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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10156
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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If I were to reside in Maine yet worked and owned a company

Customer Question

If I were to reside in Maine yet worked and owned a company in New Hampshire where would I pay my state income tax?
Submitted: 8 months ago.
Category: Tax
Customer: replied 8 months ago.
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Expert:  JudgeLaw replied 8 months ago.

Good evening. I am Loren, a licensed attorney, and I look forward to assisting you.

Expert:  JudgeLaw replied 8 months ago.

If the state you work in does not have a reciprocal agreement with your “home” state (Maine and NH have no reciprocal agreement), you'll have to file a resident tax return and a nonresident tax return. On your resident tax return (for your “home” state), you list all sources of income, including that which you earned out-of-state.

Expert:  Lane replied 8 months ago.

Hi I am a different expert and have a different answer. I was hoping the previous expert was going to add in what's the most important piece here ... but did not, and that was almost 20 minutes ago.

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Although your resident state taxes all income (the tax policy there being that you use your resident state's resources) and, yes, you do file a non-resident return to report income EARNED in another state (can also happen if you own property in another state and sell for a gain or have rental income from that property)...

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To prevent double taxation (paying tax to two different states on the same dollar of income) your RESIDENT state provides a tax CREDIT for the taxes paid to the other state.

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Here's the worksheet for that from Maine: https://www1.maine.gov/revenue/forms/credits/2011/11_CrTaxPdOthrJurisWksht_revFeb12.pdf

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Expert:  Lane replied 8 months ago.

And depending on how you're organized, there can be other issues, such as a non-resident state taxing a corporation that's doing business IN their state.

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But all of this is built around the tax policy/logic that where one resides, one pays taxes on income regardless of where its generated... But states (just as the US government has a tax credit for taxes paid to another government and taxes all worldwide income) provide a credit for taxes paid to another state, on their resident tax forms. Maine offers this credit.

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It's done to prevent double taxation (although you'll end up paying tax at the higher state's rate) because your resident state can only provided a credit up to what it would tax.

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Hope this has helped … let me know if you have questions

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If this HAS helped, (and you don’t have additional questions on this), I'd really appreciate your positive rating … (by using the stars or rating request on your screen) … … That’s the only way I'll be credited a portion of what you've paid JustAnswer.

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Thank you,

Lane

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I hold a JD (Juris Doctorate, a doctoral degree in the law), concentration in Tax Law & Corporate law, an MBA (specialization in finance & tax), and BBA from Mercer University’s Stetson School of Business and Economics, as well as CFP® and CRPS designations. I've been providing tax and corporate advice since 1986.

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