Telecommuters May Owe Extra State Taxes 617
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."
Re:And his point is??? (Score:1, Informative)
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?
Re:Is this a new issue? (Score:5, Informative)
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.
How does this apply to DC? (Score:5, Informative)
Re:Have a reality check (Score:3, Informative)
Re:SSH? VNC? (Score:3, Informative)
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.
Huh? (Score:5, Informative)
Re:And his point is??? (Score:2, Informative)
I'm willing to bet... (Score:3, Informative)
Re:Fairtax (Score:2, Informative)
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.
Re:Fairtax (Score:3, Informative)
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.
Re:Fairtax (Score:3, Informative)
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.
Re:How does this apply to DC? (Score:3, Informative)
Re:You're missing the point (Score:3, Informative)
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.
Representation (Score:3, Informative)
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.
Re:Fairtax (Score:2, Informative)
You can learn more about it here: http://www.fairtax.org [fairtax.org]
Re:SSH? VNC? (Score:3, Informative)
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.
Re:So does this mean.. (Score:3, Informative)
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.
No Taxation Without... (Score:3, Informative)
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?
Sigh (Score:3, Informative)
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?
Re:You're missing the point (Score:1, Informative)
Re:So does this mean.. (Score:4, Informative)
For your perusal: Renunciation of U.S. Citizenship [state.gov] right from the State Department.
Note that this doesn't excuse you from prior taxes or other financial obligations in the US.
Taxes? (Score:3, Informative)
Re:Good news for ending offshoring? No, not really (Score:3, Informative)
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.
Re:So does this mean.. (Score:1, Informative)
Re:Taxes? (Score:5, Informative)
It's also exempt from Income Tax. I think you also have to be on an overseas payroll. If you're on the payroll of a US company, they still take out FICA/Medicare.
HOWEVER, you MUST be out of the US 330 out of a 365 day period. For example, if I leave the US on 01-NOV-2005, then until 01-NOV-2006, I can only be in the US a total of 35 days, or else I owe taxes on that 80,000. There's a form you fill out with your employer (I think its form 679... I just did mine for 2006) that will keep your employer from deducting any taxes on the first 80,000.