How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Wallstreet Esq. Your Own Question
Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 581
Experience:  10 years experience
16356563
Type Your Tax Question Here...
Wallstreet Esq. is online now
A new question is answered every 9 seconds

I have just purchased a home in VA. I have established

Customer Question

I have just purchased a home in VA. I have established residency and rent a place in PA. I also work and draw payroll in PA. My wife does not work at this time. Should I maintain residency in PA or in VA?
Submitted: 6 months ago.
Category: Tax
Expert:  Lane replied 6 months ago.

Hi. I can help here. My name's Lane.

...

If you're asking this as it relates to state income tax, taxes in VA are lower than PA. The Tax Foundation has PA in the top 10 states for overall tax burden.

...

However that MAY not matter if the only income you have is PA source income.

...

The way multi-state taxes work, is that essentially every state provides a credit for taxes paid to another state on the RESIDENT return.

...

HOWEVER all states have the right to tax their source income (income EARNED in their state).

...

SO even if you left your residence in VA, VA would tax all of the income (again, your resident state taxes ALL income worldwide, but provides a credit for taxes paid to other states) and then provide a credit for what it can (at it's lower rates) the rest will end up being taxed at PA rates.

...

This is how this ALWAYS works out becasue a state can only credit all of the tax owed TO it ... so those who file multi-state returns (I have several clients that do) only pay on the income once, but end up paying at the higher state's rates.

...

Where you do the withholding doesn't really matter in the end, you'll owe what you owe, when it comes time to file that one resident return and one non-resident return. (if you had everything withheld and paid to PA, then you would owe VA what you owe them at the lower rate... and that's what would be refunded by PA (in that scenario).

...

So given that everything will net out to your having to pay at the higher state's rate, if you CAN establish residency in PA (owning a house in VA) it would make things simpler becasue you'd only have to file the PA return.

...

Have I understood your question correctly?

...

let me know

...

Lane

..

..

I hope this has helped. … Please let me know if you have any questions at all, before rating me

...

If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit") ... Otherwise I receive no crediting for the work here.

...

Thank you!

Lane

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.