[TRACEYMUELLER]

I recently moved from Georgia to Florida and work out of my office in my home. The company I work for is located in Georgia. They are continuing to deduct Georgia state taxes from my payroll check, and said they must do so because they are in Georgia. They said it does not matter where I live, nor where I physically work, it depends on where the employer is located... I can't believe this is correct, especially since Florida has no state tax. My employer says I will need to file a Georgia state return each year to get my taxes back, and that I won't receive the full amount back. Is this true

[AtlantaTaxExpert]

Tracey:

Your employer is WRONG!

Where you live and where you work dictates which state taxes are paid. If you BOTH work and live in Florida, you owe ZERO Georgia income taxes. This has been decided in multiple tax court cases in a variety of other states over the past fifty years.

Have your employer contact the Georgia Department of Revenue. Once they explain all the details, the GA DOR will set them straight.

[MukatA]

I am sure AtlantaTaxExpert must be right.
But when you go to any State web site, it says that if you are resident of the State then you must pay tax on your world wide income (including income from other states), and if you are nonresident or part resident, then you must pay tax on the income from the State sources.

[AtlantaTaxExpert]

MukatA raises a good point, but the web site statement assumes that the individual earned the income while located within state borders.

The fact that the company HQs is in the state does NOT make the employees subject to that state's income taxes.

If that were the case, a fair number of U.S. citizens would be paying New York state income taxes, because a fair number of companies are headquartered in NY state.

[MukatA]

Traceymueller was working in Georgia, and is working for the same company but has moved out of Georgia to Florida. Does that mean the company should stop withholding state taxes from the very first day they are informed? Or does the company requires some proof of the shifting of residence to be sure that in employee is in not in the state?

[AtlantaTaxExpert]

The company would have to exercise some DUE DILIGENCE by requiring the employee show proof of residence in Florida.

However, once such proof is provided, they would then be obligated to STOP withholding Geargia income taxes from her salary.

She would have to file a tax return for the year in which she moved to settle up for the period she worked and lived in both states. In that year, she would file as a part-year resident, providing the dates of her residency and paying taxes on the portion of her pay she earned while being PHYSICALLY located in Georgia.

For every year thereafter, no income taxes should be withheld and she would have NO filing requirement at all for Georgia.

[MukatA]

Even if the employer withholds Georgia tax on a few additional paychecks, she will get a refund when she files Georgia tax return as a part-year resident.

[AtlantaTaxExpert]

That is true.

Hopefully, the few extra paychecks are in the same tax year, so Tracy does not have to wait a full year before she can get the money back by filing a non-resident tax return.