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I don't currently know a tax lawyer/firm that is actually competent in all the issues here, so maybe you all can tell me something constructive about this state income tax question.

In this scenario, I'll be a resident of New York and doing work from new york. The company I'll be billing is in Colorado with only an office in colorado.

For the purpose of withholding/paying state income tax, who gets it? New York, Colorado or is there simply no state tax liability

Reason this is confusing for me is that some states tax income "sourced" from their state, which I don't completely understand the conditions for, some states tax only residents, some states have some other constructive conditions and I would ultimately like to keep as much as possible for myself

thanks for any insight

4

According to the Colorado form CY104PN, Colorado taxes income earned while working in or being a resident of the State of Colorado.

Assuming you never set foot in the State of Colorado, I read it as if you will only be liable to pay taxes in the State of New York (on all of your income, of course).

You can get a more reliable opinion from a Colorado-licensed CPA.

  • Tricky, they might consider working for a Colorado company to be "working in" Colorado. – TM. Mar 19 '13 at 7:32
  • @TM. I haven't seen a state that doesn't define working in as the state where the work is actually done. – Andy Nov 13 '15 at 2:27
0

Residents pay tax on all of the income they receive during the calendar year from all sources, so you'll at least need to file and pay New York state income taxes on this money regardless.

I can't answer whether you'll need to file and pay Colorado state income tax on this money as well. Generally speaking, you need to file a return for each state in which you live, receive income, or have business interests.

If you are required to file a Colorado state income tax return, however, you can claim a credit for taxes paid to another state on your New York state income tax return using form IT-112-R (see the form and instructions).

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