The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: State taxes on income earned in another stat||Date: 4/4/2011 8:13 PM|
|Author: ptheland||Number: 112969 of 121461|
Typically, your home state taxes all of your income and then gives you a credit for taxes paid to the other state. That credit is normally the smaller of the actual taxes paid, or the home state's tax on the double taxed income.
So effectively you pay the higher of the two state's taxes on that out of state income.
However, some state pairs work the other way around. The non-resident state gives you a credit for taxes paid to your home state. These are definitely in the minority, but there are some out there.
A fairly time effective way to figure it out is to get the instructions for non-resident VA returns and see what they have to say. Also take a look at your PA instructions, keeping an eye out for a credit for taxes paid to other states.
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