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."
SSH? VNC? (Score:3, Interesting)
Comment removed (Score:2, Interesting)
Income Tax (Score:3, Interesting)
Why not tax me for working out of another state? (Score:3, Interesting)
I worked as a flight attendant. I was based out of a nearby state. And very often, I would be sent to other airports to work out of there. So, could I possibly owe taxes in every state I worked out of?
I know this is telecommuting, but the idea is the same, I technically lived in one state and worked out of many others...
Stupid...
Ironically the Military is the Reverse (Score:5, Interesting)
Caveat: This might have changed in the past 4 years, but I know in 2001, that's how it worked. The military has been, as of late, cracking down on people who claim non-tax states as their home while having no plans of ever actually living in that state or having any ties in that state.
Make another corporate entity? (Score:3, Interesting)
That really screws the 10-500 employee businesses that make up the backbone of the US economy, of course. They have too much infrastructure to just go ahead and do this for the fairly nominal setup cost a small company would encounter, but too little to already be incorporated in multiple locations.
Re:So does this mean.. (Score:5, Interesting)
-Colin [colingregorypalmer.net]
Hmmm.... (Score:4, Interesting)
Of course, if TN has no income tax, I guess there would be no credit for it on this guy's NY taxes. *shrug*
Short sighted states (Score:3, Interesting)
But this is just short-sighted. Business will just go to states with more tax-friendly policies or maybe offshore.
What defines where you did work? (Score:3, Interesting)
This opens a great big mess-o-worms.
Re:Why not tax me for working out of another state (Score:2, Interesting)
That doesn't mean that you should worry. Truck drivers don't pay income tax to every single state they drive in...that would be silly. They have a home base that they work from. In fact, I think they are exempted from the baseball player rule. Same thing with airline stewards...I think. Ask your accountant or lawyer. *ducks*
Re:Ironically the Military is the Reverse (Score:4, Interesting)
When I was in California between 1992 and 1996, the legislature passed a law defining what qualified a person as a resident of California. If I recall correctly, the criteria were any two of home ownership, driver's license and (I think) a certain time of continuous residence. The net result was that most military members would end up being California residents (according to California) and would have to pay income tax, even if their official state of residence was elsewhere (and where they were also paying income tax). The DoD pounced on that very quickly and it was successfully challenged in court.
-h-
Re:SSH? VNC? (Score:1, Interesting)
Re:SSH? VNC? (Score:2, Interesting)
So what if he does all his coding and testing at home and then just uploads the final version?
Re:Fairtax (Score:2, Interesting)
http://www.prosper.org.au/index.php?module=Websit
(Australian link, but it should give the idea)
It taxes the rich, but only the undeserving rich
Last Year I Paid Taxes in 5 states (Score:3, Interesting)
Re:So does this mean.. (Score:3, Interesting)
And it's usually not as bad as you make out. With many countries (Canada for sure, don't know about others), the US has tax treaties that specifically avoid this double-taxation. With Canada, the US waives (at least most, maybe all) income tax it would otherwise levy on Canadian citizens in the US in exchange for Canada's doing the same for US citizens in Canada.
Re:Fairtax (Score:4, Interesting)
Also, this aligns government with the preservation and increase of wealth in its citizens. After all, under your current scheme, government has a strong incentive to increase spending on new goods in order to increase tax revenue. OTOH, if they can only tax assets, then they have a strong incentive to increase the value of assets in order to increase revenue.
This scheme also drives up the cost of goods and services and makes the cost of taxation less transparent to the end user. That adds economic inefficiency to the system and hides important information from the citizen (namely, how much of your money went to government?).
Re:Good news for ending offshoring? No, not really (Score:3, Interesting)
Go read up on John Rawl's [wikipedia.org] and The Veil of Ignorance [stanford.edu]. The basic idea is that before you are born, you don't know if you will be born as the gifted child of a wealthy family or a mentally handicapped child of a poor family. What tax system would you choose for the society you will live in before you discover the actual alternative into which you are born? Is it fair to newborn children that some are born into wealthy families and others into poor families or that some are born with great talent and others with physical or mental handicaps? To me, a fair tax system is one that balances incentives to work hard and grow the economy with the moral understanding that people don't all start out equally.
Re:Fairtax (Score:3, Interesting)
Actually, the scenario that I described with the jets occurs today. It is one of the most abused tax evasion scheme.
Today, if you take a ride on a "corporate jet" for a private purpose, all you have to report on your income tax is the equivalent cost of a commercial flight. It is a specific benefit written into the tax code by your Congress.
This means that if I am Jack Welch, I can use GE corporate jet to go vacation in Hawaii (which probably cost the company about $100k), and the tax I have to pay on that benefit is the equivalent commercial flight, which is about $500 to $1000 (tax of $100 to $400 for $100k benefit).
It doesn't stop there. The company that lent the jet can deduct the depreciation occurred on that flight.
Just look at all the guys on fortune 100 list. Almost NONE of them own their own jets. They all "borrow" the jets from the company they work for or companies they control.
Fair Tax is for poor (actually, middle class) people. Rich don't pay (unless the have no other option).
There is a reason why prominent tax attorneys make tens of millions of dollars a year. People don't pay that kind of money just to prepare 1040's...