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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11987
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi, I have an opportunity with Kellogg that would require me

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Hi, I have an opportunity with Kellogg that would require me to live in TN for about 2-3 years. I plan on manitainng my home in Kentucky, however, and my wife wuoudl actaully still live there due to several personal reasons that require her to be in KY. She does not work. I know Tennesee will tax my salary, as I would be living in a company provided aprtment, but all our joint investment income would remain with the KY address. Wondering how all that affects my KY and TN tax obligations

Lane :

Hi,

Lane :

First some good news, Tennessee doesn't have an income tax

Lane :

The state does, however, levy a tax on interest and dividend income over $1,250 per person.

Lane :

And just as a heads up, like most states with no income tax, Tennessee does have a relatively high sales tax rate of 7% on general merchandise and 5.5% on food. In addition, individual counties levy their own sales tax above and beyond the state sales tax.

Customer:

Thnaks, so likely KY will continue to tax my nicome even though I am livign in TN? The W-2 for investmetn income would be delivered to my KY residence as we are maintaing that as our home

Lane :

If you keep your residency (measured by facts and circumstances, such as keeping the home, intent to come back, wife staying, etc) ... ah beat me to it ... yes the W-2 being sent there makes it very clean

Lane :

You'll still be taxed non all income as a KY resident

Lane :

From a tax perspective it will really eb as though nothing changed ... ALTHOUGH

Lane :

you may be able to use form 2106 (unreimbursed employee expenses) to deduct anything required by the company but NOT reimbursed

Lane :

Here ya go, in the event that it's useful: Form 2106 and Instructions for Form 2106 (HTML)

Customer:

Great, Thnaks. So to sum it all up. I woudl have to see if Kellogg would list my address as KY, and withold taxes for KY, or, if they listed my address as TN, since they are calling this a relocation, and not with hold inome taxes for either state, would KY have any argument to then tax that salary income even though I was workign out of state because we maintained teh KY home? That's where I am really confused

Lane :

Yes, don't shoot the messenger here, but KY WILL say that you are still a KY resident, and therefore taxed on all income ... IF you were going to a state with an income tax that would require you to file an NR return (Non-resident tax return), then KY does have a credit for taxes paid to another state - so there's no DOUBLE taxation ... but in this scenario you'll be considered a KY resident by KY dapt of revenue, because of keeping the domicile and your intent to return

Customer:

No shooting, I promise :). Kind of figured that woudl be teh case, had a similar scenario a few years back with Michigan, but they did have income taxes, so I was filing estimated payments with KY while MIchigan was being withheld, and then got everythgn back from Michigan through teh NonResident filing.

Customer:

Thanks a lot for your help. Helps to make the decision about accepting or not a little easier.

Lane :

You employer IS supposed to withhold for your state of residency, that's the law ... however, if they play hardball with you about that, then (as you've just mentioned) you can pay estimated to KY

Lane :

Congrats on the offer ... bet TN will be nicer than MI?

Customer:

It was a screw up in their payrolll depatemnt got it cleared up after the first year. IDK about nicer, although they did have snow in MI last night, none Here YET! THANKS AGAIN

Lane :

You've very welcome ...


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Lane and 4 other Tax Specialists are ready to help you

 

Hi Greg,

 

... just checking back inhere, as I never saw you come back into the chat

 

 

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Lane

 


Thanks so much Greg!

If you'd like to work with ME again you can go here Lane and enter your question.

Thanks again,
Lane