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Paying State Taxes In A State I don't Reside

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TaxNoob

New member
The company I work for is headquartered in Pennsylvania. My office is located in South Florida. All of the employees at my office are official residents of the state of Florida, yet all of us pay Pennsylvania state income taxes. Is there a reason we are paying state taxes in a state none of us live in or even travel to?
 


LdiJ

Senior Member
The company I work for is headquartered in Pennsylvania. My office is located in South Florida. All of the employees at my office are official residents of the state of Florida, yet all of us pay Pennsylvania state income taxes. Is there a reason we are paying state taxes in a state none of us live in or even travel to?
No, you absolutely should NOT be paying PA state taxes if you neither reside in PA nor travel to PA for work. Your employer should not be withholding state taxes at all since you live in a state that does not have state income tax.
 

Taxing Matters

Overtaxed Member
The company I work for is headquartered in Pennsylvania. My office is located in South Florida. All of the employees at my office are official residents of the state of Florida, yet all of us pay Pennsylvania state income taxes. Is there a reason we are paying state taxes in a state none of us live in or even travel to?
The likely reason is that your employer is too lazy to do the set up needed to separate out payroll processing for the Pennsylvania employees and the Florida employees. You won't have to pay PA income tax if you don't reside there and didn't spend any days working there, but you may need to file a return to get a refund of the tax your employer withheld.
 

LdiJ

Senior Member
The likely reason is that your employer is too lazy to do the set up needed to separate out payroll processing for the Pennsylvania employees and the Florida employees. You won't have to pay PA income tax if you don't reside there and didn't spend any days working there, but you may need to file a return to get a refund of the tax your employer withheld.
Unfortunately, if PA is anything like a lot of other states, the OP can also expect them to fight refunding the tax. I once had Indiana tell me that if an employer withheld Indiana tax, then the employee owed Indiana tax, period. I ended up having to go to the Indiana taxpayer's advocate to get that one resolved, and its not the last time that happened.
 

Taxing Matters

Overtaxed Member
Unfortunately, if PA is anything like a lot of other states, the OP can also expect them to fight refunding the tax.
I'd start by trying to get the employer to show that the PA wages paid were zero on the W-2 but show the PA state tax that was properly withheld in the state withholding box. The state has a harder time trying to argue the matter when the return is consistent with the W-2.
 

LdiJ

Senior Member
I'd start by trying to get the employer to show that the PA wages paid were zero on the W-2 but show the PA state tax that was properly withheld in the state withholding box. The state has a harder time trying to argue the matter when the return is consistent with the W-2.
That is a really good idea. I have a client fighting the same thing with their employer (Indiana rather than PA) and that is something that the employer might actually be willing to do.
 

TaxNoob

New member
I understand. Is there any other reason besides laziness that my employer wouldn't choose to separate the payroll processing? Maybe a tax credit per employee? I'm just trying to understand if pure laziness is the only reason I'm paying another states taxes.
 

LdiJ

Senior Member
I understand. Is there any other reason besides laziness that my employer wouldn't choose to separate the payroll processing? Maybe a tax credit per employee? I'm just trying to understand if pure laziness is the only reason I'm paying another states taxes.
Its pure laziness.
 

LdiJ

Senior Member
Or cheapness, but regardless of the motivation, it's entirely wrong (and likely illegal).
I still vote for laziness. It really doesn't cost anything to simply not withhold state taxes for employees who live in a state with no state income tax. You change the state code to FL on their employee screen, or you tell the payroll service to code them FL, or, if you are doing everything manually, you simply stop withholding.

Yeah, you have to get set up for FL UC and probably FL worker's comp, but that isn't going to add any real cost since it reduces the costs on the PA end of things.
 

Taxing Matters

Overtaxed Member
I understand. Is there any other reason besides laziness that my employer wouldn't choose to separate the payroll processing?
I'm sticking with laziness as I did before. I suppose the employer could have just been clueless and never gave it any thought, but even that kind of amounts to the same thing.
 

davew9128

Junior Member
Ive seen both cluelessness and laziness and also trying to avoid filing a business return in thr employee state due to nexus.
 

FlyingRon

Senior Member
Nexus is a different issue. Just because you have an employee residing in another state doesn't necessarily give you nexus there.

I used to give our small six man company's accountant lots to do (she was the owner's wife) because I moved from state to state while I was employed there.
 

davew9128

Junior Member
Nexus is a different issue. Just because you have an employee residing in another state doesn't necessarily give you nexus there.

I used to give our small six man company's accountant lots to do (she was the owner's wife) because I moved from state to state while I was employed there.
Ron, I'm pretty sure that if the employees in question living in Florida work for a PA company, they do so remotely and yes, that's nexus. This isn't a case of Texas residents driving into Oklahoma to work.
 

FlyingRon

Senior Member
It very much depends what those employees are doing. If they're merely salesmen, then there's no tax nexus. Yes once you go beyond that, it likely is a tax nexus. However NEXUS has no bearing on whether the employees withholding/UI/etc... needs to be done based on the state they are working in.
 
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