What is a multi state employers tax withholding responsibilty for employees living in different state?
Answer:
The taxes that come out of your check will be for the state you work in. You will have to file a tax return in both states. Your state of residnce will apply a percentage of what you paid in your employment state towards what you owe them. You can ask your employer to withhold extra, but that is a paperwork nightmare and most companies will not do it.
I believe you can work with your employer to determine ONE state to withhold your taxes. Most people opt for the state in which you work, not the one that you live in.
Many states will give you a credit on your taxes for 'taxes paid to other jurisdictions' (meaning the other state).
Sometimes the state will have a reciprical agreement with bordering states. If they do, the employer withholds tax from the state where the person lives. If they don't, you withhold tax from the state where the person works and they have to file both states tax returns.
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