Discussion:Non-Resident Individual Taxation

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Discussion Forum Index --> Basic Tax Questions --> Non-Resident Individual Taxation


Discussion Forum Index --> Tax Questions --> Non-Resident Individual Taxation

Asujbl (talk|edits) said:

12 May 2009
Sort of a basic question that I'm not fully sure of - A company, based in Ohio, has employees that live in various states throughout the country. These employees receive a bonus on top of their regular salary. Is that bonus portion going to be taxed (and need to be withheld on) in their particular states of residence?? or just to Ohio because that is where the "benefit" of that income is derived??

Thanks for any help!!

Kevinh5 (talk|edits) said:

12 May 2009
it will be taxed the same way their regular salary is taxed

Asujbl (talk|edits) said:

12 May 2009
That is what I thought. Thanks!!

Do you happen to know if Minnesota specifically taxes Ohio based earnings?? and if they offer a credit if they do??

Thanks again.

KatieJ (talk|edits) said:

12 May 2009
All states that impose comprehensive individual income taxes tax all personal service earnings of residents, regardless of source. That includes Massachusetts. Also, the general rule is that the source of income from personal services is the place where the service is performed. Salary (and bonus) earned by performing services in Massachusetts is Massachusetts source income, whether performed by a resident or a nonresident of Massachusetts.

The bonus is Ohio source income only to the extent that the services to earn it (i.e., services performed during the period on which the bonus is based) were performed in Ohio. Ohio Rev. Code Ann. § 5747.20(B)(1). If all of the Massachusetts resident telecommuter's services were performed in Massachusetts, there is no Ohio source income.

Massachusetts allows residents credit for taxes paid to other states on income taxed by Massachusetts. Mass. Gen. L. Chapter 62 §6(a).

Kevinh5 (talk|edits) said:

12 May 2009
kinda far - Massachusetts from Minnesota. But I see the resemblance. Can you imagine Ally McBeal with a Fargo accent?

Kevinh5 (talk|edits) said:

12 May 2009
Ya!

KatieJ (talk|edits) said:

18 May 2009
LOL, Kevin -- I guess I can't read! Or at least I couldn't that day. How I got Massachusetts out of Minnesota, I'll never know.

The answer, though, is basically the same. It isn't Ohio source income except to the extent that the services were performed in Ohio. Minnesota taxes all income of residents, from all sources (Minn. Stat. §290.014, Subdivision 1), and allows credit for taxes paid to other states on income earned in the other state, limited to the proportion of the Minnesota tax that relates to that income (Minn. Stat. §290.06, Subd. 22(a) and (d)).

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