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Tax Issues with an Employer


AlexP

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Wonder if someone on the forum might have some ideas for me. I appear to need probably an accountant with good understanding of full timer issues.

 

About 4 years ago after a 3 yr stint taking care of Mom and Dad, I drove to Livingston for the Nov '11 Boot Camp, and then went to PPL and bought a 36' Motorhome and started living the life. Oh and I am employed by a multinational Tech company, whose name you would all recognize, and have been for at the time about 32 years.

 

So I was living the life and wandering around. Never more than 3-4 months anywhere usually alot less. And from WA to NH to FL to CA. About a month ago I was visited by our internal auditors. I guess they were tipped of my a business trip I did from Phoenix rather than from Livingston.

 

Anyway, when they heard what I was doing they were unhappy. First as far as the IRS (not the co is concerned) I don't have a tax home. This makes my business trips no longer tax deductable to the company or me. Then if I am working in a state, my company is supposed to be paying unemployment and state taxes to that state. (curiously when I called the employee service center, the representative assured me that if I was in a state for business purposed that was so, but if it was just for personal reasons, then no. But apparently he was incorrect.) So at this point they are reviewing my logs of the past 2 years and will be amending their tax filings, and evidently I will be too. I guess I will need to be filing in 2-3 different states for parts of last year and another 2-3 for this year. For my career, I have always done my own taxes, they are easy, I get a salary and so I don't have much of a way to protect it, so I just pay it. And paid one state return.

 

The rules appear to be a little sketchy. Most states you can visit for 30 days, but after that it is necessary to get a tax jurisdiction applied. But some are 15 (NY and CT) and some are 60 (AZ and HI) or so I am given to understand.

 

Thought I would bounce this off of you knowledgeable folk and see if I might get pointed to someone appropriate, who has experience with this kind of stuff. Who can handle the paperwork, and might be able to provide me guidance on keeping my accounting life as simple as I can.

 

Thanks

Alex

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As far as deducting the travel expenses, I can't help; mine were are all reimbursed, so no deduction. But your company is right on the state income & unemployment deductions; as well as workers comp deductions they should pay each state. My situation (before retirement) was similar in some ways, but different in other ways. I did have a permanent tax home, but whether you do or don't, doesn't matter if you're working for pay in multiple states. If I was in Az for a month or 2 or 3, managing a project in Az, then I was earning income in Az, even though my permanent home was in Colorado. Three months later I was in Utah managing a project and earning income in Utah for a few months. Many years I had to file 3 or 4 different state income tax returns, along with my home state of Colorado. I filed as a "resident" of Co, and as a "non-resident" of the other 3 or 4 states. Just as any pro athlete who plays an away game in Ca or NY owes Ca or NY income taxes on whatever they make per game for that day, regardless of where their "home" is. There are durations (vary state by state) to define when you become a "part year resident" vs a "non-resident" for tax purposes, which effects whether you also owe that state proportionate taxes on all your passive income sources not tied to any specific state.

If you're used to doing your own taxes, which I always did as well, there is no reason not to continue. You just have more forms to fill out and you need to track where you lived, for how long. The biggest complication for me was my annual bonus. I could earn up to $100,000 on top of my salary as an end of year bonus, based on profits from my projects and the company overall profits. Trying to divvy that up among 5 different states was a challenge I'm not sure I always got right, but never got audited.

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Wonder if someone on the forum might have some ideas for me. I appear to need probably an accountant with good understanding of full timer issues.

 

About 4 years ago after a 3 yr stint taking care of Mom and Dad, I drove to Livingston for the Nov '11 Boot Camp, and then went to PPL and bought a 36' Motorhome and started living the life. Oh and I am employed by a multinational Tech company, whose name you would all recognize, and have been for at the time about 32 years.

 

So I was living the life and wandering around. Never more than 3-4 months anywhere usually alot less. And from WA to NH to FL to CA. About a month ago I was visited by our internal auditors. I guess they were tipped of my a business trip I did from Phoenix rather than from Livingston.

 

Anyway, when they heard what I was doing they were unhappy. First as far as the IRS (not the co is concerned) I don't have a tax home. This makes my business trips no longer tax deductable to the company or me. Then if I am working in a state, my company is supposed to be paying unemployment and state taxes to that state. (curiously when I called the employee service center, the representative assured me that if I was in a state for business purposed that was so, but if it was just for personal reasons, then no. But apparently he was incorrect.) So at this point they are reviewing my logs of the past 2 years and will be amending their tax filings, and evidently I will be too. I guess I will need to be filing in 2-3 different states for parts of last year and another 2-3 for this year. For my career, I have always done my own taxes, they are easy, I get a salary and so I don't have much of a way to protect it, so I just pay it. And paid one state return.

 

The rules appear to be a little sketchy. Most states you can visit for 30 days, but after that it is necessary to get a tax jurisdiction applied. But some are 15 (NY and CT) and some are 60 (AZ and HI) or so I am given to understand.

 

Thought I would bounce this off of you knowledgeable folk and see if I might get pointed to someone appropriate, who has experience with this kind of stuff. Who can handle the paperwork, and might be able to provide me guidance on keeping my accounting life as simple as I can.

 

Thanks

Alex

 

Are you an I.C.E.?

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It sounds as though you have two problems. The first one is your employer and the second is how their actions will impact you. It does not sound like the folks you work for are very inclined to listen to what you think so you may not be able to influence the course of action that they are taking. That means that you will only be able to react to what they are doing.

At some point you will most likely need more than just an Accountant, a Tax Lawyer will probably be needed too. Good luck and have patience.

This is probably the best advice that I can give as well. Of course, a factor to consider is what amount of money is involved in the changes that the employer is making so far as your taxes will be changed. If the amount is small it might be best to just go along for the ride and to pay whatever is asked for since tax attorneys do not work cheaply. But it the money involved is significant, you need more than just some accountant to advise you.

 

You may also be able to get at least some advice that is sound by contacting Shawn Loring , who is a member of the forums and an Escapee.

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Jim, Thanks for the perspective. Just feels a bit funny in an RV in a park somewhere to be wracking up earnings for that state. In contrast to running a project in a state, but that seems to be the way it is. So I will adjust my perspective.

 

If I.C.E. means independent contractor, then no, I am a conventional employee.

 

Kirk, I am not going to influence the past. The internal auditors are preparing their report. There will be adjustments and I will roll with it. But going forward, I hope to me more knowledgeable, and might adjust my travels to make the paperwork simpler...... if I can..... Or just retire. Folks are gone, Kids are grown. Money is there. Just it is kind of fun somedays writing software.

 

Alex

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A thought. Doesn't take an exspensive "home" to make it a home. I purchased a piece of land. Had a metal house type buiding erected along with a concrete pad for our Teton. Building and pad 18k. Put a solar panel on to run sewer system. The land I consider an investment since I can sell when I retire likely at a profit. Small exspence for the deductions you can get. Only monthly bill is water. My son in law mowes the grass and that is a labor of love siince we send money to them anyway. We do go there a little.

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Many of us full-timers are official residents of very tiny houses (we're talking maybe 240 cubic inches). Mine is in Sioux Falls, SD, while others are in Florida or Texas. That is our home for tax purposes.

 

For 2015 my income came from various retirement sources plus what I earned in Oklahoma working on a church project. I expect that I will have to pay Oklahoma income tax on that but not on anything else. Since SD doesn't have any income tax, I won't have to worry about them. Federal doesn't matter where it was earned.

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Good luck with your situation...sounds frustrating.

 

FWIW, for anyone who works or wants to work seasonally in Az, (as I had hoped to do) I just discovered that Az taxes income (including retirement) from other states. That is from the Az Dept. of Revenue website, but strangely that rule is dated 2013 so perhaps it is outdated....?

 

Guess I'll just take it easy-don't care to pay taxes to Az beyond income earned in Az!

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AZ is the same as most other income tax states on this issue. It all comes down to whether you are classified as a "non-resident" or a "Part Year Resident".

Read the Az DOR tax form instructions on 140NR (non-resident) and 140PY (part year resident). As a non-resident only income generated inside Az is taxed. as a part year resident, in addition to taxing all AZ income, they will tax a proportionate share of all other income. meaning, if you were an AZ resident for 4 months (1/3 of the year), then 33.3% of your non Az income will be taxed.

So the real question is, is a seasonal worker a non-resident or a part year resident? Most states maintain that if you move here to take a paid job, even if that job only lasts 3 to 6 months, you are a resident for those 3-6 months. Some states have specific exceptions for seasonal farm workers, military, emergency fire workers, and a few other specialty classes. As with most laws, you wont find anything that specifically addresses fulltime RV'ers, its just another grey area we fall into. The state tax laws usually include language saying, if you're in this state for anything other than "temporary & transitory" purposes, then you're a resident. The few court cases that have tested this wording, have held that taking paid employment is not "temporary & transitory". On the other hand most RV'ers never get challenged on this issue. Their jobs are low visibility and most states haven't made an issue of chasing them down in the past. As states become more desperate for income, they are becoming more aggressive in enforcement. As with many tax issues, its your personal choice to try to slide under the radar or address the issue up front. But in general, AZ is no different than other states on this seasonal work/tax issue.

 

 

FWIW, for anyone who works or wants to work seasonally in Az, (as I had hoped to do) I just discovered that Az taxes income (including retirement) from other states. That is from the Az Dept. of Revenue website, but strangely that rule is dated 2013 so perhaps it is outdated....?

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I wonder how the question of where income is earned / liability for paying state income tax comes into play for telecommuters. In my case, I'll be working from my coach (which could be physically located anywhere) - remotely controlling devices in a data center that is physically located in Michigan. My paychecks will be issued by a company that is located in Michigan (a company who may not have any physical presence in the state my coach is/was located in). Any telecommuters here with experience in this regard?

 

I would imagine any state (other than Michigan) would be hard pressed to substantiate a claim that I owe them state income tax - simply because I happened to be a transient passing thru their state when I logged in and performed work on assets physically located in Michigan and owned by a Michigan based employer.

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SpaceNorman, unfortunately as the state tax laws are currently written, most do not address telecommuting. which leaves the deciding factor on state tax liability being your physical location. If you're within the state of AZ or Ca or Ny while performing whatever service you do to earn a paycheck, then you owe that state income taxes on that income for the duration you're within that state.

 

Some greedy states like NY have also held that even if you're out of NY state, if you telecommute work for a NY employer they want to tax 100% of your income, regardless of where you actually performed the work. Here is a 2005 law journal article about the case, which NY state won. (scroll down to the article titled- Supreme Court Denies Cert in Challenge to State Income Tax on Out of State Teleworkers) < http://www.techlawjournal.com/alert/2005/11/01.asp >

 

Congress has tried to deal with this issue a couple of times, but so far no agreement has passed. Here is an article from this past summers attempt in the house. You'll see that it acknowledges right now each state with an income tax can claim telecommuters owe them taxes if they work while traveling through the state. You should also note that even this proposed "fix" by the house, would only apply if you stayed in that state less than 30 days. < http://www.detroitnews.com/story/news/politics/2015/06/17/house-panel-oks-uniform-tax-rule-mobile-workers/28881251/ >

 

Just another grey area in the tax laws where you're left to do what seems right & logical. But logic frequently doesn't apply to taxes.

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Which is one reason we kept our S &B in Ohio which is our official domicile . We winter in Florida and work part time there. We do pay Federal income tax on those earnings . Florida has no State income tax which is why we winter here since it is for a long period of time. When on the road we do not spend more than one month in any state nor do we earn income in any in those States. We do have property in Florida and pay the appropriate taxes .

 

If we do decide to winter in say the S.W we do not stay in any one state for more than a month and we do not earn income. We have no tax problems.

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AZ is the same as most other income tax states on this issue. It all comes down to whether you are classified as a "non-resident" or a "Part Year Resident".

Read the Az DOR tax form instructions on 140NR (non-resident) and 140PY (part year resident). As a non-resident only income generated inside Az is taxed. as a part year resident, in addition to taxing all AZ income, they will tax a proportionate share of all other income. meaning, if you were an AZ resident for 4 months (1/3 of the year), then 33.3% of your non Az income will be taxed.

So the real question is, is a seasonal worker a non-resident or a part year resident? Most states maintain that if you move here to take a paid job, even if that job only lasts 3 to 6 months, you are a resident for those 3-6 months. Some states have specific exceptions for seasonal farm workers, military, emergency fire workers, and a few other specialty classes. As with most laws, you wont find anything that specifically addresses fulltime RV'ers, its just another grey area we fall into. The state tax laws usually include language saying, if you're in this state for anything other than "temporary & transitory" purposes, then you're a resident. The few court cases that have tested this wording, have held that taking paid employment is not "temporary & transitory". On the other hand most RV'ers never get challenged on this issue. Their jobs are low visibility and most states haven't made an issue of chasing them down in the past. As states become more desperate for income, they are becoming more aggressive in enforcement. As with many tax issues, its your personal choice to try to slide under the radar or address the issue up front. But in general, AZ is no different than other states on this seasonal work/tax issue.

 

 

Thanks Jim. Good info. Thought I read something somewhere about resident/non resident with regard to taxes (in Az) but I didn't see any reference to that at the DOR website. And it would be a seasonal job by definition so maybe I would be okay. Need to dig a little deeper I guess. Really would like to have some extra fun money....

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May not be much help, but we full time and a few years ago, we parked in Houston for 3 months while DH underwent cancer treatment. I lot of fellow patients were renting apartments, etc., and were deducting those expenses on their federal taxes. When I inquired about the possibility of deducting our monthly rent at the RV park, my tax person said. . . "You cannot deduct that expense because you are "home."

 

Dale

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The issue with Expense account is this....From IRS pub 463

 

Tax Home

1.You perform part of your business in the area of your main home and use that
home for lodging while doing business in the area.
2. You have living expenses at your main home that you duplicate because your
business requires you to be away from that home.
3. You have not abandoned the area in which both your historical place of lodging
and your claimed main home are located; you have a member or members of your
family living at your main home; or you often use that home for lodging.
IfIf you satisfy all three factors, your tax home is the home where you regularly live. If you sat-
isfy only two factors, you may have a tax home depending on all the facts and circumstances. If
you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses.
I am pretty sure I don't qualify for any of these.
Alex
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It took me a couple of years, and contacting two tax accountants, but I THINK I have finally figured my situation out. It sounds very similar to your situation, SpaceNorman.

 

I am a full-timer who is mostly retired. I teach online part-time for a college located in Michigan. My students are also located there. My residence is legally in Ohio at my son's house, and I have to pay Ohio state taxes as a resident of Ohio. (The college was withholding Michigan income taxes, but I got them to stop now. I pay estimated Oho income taxes.) Michigan and Ohio have an agreement that if a person works in one state and resides in the other, they will pay only in the resident state, and get credit for the taxes they would have paid in the employment state. But Michigan state taxes are higher than Ohio state taxes, so I pay no Michigan taxes.

 

Yes, I know I could "move" to a state which does not have an income tax, but I was told I would then have to pay Michigan taxes if there is no agreement. The positive thing about being an Ohio resident is that my license fees and insurance costs are very low there. And I like my son handling my mail.

 

I also never stay in one place long enough for someone to say I am a resident. I think it might be different for someone who actually had a place of business in another state.

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Just out of curiosity, do Michigan or Ohio have such agreements with any other states that you know of? I wonder if this kind of thing exists elsewhere. I guess I want to look into how that came about, as that is an interesting situation.

 

I'll answer my own question after looking it up. Lots of states have reciprocity agreements. It is for wages or salaries only, as far as I see. Nothing to do with doing business in another state.

 

It took me a couple of years, and contacting two tax accountants, but I THINK I have finally figured my situation out. It sounds very similar to your situation, SpaceNorman.

 

I am a full-timer who is mostly retired. I teach online part-time for a college located in Michigan. My students are also located there. My residence is legally in Ohio at my son's house, and I have to pay Ohio state taxes as a resident of Ohio. (The college was withholding Michigan income taxes, but I got them to stop now. I pay estimated Oho income taxes.) Michigan and Ohio have an agreement that if a person works in one state and resides in the other, they will pay only in the resident state, and get credit for the taxes they would have paid in the employment state. But Michigan state taxes are higher than Ohio state taxes, so I pay no Michigan taxes.

 

Yes, I know I could "move" to a state which does not have an income tax, but I was told I would then have to pay Michigan taxes if there is no agreement. The positive thing about being an Ohio resident is that my license fees and insurance costs are very low there. And I like my son handling my mail.

 

I also never stay in one place long enough for someone to say I am a resident. I think it might be different for someone who actually had a place of business in another state.

 

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Just out of curiosity, do Michigan or Ohio have such agreements with any other states that you know of? I wonder if this kind of thing exists elsewhere. I guess I want to look into how that came about, as that is an interesting situation.

Most of the time, such agreements between states with regard to tax issues are between states that share a common border. They are triggered mostly by citizens who reside in one state and work in the other or by shopping in one while residing in the other. I doubt that you will find any such agreements between non-contiguous states.

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I see that it is almost always contiguous and I see the apparent reason for the reciprocity: They want the other state to collect taxes for them from their own residents.

 

Not all are contiguous though. Kentucky has reciprocity with WI and Arizona has reciprocity with Indiana, Washington, D.C. and Virginia.

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A thought. Doesn't take an exspensive "home" to make it a home. I purchased a piece of land. Had a metal house type buiding erected along with a concrete pad for our Teton. Building and pad 18k. Put a solar panel on to run sewer system. The land I consider an investment since I can sell when I retire likely at a profit. Small exspence for the deductions you can get. Only monthly bill is water. My son in law mowes the grass and that is a labor of love siince we send money to them anyway. We do go there a little.

How much and what type of deductions for a piece of land with an 18k building and pad on it? Just wondering.

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How much and what type of deductions for a piece of land with an 18k building and pad on it? Just wondering.

As a Texas homeowner, I'd like to know more about this also? I get a reduction of property taxes from the homestead exemption, and another for being past age 65, but those only lower the property taxes that I pay. When we were fulltimers with no real property, we paid no such taxes at all.

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