do they use a payroll service like ADP or Paychek or one of those operations?

Stephen E. Grizey :

Is it a big company?

Customer :

No 43 people, ADP. Reason they are doing it is to save filing with KY. Don't know the savings.

Stephen E. Grizey :

Estimates are due 4/15,6/15,9/15 & 1/15 of the following year, ie 1/15/2012 is for tax year 2011

Stephen E. Grizey :

wow, it's no big deal with ADP; the employer tax, unemployment tax must be higher in Kentucky or something like that

Stephen E. Grizey :

Still with ADP it is routine; doesn't make sense to me?

Customer :

Nor to me.They are starting this on April 1st so my first one this year would be 4/15 or 6/15

Stephen E. Grizey :

Must be some accountant trying to look good to his boss

Customer :

Nor to me as well.

Stephen E. Grizey :

Isn't their someone else in the Company you can talk to; maybe on the operations side?

Customer :

I think you hit it on the head, new CEO

Customer :

They will start this 4/1, would my first quarterly be 6/15 then?

Stephen E. Grizey :

Yes

Stephen E. Grizey :

PIA

Customer :

Thanks, XXXXX XXXXX been a big help I am signing off and accepting.

Stephen E. Grizey :

ok, thanks very much

Stephen E. Grizey :

Please remember to "Accept", it is the only way we get credit for our work. Feedback, if you have time, and bonuses, where you think they are warranted, are always most appreciated.

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4066
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and other Tax Specialists are ready to help you

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