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Employer Won’t Withhold Taxes

Forum|Forum|2 years ago
November 4, 2023
2 replies
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Hypothetical… employee works remotely in state A. Employer has been made aware but forces them leave all of their paperwork and residency assigned to state B. The employee technically should be paying state income tax to state A, but state B has no tax so none are withheld from their paycheck.

Can the employee pay tax for the year as a lump sum to state A when they file? Will there be penalties for this? The employee notified the employer numerous times and requested a change but the employer refuses. So the employee either pays no tax or does… what? I don’t know.

Best answer by NCPERSON1

@taxpayer1776 as a resident of IL, you are required to pay income tax to IL. Even if the employer says you 'work' in TN, you get no tax credit from IL for "paying" taxes TN since TN has no income tax.

suggest paying quarterly to avoid underestimated payment penalties.

N

NCPERSON1

@taxpayer1776 please be a little clearer.

1) do you PHYSICALLY work in State A or State B

2) do you RESIDE in State A or State B?

3) if you work in one state and reside in another, you file as a non-resident where you work and as a resident you where you live.

4) most states would require quarterly payments (assuming no withiholdings) to cover the tax liability.

which two states are we dealing with? some have reciprocity agreements.

T

taxpayer1776Author

Employee resides and works in IL while the company has them listed under an office in TN.

Employee visits TN office for work 3-4wks per year and WA office 4wk per year. The employer won’t list them under IL because the state has different labor laws and they could no longer require them to come in for occasional meetings.

N

NCPERSON1Answer

@taxpayer1776 as a resident of IL, you are required to pay income tax to IL. Even if the employer says you 'work' in TN, you get no tax credit from IL for "paying" taxes TN since TN has no income tax.

suggest paying quarterly to avoid underestimated payment penalties.

M

Mike9241

your situation is not uncommon. Illinois would require your company to register as an IL w/h agent. many companies won't do that because they want nothing to do with filing and paying out of state income taxes.

you'll have to pay estimates to avoid Illinois penalties.