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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10097
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a W2 that has my Federal wages of $84000 wages of

Customer Question

I have a W2 that has my Federal wages of $84000 KY wages of $84000 and IA wages of $84000 - I am a resident of IA but worked in KY. Shouldn't my state wages be split and equal to my federal wages or close?
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Submitted: 8 months ago.
Category: Tax
Expert:  Lane replied 8 months ago.

Hi - I can help you here

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Yes, someone certainly made a mistake EITHER in the W-2 or actually paid in taxes to both states

Expert:  Lane replied 8 months ago.

The was the actual taxation works is that you, as resident of Iowa are liable for taxes on all income (regardless of where you earned it)

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BUT, your home state will give you a credit for the taxes paid to KY for the KY source income

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You'll need to file an IOWA resident return and a KY non-resident return

Expert:  Lane replied 8 months ago.

Depending on which state's tax rates are higher, the net effect will be that you'll end up paying taxes at the higher of the two (IOWA can only credit up to 100% of what their taxes would be)

Expert:  Lane replied 8 months ago.

So you'll likely be getting a large refund from IOWA if you didn't have any income earned in IOWA

Expert:  Lane replied 8 months ago.

See this from Iowa Dept of Revenue

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All income an Iowa resident earns is taxable to Iowa to the same extent that it is taxable on the federal return even if the income was earned in another state or foreign country. If another state or foreign country taxes that same income, then the Iowa resident may be able to claim a credit on this line. Use form IA 130 to compute the Out-of-State Tax Credit.

Expert:  Lane replied 8 months ago.

So, to recap ...If the company actually withheld and paid-in that amount to both states, you can get a refund back from your resident state for taxes paid to a non-resident state using the form I linked for you

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I hope this has helped.

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Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd really appreciate a positive rating (using the rating request, faces, or stars on your screen)

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That's the only way I'll be credited for the work here.

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Thank you!

Lane

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