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I am in the last phase of a job interview and will have to negotiate salary. I currently live in Florida (no state income tax), the job is in North Carolina and the company has offices in many states (10K+ employees). North Carolina taxes income at 5.75%. I will work the job remotely for about a year and then move to NC after that (the office they are hiring for is not built yet).
Do I pay NC taxes for the year I'm in Florida? I've been reading and reading and can't figure it out. The issue is that the salary they want to offer is $5K higher than what I currently make and if NC takes their share, I will be left with a $2K increase which after taxes will end up being $1400/year. So a $5K salary bump (everything else constant) gives me a salary increase of $1400. So I am debating if that's worth it or not. I will go for a $10K increase over my current salary, but need to know how the numbers figure in case they won't go that far.
This is an amazing opportunity professionally and will allow me to have a job in a city that I want to move to, but I do want some sort of increase in pay - because we all know that once you get in it's very hard to get any raises.
Are they going to pay you as an employee and take out taxes or pay you on a 1099 as an independent contractor? If an employee, I know when I worked for an out of state company, they took out taxes for the state I lived in, not where they were based.
I think it would be fair to ask the company before you discuss salary.
Are they going to pay you as an employee and take out taxes or pay you on a 1099 as an independent contractor? If an employee, I know when I worked for an out of state company, they took out taxes for the state I lived in, not where they were based.
I think it would be fair to ask the company before you discuss salary.
It would be a W-2. I will ask to make sure, but salary negotiations will happen before that I think. I'm working with a recruiter and they don't really care, they just want you to accept the job if it's offered. I will make the case to her, but want to be prepared on all sides.
First off, congrats on making it so far through the interview process!
Next, it would be best to check with a tax professional. State income taxes vary from state to state, some base the tax rate off of permanent residence, others base it off the state the employer is in. Some states can have conflicting tax laws, making it even trickier.
Beware of anyone here giving you answers one way or another without citing tax law from both NC and FL. If you make a decision from some well-meaning but incorrect person here, you're the one that'll have to deal with the tax implications down the road.
You won't pay any state income tax as long as when you file you state you live in FL.
I work for an airline, few of my co-workers live where the company is based, or where we are based. People live all over the country. You only pay taxes for the state in which you live. This is why so many folks who work in Boston commute from southern NH, no state income tax .
The one exception to that is CA, but the situation doesn't apply to you at all, since you won't be in the state.
You won't pay any state income tax as long as when you file you state you live in FL.
I work for an airline, few of my co-workers live where the company is based, or where we are based. People live all over the country. You only pay taxes for the state in which you live. This is why so many folks who work in Boston commute from southern NH, no state income tax .
The one exception to that is CA, but the situation doesn't apply to you at all, since you won't be in the state.
The one exception is CA
or NY
or NE
or DE
or PA
etc
Please please please talk to a tax professional, not someone that only has experience with telecommuting from one state to another, both unrelated to your situation. Some states still collect income tax for out-of-state residents, either partially or fully.
Please please please talk to a tax professional, not someone that only has experience with telecommuting from one state to another, both unrelated to your situation. Some states still collect income tax for out-of-state residents, either partially or fully.
Certain cities in PA do charge a local tax but that would be up to the company to administer, they will know if they are based there.
CA collects tax if you earn wages while in the state like most. They are tying to force pilots to pay taxes on income for the time they overfly the state even. No, not joking.
Why guess? Go straight to the source. Only income earned while performing duties in NC is taxable. Since he lives in FL, and won't be working in NC, no income tax is due.
This does bring up a great point with those who travel for work. Most states want a tax return for work done while in the state. Most ignore this, the reporting requirements and record keeping needed is insane.
Why guess? Go straight to the source. Only income earned while performing duties in NC is taxable. Since he lives in FL, and won't be working in NC, no income tax is due.
A nonresident is required to report income received from services performed in North Carolina or from tangible property located in this State. (emphasis added)
Does "tangible property" also include company assets (like servers) that katestar would be using while telecommuting? Will katestar be remoting in to a computer or computers as part of that company's VPN architecture? This definition of "tangible property located in this State" can vary, how does NC define it?
Are you a tax professional willing to accept the legal consequences of an incorrect interpretation for katestar?
No?
Then great! We agree that katestar should talk to a tax professional to have that question answered.
Thank you for your responses. I will obviously consult with a professional, but there is no time for that now. I will just operate under the idea that I will lose 5.75% of my income to NC state tax.
Regardless of what your employer withholds from your wages, your tax liability is to the state in which you are resident at the end of the tax year.
If you file your federal taxes as a resident of Florida, and your employer withholds taxes according to a North Carolina tax schedule, you can file a non-resident NC state income tax form and get it refunded. But NC may require proof of your de facto residence in Florida.
Your employer's payroll office should withhold according to the state you tell them is your state of residence, and in your case, should be knowledgeable about that. I once worked for an employer in Kansas, a couple of blocks from the state line, and a majority of the employees lived in Missouri. They know how to deal with that, your case is not unique.
I would just phone the payroll clerk that will be issuing your check, and ask what they understand the state tax law to be in a case like yours.
Last edited by jtur88; 09-04-2015 at 06:06 AM..
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