Are you required to pay state income taxes in the state you work in if you don't live there?

Question

I'm sure I could find this stuff out if I looked hard enough, but I'm sure there is some here that knows the answer! :) So, I work in TN and live in AR. TN doesn't have state taxes but AR does. How fair is it that I have to pay state taxes for AR and I don't even work there? :(

Answer 1

Yes.  For years I worked in South Carolina and lived in North Carolina.  I had to pay taxes to both states but it is at a reduced rate.

Answer 2

You have to pay the state income taxes is AR because you live there.  But you'd be a part year resident and would only owe tax on the money you made after you moved to AR.

Answer 3

While it various from state to state, most states have two rates: resident and non-resident.  Usually the non-resident is half the rate of resident. While you may not live in the state, you do benefits from its services (such as the roads you drive to get to work), so it is only fair that you pay some of the expenses.  If you check your pay stub, you will probably find that your employer is already withholding the TN taxes from your pay before you get your check.

If you have a question about the taxes, talk to your employer. They will know the law.

Answer 4

You are required to pay income tax to the state that was the source of the income.

Answer 5

There are three types of taxes in effect, spread across all levels of government. Sales Tax, which taxes everyone since everyone has to consume goods. Income Tax, which is the taxable income during the year which the government determines through tax brackets. And finally Property Taxes, which are the taxes imposed on your property. Note: The bulk of your property taxes will be used strictly in your state/region/school district.

Your income tax is report through your employer in the state of Tenessee. However, you are living in Arkansas where you pay property taxes (if you own a home) and fund your local school district and municipalities. You may not work in Arkansas, however, your do pay property taxes there. As for income taxes, that is reported to the federal government. It does not matter if you worked in Arkansas or Tenessee because that taxable income is reported to the federal government regardless. I hope this answers your question.

Answer 6

Living in AR and physically working in TN was your choice. If you don't like getting taxed twice, MOVE or find a job in AR.

Answer 7

you have to declar TN residency and then you can be exemped from paying AR state taxes. Declare your permaneant address in TN to circumvent paying.