Paying State Income Tax in Non-resident States

[vic120]

How come those offshore places are exempt from laws and taxes.

 

[WCMason]

All this info we've discussed is probably the letter of the law much like intangible tax owed in many states on bank and stock accounts. But few ever claimed intangible taxes and the irs never enforced . We have a situation were we are paying our taxes although a small amount could be to the wrong state. As i stated any state that wants to enforce will probably see the same % of reduced taxes from other states that enforce. So it's a wash really. I like 99.9% of agents who do business in multiple states won't lift a finger until co's segregate 1099's by state were income was made and it's reported to the it's .

1099 is a federal form that won't break anything down by state because it doesn't have to and the absence of state-specific information on it won't prevent a state from getting what they believe they're due if they pursue it. What the carrier tells you is less important than what the carrier tells your non-resident states. I'd at least lift one finger to call my carriers to see how they report my income to the states I'm licensed in.

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How come those offshore places are exempt from laws and taxes.

No idea and no interest as it does not affect me. The most important advice I give any new downline agent: Pay your taxes. 99.9% may not pay tax to non-resident states and if there is a legit way out I'll take it. Otherwise that is one herd I will not follow. Too much at stake.

 

[vic120]

1099 is a federal form that won't break anything down by state because it doesn't have to and the absence of state-specific information on it won't prevent a state from getting what they believe they're due if they pursue it. What the carrier tells you is less important than what the carrier tells your non-resident states. I'd at least lift one finger to call my carriers to see how they report my income to the states I'm licensed in.

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No idea and no interest as it does not affect me. The most important advice I give any new downline agent: Pay your taxes. 99.9% may not pay tax to non-resident states and if there is a legit way out I'll take it. Otherwise that is one herd I will not follow. Too much at stake.

Its just I find it hard to believe 99% of agents are breaking the law, I have a hard time believing if it were true I would think Ins companies would make it easier to show what commission is coming from which state. I also think I would have heard of this before now.

 

[sirherbie]

All I know is a lot of agents on this board have been in the business 20-40 yrs and I've never heard anyone mention this.Yes it makes sense to a degree but it makes much more sense were I sell a real item and don't give the state sales tax. Sure the state can tell who's got a non resident license but I assure you some of these companies have a hard enough time reporting 1099 income much less segregating it by state and reporting it to the irs

 

[Norwayguy]

All I know is a lot of agents on this board have been in the business 20-40 yrs and I've never heard anyone mention this.Yes it makes sense to a degree but it makes much more sense were I sell a real item and don't give the state sales tax. Sure the state can tell who's got a non resident license but I assure you some of these companies have a hard enough time reporting 1099 income much less segregating it by state and reporting it to the irs

But how many really solicit in multiple states.

 

[Todd King]

My accountant may very well be acting like an *** and I would love to have some evidence that he is. After getting this information from him I did my own research and discovered that states do require that non-residents file an income tax return for income earned in their state, consistent with what he told me. It does not appear that you were disputing that in general, but that it does not apply to those in the insurance business. I have not seen any mention of an exception like this for insurance agents or agencies on any of the state tax board websites I have been researching in my non-resident states. Is there any website or publication that you can point me to that would support this good news?

The only place I can point you to is to call your carriers and ask them if they report it to the non-res states. You won't find a single one that does.

 

[vic120]

But how many really solicit in multiple states.

Being that most who I have spoken with on and off this forum does multible states, I would imagine it's not far and few between

 

[WCMason]

The only place I can point you to is to call your carriers and ask them if they report it to the non-res states. You won't find a single one that does.

In your last post you said the responsibility to pay income tax in non-resident states is something that does not apply to insurance agents. This isn't the same thing at all. An insurance carrier not reporting income to each state would not exempt us from that responsibility if it does apply to agents. It just makes it less likely a state will demand a tax return.

As one who lives in a state with no income tax, I'm not eager to pay non-resident income tax in other states. But there is a huge difference between we don't have to and we won't get caught. So far on this thread the case against filing sounds all like the latter.

 

[sshafran]

So far on this thread the case against filing sounds all like the latter.

Maybe.

But it still doesn't make sense. If I call someone in Illinois and they pay Aetna (not my agency) - what have I earned in Illinois? Nothing. Aetna earned in Illinois...

Aetna pays my corp in Ohio. Therefore, Ohio is where I earned the compensation.


Now if my Illinois client paid me... then I can see Illinois wanting a state tax return.

Not arguing - just stating that I can't see how the non-res state could collect.




Would they also require a W-2 employee working at a call center for Aetna in their headquarters to file a state income tax every time they answered an inbound call that resulted in a sale and a bonus from someone in Florida?

After all, that W-2 employee now has a client in Florida that they earned money off of...

 

[vic120]

In your last post you said the responsibility to pay income tax in non-resident states is something that does not apply to insurance agents. This isn't the same thing at all. An insurance carrier not reporting income to each state would not exempt us from that responsibility if it does apply to agents. It just makes it less likely a state will demand a tax return.

As one who lives in a state with no income tax, I'm not eager to pay non-resident income tax in other states. But there is a huge difference between we don't have to and we won't get caught. So far on this thread the case against filing sounds all like the latter.

I have 3 FMO's all tell me it is not so. I don't know most of those have done this a while say it is not so.

I respect you on the forum and I am not trying to be a hard Azz However you did say the whole thing came up because an INS carrier submitted income you did not even earn. and that you just now for the first time are getting no res lic