[khaleelskb]

Hi All,

I am on a h1b status. I work in a state which does not have any State tax but my employer resides in a state where the state tax is payable. My employer runs my pay-stubs for the state in which my company is.

So, All my income during the year 2007 is deducted as per that state tax regulations. Can I file a tax return for my taxed income of that state? Also, can I get a complete list of all the expenses on which I can claim my returns? I have heard that Internet cable services can be claimed for tax returns.

Thanks a lot,

KS

[MukatA]

Many deductions are available only when you itemize your deductions. You will itemize only if your itemized deduction is more than standard deduction of $5,350 ($10,700 for married filing joint return).
Employee business expense that are more than 2% of your Adjusted Gross Income can be deducted if you itemize. Internet charges can be claimed only if they are required by your employer and then also you must divide it based on personal use and business use.

[AtlantaTaxExpert]

MukatA's advice is accurate, but does not address the issue of the state taxes.

You are liable for taxes for income earned within that state's borders by you while YOU are physically located within that state. The company's location is irrelevent. If that were not the case, half of the country's inhabitants would owe taxes to the states of New York, Michigan and California, since most of the big corporations are headquartered in these three states.

So, if you work in your home state, you are liable ONLY for your state income taxes, which, in your case, is ZERO because your state has NO state income tax.

You can recover the withheld taxes for the other state by filing a state tax return for that state as a non-resident and explain on that return that none of the income was earned within the borders of the state.

The state may ask you to prove that fact, so it would be prudent to attach a statement from your employer that certifies that you neither lived nor worked in the taxing state.

In the meantime, have your employer STOP withholding those state taxes IMMEDIATELY so you will not have to deal with this problem next year!