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Telecommuters May Owe Extra State Taxes
marct22 writes "According to Cnet News, the US Supreme Court refused to hear an appeal by a Tennessee programmer who was forced to pay extra taxes because he was telecommuting to a job in New York. Apparently he worked in NY 25% of the time, which he didn't argue about, but the other 75% of the time he worked from home in Tennessee, which doesn't have income taxes. Also, it appears that right now, for those of us who live in one state and telecommute in another may be doubly taxed if both have income tax. There is a Telecommuter Tax Fairness Act in the Senate, but it has not emerged from committee so has not been voted on."
Since when did not having a physical presence in a place exempt you from from their laws?
Um... since forever? Isn't that one of the great injustices of Dmitry Skylarov's arrest; that what he was doing (providing an accessible PDF reader) was completely legal when and where he did it?
"What about people who live next to state lines? Surely there are other cases where people live in one state and work in another."
Yup. I live in NJ, work in NY. Pay income taxes to NJ, NY, Federal Government. If they reinstate the commuter tax in NYC, I will also pay income tax to NYC (I did until about 4-5 years ago). Pay sales tax in NYC to the city, the county, and the state. Pay sales tax in NJ to the state. Pay property tax to my municipality in NJ. My wife pays gas tax in NJ -- I take mass transit (but still pay for roads via taxes).
The way I see it, people should pay income tax in the state that they earn the income, not the state in which they reside. If my home state wants to tax me for simply importing cash into their state, that's a problem -- since import taxes between states are illegal in the US. Besides, when I spend cash in NJ, they get to tax it then.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
It's always been my impression that this type of thing wouldn't fly, that you were just taxed in the state you live in. For an example around me, DC would dearly love to tax commuters from MD & VA who pour into the city every day yet provide no direct taxes. Every time DC tries to implement such a commuter tax, they're shot down. I didn't realize that states could do this - I assumed that if you lived in CT and worked in Manhattan, all your income tax would go to CT. Guess I was wrong.
Pennsylvania and Ohio have reciprocal tax agreements, where even if you telecommute, you pay your own resident state's taxes only. It's kind of neat, because less headaches for you. This is state tax only, you still have to look at local city taxes, depending on city you worked in.
This has been tax law for ages. If you live in one state and work in another, whether driving over the state line to work in an office, or telecommuting in, you owe taxes in both states. That's why you make sure you register your residence in the same state as your job, for the purposes of taxes. It certainly doesn't help his case that he was physically in NY 25% of the time, although many states allow you to deduct taxes paid to another state on a given income from the amount you owe them.
This also opens up states to taxing foreign nationals who never leave their country of origin....for example if some guy in Finland SSHs in to NY to work on a project. He owes NY taxes, but will they ever be collected? Probably not.
I also live in London, and I think we both know the difference between Income Tax and Council Tax. Nobody is asking this guy to pay for local amenities. However, after doing a bit more Googling, I think that the issue is not that he is being asked to pay Income tax in new York for his telecommuting, but rather that he is being asked to pay that tax on his full income, without regard for where he earns it.
Modest doubt is called the beacon of the wise. - William Shakespeare
This is a good point. If he couldn't vote in NY but was being taxed for working in NY, then he would be taxed without any representation... a principle that kinda started the revolutionary war.
The reason the Supreme Court probably refused to hear this case is specifically because there is legislation in the works to address the issue. They tend to let the legislative system work before rushing to judgement (there are exceptions; namely "political suicide" issues like abortion and gay rights which the legislators won't touch.)
FairTax would be similar to the VAT taxes in Europe. It would result in a higher sales tax rate than we currently have (to make up for the lack of taxes collected from other sources, like income tax). If it's anything like the UK, it will be upwards of 30-something percent.
Net result with FairTax: the billionaire pays less taxes than they currently do, and the working class (who has less disposable income) pays more. Helping further the disparity between the rich and poor.
Help me take back Slashdot. When did 'News for Nerds' become 'FUD and Conspiracy Theories for Extremist Nutjobs'?
Every tax proposal I see somehow provides extreme benefit to the extremely wealthy. Is the fair tax any different?
Don't confuse income and wealth. They're not the same thing at all.
Compare the widow that owns her home and has $1,000,000 in the bank making 3% interest and the programmer making $50,000 with a mortgage.
Her income is just $30,000/year compared to the programmer's $50,000, yet it's obvious she's more wealthy.
This is how rich New England Democrats can get away with advocating "taxing the wealthy", because in reality they don't really want that. They want to tax income eaners instead.
FYI: rich people hire lawyers and accountants to make sure they pay the least amount of taxes possible. They also often setup non-profit trusts and such to shelter much of their money.
Not to mention that the really, really rich (like >1 million in investments) generate their money via capital gains which is an entirely different issue.
So while the "nominal" rate in some of these systems (fair tax, sales tax, etc) may appear to decrease we must realize that the really rich aren't paying the so-called nominal rate in the first place.
Natural != (nontoxic || beneficial)
Another post says new york wants him to pay taxes on his full income.
I think whatever state the company your working for is in, despite your physical location, is the state who you should pay taxes to- for the time worked for that company only- and not have to pay it again in your home state.
Now here's a bonus question, I'm an independant contractor from Iowa, but my main client is out of california. I'm technically an employee of myself, but am receiving 'employment'/work from CA. Am I exempt from CA taxes? My tax man thinks so.
A couple hundred years later, we like to believe that the ideals expressed during the founding of the country are still important, so a complaint such as this is likely to appeal to a US citizen that has even the slightest knowledge of history.
-- $SIGNATURE
The plan is designed to be revenue-neutral, so all the money that is supplied to the federal government for road work now will be there after the plan is enacted. How much you use the roads does not necessarily affect how much you pay in taxes. How much gasoline you purchase at the retail level does.
You can learn more about it here: http://www.fairtax.org
Support the FairTax
This has been tax law for ages. If you live in one state and work in another, whether driving over the state line to work in an office, or telecommuting in, you owe taxes in both states.
I'm not a tax expert, but I do know how my own taxes work and I'm pretty sure what you just said is not right. As a consultant, I work in many different states during the year, and my firm keeps track of how many of my billable hours are in each state. At the end of the year, I file taxes by state based on the time I was billable in each state. I do not pay taxes on that income twice. Considering we're one of the largest tax firms in the world, I tend to think we're probably doing it right.
This may or may not be relevant to a telecommuting discussion, but you're claiming the tax laws, which seem ambiguous regarding telecommuting, are the same for people physically traveling and that has not been my experience.
Well assuming you are a US citizen. . . do you use your passport? Do you use all the treaties that have been signed by the U.S. government to allow you to travel freely in other countries? If you get injured or arrested while in another country are you going to use the US consulate services?
The government is not in the business of charging use fees instead it is like having insurance; you hope to god you won't need the military to come in and get your butt out of Sudan but you are really happy that they do. The US government is a social contract with the people it governs to provide them with what they expect from it: roads, trade agreements, international treaties for travel and business. All of these things cost money and we ALL use them in some sense even if not personally we benefit from them everyday. The only people would may have ANY reasonable excuse for not wanting to pay taxes are those living on their own land, growing their own food, and not using ANYTHING outside that, and even then they are using the resources of the land which they will not always own so they are in fact relying on the government to ensure that such land is available.
First, this is wrong. The states may fight over who gets to tax him, but in the end he'll only pay taxes to one state. (Yes, my wife is and accountant.) You are able to deduct taxes you pay in one state against taxes owed in another state.
Second, if he's paying taxes to NY he ought to be demanding the right to vote there. It's taxation without representation (and the right to vote against people who impose such taxes) otherwise!
Now that would make a great Supreme Court case. The guaranteed right to vote in any state that collects anything above a certain percentage of your income in taxes.
Third, I wonder if that includes City and Burough taxes in NYC?
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
"1. The tax burden shifts from those who work to those who spend."
thus hurting the people in the lowest income levels. Many of those people wither don't need to pay taxes i.e. EXEMPT or low income person who gets most, if not all, of there money back.
"2. You are only taxed on new goods. Sell your used computer, car, house, whatever, without worying about taxes."
The volume of lost tax revenue on home sales alone would intitute a huge amount of maoney you will need to recoup. That for the times you actuall keep the money. If you sell a house, and roll the money immediatly(30 days) into a new purchase, you don't pay taxes. I don't know what the upper limit is.
"3. Every head of household will receive a monthly 'rebate' check from the federal government to reimburse the taxes collected on basic necessities. The closer to the poverty line you are, the larger the check. For instance, a family of four living at the poverty line would receive a monthly check of $497.00, (estimated at the time the Fairtax book was written)."
do you reallt think people making less the 15,000 dollars spend 6000 a year in taxes on 'basic necissities'? or does rent count into this?
"4. Every pay period, you receive your gross wages. No Federal Withholding, no Social Security withholding, no Medicare withholding. Those taxes are paid from the sales tax."
I get taxed about 600 dollars a month, and I have no sales tax in this state. so now they need to get that money back through sales tax. that meand if I am taxed at 10%, I must spend 7200 dollars a monthfor the state to get the same amount of money. FYI I get about 2000 doallrs a year back.
"5. No more April 15th. It's just another spring day.
"
if 4/15 is an issue, then you are just lazy. It's not like it happens on a different time every year!
"6. Outsourcing of jobs and finances will stop as the flow is reversed to what will become the biggest and best tax haven in the world."
ummm why would people buying things in a different country want to come to a country where they would have to pay more in taxes?
The Kruger Dunning explains most post on
People say "taxation without representation" like it means something these days. There's certainly now law against it- The people living in Washington, D.C. pay federal taxes, but have no voting representatives in congress. http://en.wikipedia.org/wiki/District_of_Columbia_ voting_rights
For your perusal: Renunciation of U.S. Citizenship right from the State Department.
Note that this doesn't excuse you from prior taxes or other financial obligations in the US.
The first $80,000 or so you earn abroad is exempt and isn't subject to SSI or Medicare payroll taxes. And that's before you even touch the usual cornucopia of tax exemptions.
Okay, it's not flamebait but it is misleading. The middle and bottom in the US pay significantly more than an equitable share of taxes.
The low 50% of wage earners earn less than 2% of the total income in the US, meaning that the top 50% of earners are not pulling their weight.
More to the point, the top 10% of earners earn _way_ _way_ more than 10% of the income, (I believe it's on the close order of 90% but I can't confirm it) yet pay way less than the correct proportion.
Who, me?
You still have to file a US tax return because you have not renounced your US citizenship and/or you've realized capital gains on US-based assets. However, there is a ~80k deduction for overseas income as well as a UK-US double taxation treaty so if you're actually writing a check each year to the US treasury, you might get a new accountant.