State Income Tax for Nonresidents: Managing Inconsistent State Guidelines

State regimes for taxing nonresidents are complex. Complying with inconsistencies among states is a complicated process for individual taxpayers and SALT advisers. Some states utilize withholding thresholds that provide some relief for qualified taxpayers. However, many states require nonresident filing on any state-sourced income. Even when states offer relief, taxpayers should not assume they qualify for relief in neighboring states. Mutuality requirement states have day-based thresholds for employees residing in states without income tax, for example. However, some states have clawback provisions that negate the relief for certain classes of employees. Arizona, for instance, revokes the relief for professional athletes and entertainers. 

Often, neighboring states adopt reciprocity agreements. These agreements alleviate the taxpayer's burden of filing a nonresident return when they reside in one state but work in another. Assuming a multistate taxpayer qualifies for relief in multiple states without examining the nuances of each state would be an oversight. Considering the complexities and inconsistencies of state guidelines, it is not surprising that state nonresident compliance is so low.

Listen as our panel of state and local tax veterans compares and contrasts the state rules for taxing nonresidents in specific states and offers compliance advice for SALT practitioners and multistate taxpayers.

I. States' income taxation of nonresidents: introduction

II. Credits and reverse credits for taxes paid to other states

III. Reciprocity agreements

IV. Convenience rules

V. Other situations

VI. Filing and withholding thresholds

VII. State inconsistencies

VIII. Recent state developments

IX. Managing multistate compliance

The panel will cover these and other critical issues:

• Suggestions for managing multistate compliance for nonresidents
• Applying convenience rules in specific states for nonresidents
• The impact of reciprocity agreements on out-of-state taxpayers
• Thresholds and filing requirements for nonresidents in certain states

Learning Objectives

After completing this course, you will be able to:

• Identify specific states with mutuality agreements and how they are applied
• Determine how credits and reverse credits are applied for multistate taxpayers
• Decide what the nonresident filing requirements are in certain states
• Ascertain tips for managing SALT compliance for multistate taxpayers

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of SALT taxation, nexus and apportionment as it applies to multi-state businesses.

  
  

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).