Slashdot Mirror
Advice on Income Taxes for the "Virtual Office"
Silas asks: "I've been working for a website development firm in Indiana, but will soon be moving from Indiana to Ohio. From Ohio, I'll continue to work for that Indiana-based firm via phone, e-mail, and the occasional commute. I'm wondering what the implications are for income taxes - namely, am I living and working in Ohio, or am I living in Ohio and working in Indiana, or some weird mutation of those? Any advice from others working in similar 'virtual office' situations?"
"Some additional info is below for IANAL and IAAL readers alike:
- The firm is an LLC based in Richmond, Indiana. I'm moving to Cincinnati, Ohio.
- I am an owner/partner of the firm, so my taxes are paid as quarterly estimates instead of being drawn from each paycheck.
- I'm interested in legally minimizing the chunk of income that the gub'ment gets.
- I'm interested in keeping my tax return as simple as possible.
I currently live in Maryland and work for a company in NY.
Tax wise I reside in Maryland and pay taxes here. My company withholds Maryland Income Tax for me automatically so if there's anything complicated, they handle it on their end, but as far as I know, you always pay income tax based on where you reside.
seriously, don't ask slashdot goons for tax advice. it's worth paying the 100 bucks or whatever to a tax firm to do your return for you, and tell you what information you need to keep track of for the next year.
http://www.in.gov/dor/assistance/index.html= default%5E20&10=TAX
https://ohiocrm.das.state.oh.us/tax/default.asp?2
It looks like Indiana and Ohio have some sort of recriprocal agreement on income taxes.
Ever dream you could fly? Get up from the Flight Sim. I Fly
In this situation, since you don't work and live in the same state, you pay no taxes at all on your income.
Or do you trust Random Slashdot Yahoo #17166?
IANAA (I am not an American) but I am a big NFL and MLB watcher. And I think that, along the way, I've spotted a potential answer to your question.
Obviously, MLB and NFL players are on the road a lot - one moment they'll be playing in California, the next they'll be in New York, then Texas and so on.
Now I'm not sure it's the case for NFL players (who will only spend eight or so days actively participating in their profession* outside their home state, where they'll play the rest of their games, train, etc) but it's true that MLB players (who will spend as much time on the road as they do at home) have to play state taxes where they are actually playing.
So, when Alex Rodriguez of the Texas Rangers plays a series in Oakland or Anaheim, then he has to pay Californian taxes on the relevant portion of his $25 million salary. When he plays a series against New York, then it's New York taxes he has to pay. And when he's playing at home, or at Houston, it's Texan taxes he's liable for.
The fact that he works for a Texas based organisation is irrelevant - the fact that he's physically doing his job in California, New York, etc is what's relevant.
In your case, I would assume that you would pay Ohio taxes for the time that you work from home and Indiana taxes for the time that you are in your parent office.
But, to quote Silence Of The Lambs, "When you assume, you make an ass out of u and me." It may be that, if you don't spend a significant portion of your time in Indiana, you don't have to worry about your occasional trips to the office.
Personally, I think you should clarify the issue with an accountant (doesn't the company have one that you can consult?) and even the relevant state authorities.
Good luck with your telecommuting. Hope it goes well. Don't forget to tell your friends that someone compared you to A-Rod...
(* I refuse to call it work.)
(** OK, so I lied. Work is a nice short word to use in this situation.)
"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg
You have nothing to worry about. I live in Cincinnati. Mark Twain(!) noted that if the world were going to end, he'd want to be in Cincinnati, since everything arrived there 10 years later. So you've got 10 years before the taxman knows you're here.
Better yet, a newspaper columnist noted that Cincinnati was once the very model of 19th Century German Liberalism - and still is! Heck, they didn't even HAVE income taxes in the 1800's!
Envy my 5 digit Slashdot User ID!