Ask Experts Questions for FREE Help !
Ask
    Lakenymph's Avatar
    Lakenymph Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Jul 16, 2007, 03:26 PM
    State taxes on out-of-state short-term contract
    Hi,

    Here's my situation.

    Facts:

    I am a consultant for company X (W-2 arrangement),which is based in New Jersey, where I was hired for a 6-month contract in New Jersey to perform work for one of their clients--company Z. I am a current resident of Arizona where I have a house and I plan on returning after the contract and getting work back in Arizona as soon as possible.

    My work load is demanding enough that I do not have time to fly back and forth and I am therefore staying at an Extended Stay Hotel close to company Z and renting a car and receiving a per-diem to help offset expenses.

    Issue:

    Company X is withholding NJ state income taxes and not AZ state income taxes in my paychecks.

    Question:

    Since I am on a short-term assignment (less than 12 months) is it correct for them to withhold New Jersey income taxes in my paycheck? And if this is the case, do I need to file a partial-year return with AZ and NJ for this tax year? Or do I have to pay both Arizona and New Jersey state income taxes for income on this work arrangement?

    Thanks for your help.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Jul 17, 2007, 12:54 PM
    Yes, the withholding of NJ taxes is correct and proper, as you WILL need to file a tax return as a non-resident of NJ and you will owe some NJ taxes.

    Arizona will definitely tax you on the money earned in NJ, but, in all likelihood, will give you a tax credit against the Arizona taxes owed for the NJ taxes paid.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Short term vs long term capital gains, loss carryovers [ 4 Answers ]

Back in 2000 and 2001, I had short term capital losses that exceeded the 3000 dollar limit. Each year, I've been able to deduct 3000 dollars since my short term gains have been minimal. I still haven't used up all my 2000 and 2001 short term losses. I had some long term gains in 2000, but...

2 states: Can I credit state tax of one state to other state [ 1 Answers ]

I have 2 W-2. One from job in Mass. Mass state tax is withheld in that W-2. Then I moved to NC and got a new job in NC. NC state tax is withheld in this second jobs W-2. Both W-2 only have state tax withheld from their corresponding states. So can I credit taxes of one state to another and...

401K short term taxes [ 3 Answers ]

I have a 401k accout that I am able to play the stock market with. I have been trading stocks on a short term basis, my question is when I start drawing from this account what tax rate because of the short term trading will I be looking at.

NY / NJ state taxes [ 5 Answers ]

Hi: My employer is NJ based, but I am residing in NY from Jan '06 working for a client here. I will most probably reside in NY until the end of this year. For 2006 1. My income source is only NJ (My employer is holding NJ taxes from my pay checks) 2. All year I have resided in NY ...

Is short-term or long-term debt more stressful to your personal finances? Why? [ 4 Answers ]

Is short-term or long-term debt more stressful to your personal finances? Why?

View more questions Search