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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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I am a resident of Wyoming. I am employed by the Federal Govt.,

Customer Question

I am a resident of Wyoming. I am employed by the Federal Govt., DOT with the division office located in Colorado. I am a civil engineer and administer construction contracts on occasion in a Colorado National Park. Colorado state income tax is withheld. I file a non-resident return to Colorado and indicate the number of days worked in Colorado and are taxed based on the number days worked in Colorado. I should not have to pay any Colorado State Tax because Wyoming has no state tax. Is there any relief from being a Federal worker and working in a National Park operated by the government. Thirdly even though the division office is located in Colorado, my pay check is processed from FAA in Oklahoma.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
Hi and welcome to our site!The issue is that state income tax liability is based on both - residency and physical place of employment.As a nonresident of Colorado - you are correctly taxed ONLY on compensation for services you provided in Colorado.As you are working in different states - your employer must separately account for work and compensation paid for work physically done in each state.There is no difference for federal employees with some exemptions for military personal who are treated differently.So far based on your information - you correctly report compensation based on the number of days worked in Colorado and correctly file Colorado nonresident tax return.We may not avoid to be taxed on Colorado sources income regarding in which state you are living.
Expert:  Lev replied 1 year ago.
Please see for reference
https://www.colorado.gov/pacific/sites/default/files/Income6.pdf
A nonresident is required to file a
Colorado income tax return if they:
• are required to file a federal income tax return, and
• had taxable Colorado-source income.
COLORADO SOURCE INCOME
Income earned by an individual while they are not a resident of Colorado will be taxed in Colorado only if it is
considered Colorado-source income and is included in their modified federal adjusted gross income. For Colorado
purposed, the modified adjusted gross income is the federal adjusted gross income plus or minus some of the
additions and subtractions to federal taxable income that are reported on the Colorado Form 104.
Modified federal adjusted gross income shall be considered to be Colorado-source if it arises from:
1. a business, trade, profession or occupation carried on in Colorado. This would include the profit from any
business carried-on in Colorado and payments received for work performed in Colorado either as an
independent contractor or as an employee; or
...
So based on that determination - wages paid for work activities carried on in Colorado would be classified as income from Colorado sources - subject to Colorado state income tax for nonresidents.
There is no special treatment / exclusion for government employees.
Sorry if you expected differently.

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