Out of state employee question

[DaveinOlyWA]

i can tell you from experience that Arizona is the most surcharged and excised state in the US even outdoing New Jersey...

they dont stop at anything to get you anyway they can...

let me ask you something.

how much do you pay in surcharges and taxes on your cellphone bill??

i bet its WAAAY more than anyone else here.

[daniel]

I get some income from California, and I have to pay CA tax on that income. States will do whatever they can get away with to increase tax revenues. My CA income is from real estate and it annoys me because the business already pays property tax (which I do not object to, since the property receives state services such as utilities and fire protection). But I receive no services from CA and so I get nothing in return for paying income tax to CA.

But they can do it, so they do. So, yes, in all probability, in any dealings involving California, CA will collect taxes. (I harbor particular animosity toward California, because for the first two decades of my life I lived there and the air was so filthy it was actually painful just to take a deep breath of air.) People wondered why I moved to the frigid north, but the air in ND, while cold half the year, is clean!

[dogfriend]

Originally Posted by mingoglia

I appreciate the responses and the leg work. Thanks a lot. Does anyone from California know if a similar rule exists there? The reason I'm asking is her current employer is located in CA. She claims she is not currently paying CA tax.

Mike

I think that makes her a tax evader.

I did not live in California. Do I have to file a return?

[dwreed3rd]

All of the above advice is correct! If you take the office in Nevada option, you will not only have to withold and file Nevada state withholding, but also as an employer, file and pay Nevada SUI for your Nevada employee. If she is infact being paid as an employee by a California employer, then the employer should be reporting her earnings to California and they are subject to California PIT, SDI & ETT for the employee and SDI and SUI for the employer.
You may want to consider increasing her wages to either cover the Arizona state taxes, if an employee(W-2) or to cover her health care if a contractor(1099). Remember as contract labor you would also save Federal FUI ($56.00/year), Employer OASDI & MEDICARE(7.65% of her wages that you pay as an employer), and Arizona SUI(depends or your rate), all of which could be added to her wages to help cover her cost of health insurance. Just a thought.

[isisdave]

Every state does this -- claims tax on income derived from sources within the state, even if you're not a resident. But nearly every state gives you a credit for such taxes against your taxes you owe in your state of residence.

However this is not much help when you live in Nevada or Washington or one of the other few states with no income tax.

Another idea: employee leasing. You pay a company in Nevada to hire her and "lease" her services to you. They do all the paperwork. The cost is probably more than you would incur otherwise, but it'll save you lots of time. Maybe they could provide her health coverage too.

[dwreed3rd]

Originally Posted by isisdave

Every state does this -- claims tax on income derived from sources within the state, even if you're not a resident. But nearly every state gives you a credit for such taxes against your taxes you owe in your state of residence.

However this is not much help when you live in Nevada or Washington or one of the other few states with no income tax.

Another idea: employee leasing. You pay a company in Nevada to hire her and "lease" her services to you. They do all the paperwork. The cost is probably more than you would incur otherwise, but it'll save you lots of time. Maybe they could provide her health coverage too.

Good suggestion on the employee leasing. But the employer and prospective employee/contractor would have to crank the numbers to compare leasing company costs vs employee(W-2) costs vs contractor(1099) costs. BTW, I forgot to mention the Workers' Comp costs the employer would save for 1099 vs W-2 taht could be passed on as pay to a 1099 contractor.