Question

VA Permanent Resident Earning Income in TN as a student

Forum|Forum|3 years ago
February 25, 2023
1 reply
0 views

I am a permanent resident of VA but am a student in TN. As there is no state income tax in TN, I did not have any deducted from my student job. However, my VA state return is calculating a massive amount of tax I owe. Do I have to pay tax in VA as a permanent resident in VA if I earned it in TN? I selected "I earned money in other states," but since TN doesn't have income tax, it never prompted me to enter the amount I earned in TN and seems to be taxing all of my income (summer job at home in VA and student job in TN) as taxable in VA.

Hal_Al

Employee

Q. Do I have to pay tax in VA as a permanent resident in VA if I earned it in TN?

A. Yes. That's the way it works in all states.

Q. TurboTax (TT) never prompted me to enter the amount I earned in TN?

A. That's correct. As a full year VA resident, all your income is taxable by VA, regardless of where earned. TT doesn't need to know where you earned it (when preparing your VA return).

Q. TT seems to be taxing all of my income (summer job at home in VA and student job in TN) as taxable in VA.

A. TT is doing it correctly.

You report all your income on your resident state return, including the income earned in the other state. Your home state calculates tax on all your income, but gives you a credit, or partial credit, for tax you paid to the other state.

When you worked in a state without an income tax (e.g. TN), there will be no credit, since there was no TN tax. In other words, having worked in a state without an income tax does not get you out of paying state tax on that income, to your home state.