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Hello,

 

I am a little confused about income tax in Washington state. I know that there isn't an income tax in Washington- but as a full-time consultant would I be considered a 'business' and have a business tax? I noticed that the government website refers to an income of less than $50K- I would be making less then that in this calendar year.

 

Thanks for your help!

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Correct there is no personal or business "income tax" in Wa state.

But yes, there is a "Business & Occupation" Tax, sometimes referred to as a B&O Tax. It is a Gross Receipts Tax and applies whether you're based in Wa state or just doing business there part time or business in many different states. As a gross receipts tax, it applies to all your gross income generated in Wa state. There are no deductions, if you sell $20,000 in services to Wa state clients, then the tax applies to that total amount. The tax percentage rate varies depending on your product or service being sold. I've no idea what $50,000 comment you refer to. As I understand it your level of Wa state sales may change how you report & calculate the tax, but everyone doing business in Wa state owes the tax. I did see a note that if your Wa state income was less than $12,000 you didn't have to pre-register with the Wa state treasurer, but you still owed the tax. It is a very complicated tax and if you intend on doing business within Wa state, you should seek professional guidance. When I was subject to this tax, it was as an out of state construction company and they have different rules than other businesses within Wa state.

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