State Income Tax Quandary

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Laurencita
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Joined: Sat Jun 12, 2021 9:10 am

State Income Tax Quandary

Post by Laurencita »

I just retired a couple of months ago. My employer was located in Virginia.

Since we were allowed to telework 100% this year, I moved : lock, stock and barrel from Virginia, to Florida on January 1. I have two residential leases dated back to back that show me as a resident of Florida for all of 2021. I have transferred my drivers license, registered to vote here, etc.

Nonetheless, even though I updated my address with my employer, they withheld income taxes from me for the state of Virginia, for at least the first few months of the year.

I expect to file a Virginia state income tax return for 2021. I don't know if I will be able to get any of the tax monies paid to Virginia in 2021 even though I wasn't residing there?

Has anyone encountered a situation such as this one and have any advice? thanks
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celia
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Re: State Income Tax Quandary

Post by celia »

When you file a Virgina tax return and don’t have any liability to VA, then you will get the ‘excess’ paid taxes returned to you. But be prepared to show your break from VA. For example, when you filed your 2020 taxes, did you use your FL address? Do your custodians have your new address yet?
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bengal22
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Re: State Income Tax Quandary

Post by bengal22 »

I had a similar situation with Ohio and Oklahoma. I got all my state taxes withheld returned because I lived in Oklahoma all year but they taxed my pension in Ohio.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley
Topic Author
Laurencita
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Joined: Sat Jun 12, 2021 9:10 am

Re: State Income Tax Quandary

Post by Laurencita »

My 2020 VA (and federal) tax return reflects my Florida address. In terms of custodians, are you referring to my 401K account and pension payment office, etc.?
All my financial accounts have been updated to reflect this Florida address.
muddgirl
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Re: State Income Tax Quandary

Post by muddgirl »

Did you spend any time physically in the state of Virginia in 2021?

You will file a non-resident return and likely get that money back, but it looks like VA has similar laws to CA and if you spent any days in Virginia you may be taxed proportionally for those days. I haven't dug very far into it, just skimmed the instructions on the non-resident return.
MarkNYC
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Re: State Income Tax Quandary

Post by MarkNYC »

You may have some difficulties. Let's say you were earning $8K per month and your employer withheld VA tax for the first 3 months even though you moved out of VA on Jan 1. It is likely you will receive a VA W-2 showing $24K VA wages and around $1,200 VA tax withheld. When you file a 2021 full-year nonresident VA tax return, you would properly show zero VA wages and $1,200 withheld, but this won't agree with the W-2 so VA will probably not accept it. It may then take some time and effort to convince VA that you were both not a VA resident and had zero VA source income as a nonresident.

Your best bet would be to convince your employer to file your W-2 showing zero VA wages even though there was VA tax withheld. Not sure they would do this, but you should request it. And I'm assuming VA will not tax your remote work as a nonresident.

For tax purposes, changing state residence as of Jan 1st would seem to be a clean break, but can sometimes have the opposite effect, causing confusion and skepticism among state tax authorities.
Topic Author
Laurencita
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Re: State Income Tax Quandary

Post by Laurencita »


Did you spend any time physically in the state of Virginia in 2021?


I travelled back to Virginia for a few weeks, residing in a hotel, in order to pack up my storage unit and make arrangements with my interstate moving company.
calwatch
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Re: State Income Tax Quandary

Post by calwatch »

You might want to take a look at this guidance, which has special provisions due to COVID-19. Some states have been trying to tax people who moved away from jobs that they used to do in person, even if they went to another state. https://www.ey.com/en_us/covid-19/covid ... provisions
CoherentIntegration
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Re: State Income Tax Quandary

Post by CoherentIntegration »

I’m in a similar quandary this year. I lived in PA at the start of the year, but started a new remote job on Jan 18. Employer for new job is in OK. I left PA on Apr 1, had a pit stop in TX, then finally made it to OK at the end of April. My employer’s HR was exceedingly slow and unhelpful. I attempted to process several change of address forms, but none of them went through. My employer withheld OK tax throughout the move process. I had given up on them, and planned to rectify the situation manually with my 2021 state returns. The upthread point about W-2 reported income is important, and one that I had overlooked. Looks like I need to beat down HR’s door again!
muddgirl
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Re: State Income Tax Quandary

Post by muddgirl »

Laurencita wrote: Sun Aug 01, 2021 9:03 am
Did you spend any time physically in the state of Virginia in 2021?


I travelled back to Virginia for a few weeks, residing in a hotel, in order to pack up my storage unit and make arrangements with my interstate moving company.
Then you will want to read the non-resident return instructions very carefully. It looks to me like you were working for a VA company while physically present in the state for a few weeks, you likely will owe a proportion of the taxes for that year. But you should get the rest back. However I am not a tax attorney.
humblecoder
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Re: State Income Tax Quandary

Post by humblecoder »

I am not an accountant, attorney, or tax professional.

Virginia only tax non-residence for wages received for services performed in Virginia (https://www.tax.virginia.gov/residency- ... y_status-3). So I would think that you would be liable for Virginia state income tax for the time you worked while in the state (i.e. the time you spent living in the hotel) since you were paid for services performed while in Virginia.

I know some states have "convenience of the employer" rules where if you are teleworking from state X but your assigned office is state Y, you still have to pay income tax to state Y even if you didn't set foot in state Y. But I don't think Virginia is one of those states.
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