Live and Work in Different States….Who Do You Pay?

An interesting question I came across was, “What if I work in one state, but live in another? Who do I pay my income tax to?” Common question with a pretty easy answer. Which state provides you with your income? The state you work in of course! So, e.g. You live in New Jersey but work in New York; New York is the state that is taking those tax with-holdings you fill out on your W4 forms, so therefore, New York is the state that will be collecting your income tax.

Now, I know what you are wondering? Does that mean I am paying double the tax? Absolutely not! The state in which you live should be providing you with a tax credit for that income generated in the other state. So, in my example, New Jersey will technically have you exempt from income taxes in that state. You will still have to deal with property taxes and such though. So, a bit more work for you if you live and work in multiple state. Sorry!