Question:
I am on H1B Visa. My employer a consulting services firm based in Texas.
I am working for a client of my employer who is in Vireginia.
My wife works and stays in West Virginia. I used to stay in Texas and visits my wife in westvirginia on week ends. Due to my services for the client company in virginia, I travel a lot through out USA on week days and lands back in West Virginia on week ends to staywith my wife. Due to travel I gave up my rented apartment in Texas and changed all my bank, creadit card addresses to my wife's address. I do not rent or own any property/apartment in any state now. Now which state tax applies to me.

1. Is it Texas state tax as my employer who pays me based in Texas?
OR
2. Is it West virginia state tax as all my bank/credir addresses refers to my wife's address and I stays on weekends there?
OR
3. Virginia state tax as my employers client is based there in virginia?
OR
4. All of the above

Please advice me appropriately so that I do not want to be in trouble with IRS.

Best regards,
Mohamed

Answer from Atlanta Tax expert
You have legally transferred your state of residency from Texas to West Virginia, so for sure you must file a West Virginia state income tax return. Whether you owe money to WV is another matter (see below).

If you work and earn above a certain amount (usually $10,000) in ANY state, that state has the right to tax you on the income earned within their borders. Most states of residence (in your case WV) give you a credit for taxes paid to other states. Often, the credit completely offsets any state tax owed to the resident state.

Temporary workers often avoid the taxes for the state they work in because the employer fails to follow the law and does not withhold the taxes. It's not a big problem as long as the state does not become aware of your work within their borders. When they DO find out, however, there can be some heavy financial consequences for BOTH the employer and the employee.

Request for clarification

I need some more clarification on this subject for the following

1. My source of income is from my employer based in Texas.
2. My emplpoyers client is in Virginia for whome I work on my employers bahalf.
3. I stay with my wife in West Virginia for my convenience.

Here which state tax my emlpoyer has to deduct. I under stand there is no state tax in Texas, but Virginia and also West Virginia have state tax.

Here which state tax my emloyer has to apply, is it Virginia or west virginia? I have to suggest my employer who is also new to this type of complex things.
Thanks,
Mohamed

Mohamed:

Where the company is based is irrelevent when it comes to establishing where you WORK and where you LIVE (the two factors that ARE relevant in determing the state income taxes for which you are liable).

Have them withhold money for Virginia, as they have first claim on your income. As noted, West Virginia will give you a credit for taxes paid to Virginia, so it is likely that you will owe ZERO taxes to West Virginia.