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  1. #1
    Affiliate Manager Textbooks's Avatar
    Join Date
    November 9th, 2006
    Chicago, IL
    Tax Question: Employees in Other States
    If your company is in one state and you have employees in other states do you
    1) Pay your state taxes only in the state you are incorporated in?
    2) Pay state taxes based on where you employees are?
    3) another option?

    If you go the route of #2 how do you determine the tax for each state? If I were a retailer it would be easier. Since I don't know where any of the actual sales go do I pay state taxes based on the income I received? For instance if I live in New York and get money from New York Merchants then I pay that portion to New York even though my company is a Maryland corporation?

    Any know?

  2. #2
    Tax Paying Member
    Join Date
    November 14th, 2005
    Chapel Hill, NC
    Not to give you a curt answer..........But you need the advice of an experienced tax accountant and/or lawyer....

    There are a number of variables here. Do you withhold taxes on your employees? Are they real employees or contractors? Is the merchandise shipped from your home state of from state of purchase? Do you sell physical items or services? Do you live in the state of incorporation?

    This can go on. You should get real professional advice
    You must climb this mountain. There is no elevator. ---- Don't stick your finger in the liquid nitrogen.
    Carolina China

  3. #3
    Newbie QueenBuzzy's Avatar
    Join Date
    May 15th, 2005
    US/CAN depending on my mood
    I second what Witzer says...get legal and professional advice.

    I also think that any 'employee' working out of state should be classified as an Independent Contractor.

    The government classifies IC's as those who use their own materials (computers, phones, etc), set their own schedules, and have other 'clients' they work for more than just you. If someone is out of state, it's likely that they would fall under the government classification of IC, not employee. Which, makes tax reporting much easier for you!

    But again, I am not a tax professional (nor do I play one on TV), I've just hired a lot of ICs in various states and have some experience in this matter.

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