Discussion:OR resident working at home for Georgia-based employer
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Discussion Forum Index --> Tax Questions --> OR resident working at home for Georgia-based employer
| 29 March 2007 | |
| Client is an OR resident, working from home for employer based in Georgia. I understand he has to file for OR.
Does he have to file for GA? I am reading the GA instruction: non-residents must file if they have GA-source income; and legal residents of another state are not required to file if their only activity in GA is working for an employer where GA-source income does not exceed 5% of total income or $5000. This client had GA source income since 2004, and I missed it every year! I hope there won't be any penalties. :<) Any multi-state experts out there who can shed some light on this? | |
| 29 March 2007 | |
| GA source income is income earned by "nexus" in GA. If the employee is working from home in OR, then he has no presence in GA and is not taxed in that state..... | |
| 30 March 2007 | |
| Thank you Sandysea. So what kind of non-GA resident will have to file? | |
| 30 March 2007 | |
| You file the OR tax return. Did they pay state income taxes to GA on the W-2?
If he did not pay in any taxes to GA state, then he has no filings...doesn't matter that his employer is GA based or not...did he earn ANY income working in GA... | |
| 30 March 2007 | |
| Got any NM experts out there? I have a client who lived in CA, then OK and also Consulted in NM. Several trips to NM, 1099 from client in NM. Best I can tell, if he did not take a computer with him, he probably will not owe any NM tax. | |
| 30 March 2007 | |
| Simply consulting in ANY state, NM most likely included is not considered to be nexus and taxed in that state. Did he simply travel there for assignments and had a home in another state? You need to look at the time present, whether he rented or owned real estate or tangible property in the state and determine if any of the NM 1099 income is taxable in that state.... | |
| 30 March 2007 | |
| Georgia taxes nonresidents on income from services performed, property owned, or business carried on in the state, and on Georgia state lottery winnings. Ga. Code Ann. § 48-7-20(a).
Since your client performed no services and carried on no business in Georgia, he has no GA source income. If he worked at his employer's Georgia location at any time during the year, he would owe GA tax on that proportion of his compensation (prorate by the days or weeks), unless it is under GA's de minimis threshold. | |
| 30 March 2007 | |
| Thank you Sandy. That was the way I was trying to read the instructions and wanted a little reassurance. | |
| 30 March 2007 | |
| Nonono, Okie and Sandy. If your client worked in NM, he has NM taxable income. No need to have property there. The performance of services in the state is nexus, and produces NM source income. NM taxes income of nonresidents "employed or engaged in the transaction of business in, into or from this state, or deriving any income from any property or employment within this state." NM Stats. Ann. 1978 § 7-2-3.
"Simply consulting" in ANY state generally DOES create nexus. If a business is physically present in the state (sole proprietor or otherwise), and engages in income-producing activities there, it has nexus with the state. The only "out" is a de minimis rule, which many states do have. GA is one, referred to above. I don't see one in the NM form instructions. | |
| 30 March 2007 | |
| NM PIT-B - Apportionment of Business Income - Worksheet - Property Factor Average value of real and tangible property owned and rented by taxpayer and used during tax period - Total Everywhere - Total New Mexico. Unless he took a laptop when he flew, the only property he had was his clothing and luggage. | |
| 30 March 2007 | |
| That's true, NM does use the UDITPA formula to determine an individual's source income. However, he DOES have a sales factor. Income other than employee compensation is apportioned to NM by the equally-weighted, three-factor UDITPA formula (property, payroll and sales). NMSA 1978 § 7-2-11(A)(2). He would have zero property or payroll, but he does have sales. N.M. Admin. Code § 3.5.10.8(A)) To the extent the services that earned the revenue from the NM contract were performed in NM, that proportion of the 1099 amount would go in the NM sales factor numerator. N.M. Admin. Code § 3.5.18.8(D)(2)(c)
If he didn't perform all the services on that contract in NM, he may not have enough net income apportionable to NM to have a tax liability. But that doesn't mean he doesn't have nexus. He does. I note that there is a 15-day exclusion for compensation for services performed by a nonresident (NMSA 1978 § 7-2-11(A)(4)(a), which I didn't see before. If the client were an employee, he wouldn't have a NM tax liability unless he was working in the state for more than 15 days. I'm not sure that applies to a sole proprietor, though. | |
| 30 March 2007 | |
| OK, I'll download that code. Thank you, this is what I need to get beyond the simplfied instructions on the forms. | |
| 31 March 2007 | |
| I don't know GA law, but be aware of a NY case Matter of Huckaby v New York State Div. of Tax Appeals. It held that a TN resident who worked primarily from his home was subject to NY tax on ALL of his salary.
There have been congressional efforts to override this but I don't believe any have become law. | |
| 31 March 2007 | |
| _Huckaby_ is based on a NY regulation (NYCRR 132.18) that has been on the books for many years and was first approved by the NY Court of Appeals (the high court in NY) in the mid-1970's. SCOTUS denied cert. then and denied it again in _Huckaby_ in 2005 or 06, I forget exactly.
AFAIK New York is the only state that has this screwy rule. In general, a nonresident is taxable only on income from services actually performed in the state. In fact, income from personal services is generally considered to have its source in the state where the services are performed. The NY rule says that if a nonresident works for a NY employer and spends ANY time at the NY employer's office, ALL of his earnings are subject to NY tax unless the work outside the state is performed there out of necessity and not for the convenience of either the employee or the employer. New York has eased up on this a tad, effective for years beginning in 2007. After 2006, if the employee's home office is a "bona fide office of the employer," any normal work day spent at the home office will be considered a day worked outside of New York. New York Technical Service Bureau Memorandum TSB-M-06(5)I, 05/11/2006. | |
