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State tax and road warriors, part 1: differing standards

"The Road Warrior" was a stylish Australian movie of the early 1980s. It featured a young Mel Gibson, seeking to survive in a desolate landscape after some sort of inexplicable catastrophe.

It may have been from this film that the term "road warrior" entered the lexicon. In any case, for purposes of this blog, a road warrior is not someone who engages in spectacular battles in an apocalypse-themed movie. It refers, rather, to people who live in one state but work in another.

Road warriors raise a different issue than people who divide their residency among more than one state. As we discussed in our June 19 post, California is widely regarded as among the more aggressive states in trying to extract tax revenue from people who have left for residency in another states.

States vary considerably on how they approach the taxation of road warriors. Literally and figuratively, states are all over the map on the question.

In particular, states use different standards for determining when workers with residency in one state must file income tax returns in that state after working in another.

These standards do not only affect employees. They also affect employers because employers must comply with whatever the requirements are for income tax withholding.

States have such differing approaches to issues such as these that Congress is considering imposing uniform national standards. The bill under consideration is called the “Mobile Workforce State Income Tax Simplification Act.”

We will discuss the proposed bill in part two of this post.

Source: USA Today, "'Road warrior' state income tax laws vary widely," Elaine S. Povich (Pew/Stateline), Dec. 12, 2013

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