Tax question

[Sweetrice80]

Hey everyone,
Hope everyone is doing well and is enjoying the happy thoughts of the coming of spring. Speaking of Spring, I got a tax claim question.

To make the story short, I went and hired someone to do my taxes but after seeing he was going to charge me 400 bucks for 2 hours worth of work, I decided to go home and do the taxes myself. But I have one question that I am a bit confused on hopeing you can answer for me.


I have been a "resident" of ohio for half a year (but really been living in maryland), for the other half of the year I officially became a Maryland State Resident. But during that half a year, I did not have any taxes taken out of Ohio, I did not fill out a form for it. Because in the past I just pay it all at the end of the year. However the H and R Block person mention to me that I do not need to claim an Ohio Resident form for half the year because I did not fill out a form. I did fill out a form for Maryland and getting taxes taken out each paycheck. So he told me to file for Maryland for the whole year.

I am not sure about this, it does not seem to make sense to me but It will save me some money because then I will have to file for another state and the form itself cost money. I also do not want to file for Maryland for the whole year then come 2 months later I get a letter from ohio saying I own thme money.

Thoughts?

Thanks

David

 

[mu mike]

I'm not sure what you mean by "filling out a form" but generally speaking, if you have state source income and you were a resident for any portion of the year, you will be liable for state income tax.

Here is what the Ohio Department of Taxation states:

Who Must File

Every Ohio resident and every part-year resident is subject to the Ohio income tax. Every nonresident having Ohio-sourced income must also file. Examples of Ohio-sourced income include, but are not limited to, the following:

* Wages earned in Ohio (note: see "Exception," below),
* Ohio lottery winnings,
* Income or gain from Ohio property,
* Income or gain from a sole proprietorship doing business in Ohio; and
* Income or gain from a pass-through entity doing business in Ohio.

Exception
A full-year nonresident living in a border state does not have to file if the nonresident's only Ohio-sourced income is wages received from an unrelated employer.

Generally, you do not have to file an Ohio return if you have no Ohio income tax withheld AND if...

* you are single AND your federal adjusted gross income is less than or equal to $11,550 AND you have no Schedule A adjustments.
* you are married, filing jointly AND your federal adjusted gross income is less than or equal to $13,100 AND you have no Schedule A adjustments.
* your only source of income is retirement income that is eligible for the retirement income credit (line 48) AND the credit is the same or larger than your tax before credits (line 6).
* your personal exemption and dependent exemption amount on line 4 is the same as or more than your Ohio adjusted gross income (line 3).


I'm not familiar with Ohio specific tax returns, but would be happy to help in any way I can.

"The two certainties in life: death and taxes. The difference is that death doesn't get worse each time Congress meets."

 

[jfields]

The difference is that death doesn't get worse each time Congress meets."

You must have never paid an Inheritance Tax then.

 

[JHolmes763]

My advice is to not ask for tax advice on internet forums.

But, if I had to guess (it's your money, not mine), you need to do a return for both states. If you made money on Ohio, then you file an Ohio return for the money you made there. Same deal for the rest of the money you made while in Maryland.

-John

 

[Sweetrice80]

I am sorry for the confusion. What I meant to say was I filled out the W-2 form but did not pay any of the taxes, meaning each 2 weeks I did not pay taxes, because in the past I would pay what I own every year from my federal gov. refund. I am just suprised that H and R block would recomend somthing like that.

 

[JHolmes763]

I am just suprised that H and R block would recomend somthing like that.

Not paying any taxes into the system throughout the year and instead paying it all at once when taxes are due is one of the smartest things you can do, if you can manage it. In my opinion, at least. Why let the gov't hang on to your money throughout the year, when you can keep it and gain interest on it waiting to pay taxes. You just have to be smart about how much you're keeping back to ensure you can pay it all, easily.

... if that's what you meant by H&R's recommendation...


Also, seems pretty clear to me that you have to file for both states that you made money from. Call up the IRS directly and ask them, though. Pretty sure they publish a help number on their site. You may sit on hold for a bit, but you'll get the answer.

-John

 

[Sweetrice80]

Thanks again guys,
John, what I meant that H and R block recomended me not to file for Ohio, and to file for half a year in Maryland, and then when Ohio sends you a "bill" pay it. Meaning I never put any money into Ohio taxes, until its due. What the H and R block guy was recomending was to save money on the form to fill out for Ohio, was to not do anything and wait until a bill comes to your house and pay it. Does that make any sense?

David

 

[Cparker]

It may be helpful to review what address you used on the W-4 with the Ohio employer.

Employers are required to withold taxes, and will pay the witholding according to state tax law. If your employer has offices in both Ohio and Maryland, and you used a Maryland address on the W-4, you may find that your employer paid all witholding to Maryland which may explain the comment you mentioned. A state is only aware of your work within the state based on filings made informing the state revenue department, i.e. W-2's, 1099, sales tax filing etc.

Personally, I do my taxes using tax software and then pay an accountant to review and file my return. A CPA at $200 an hour is not out of line. Is it expensive ? Yes, but its cheaper than an audit and if an audit occurs you have a tax expert to guide you. Usually the CPA I use is pretty good at finding something I missed effectively reducing the cost or sometimes paying for itself. As with most things, you get what you pay for.

I do not use "tax preparers' based on your statement you quote.

I view using a CPA like insurance, I hate to pay for it, but if I need it I'm glad I have it.

Cparker

 

[mu mike]

Call up the IRS directly and ask them, though. Pretty sure they publish a help number on their site. You may sit on hold for a bit, but you'll get the answer.

The IRS won't be able to help with an Ohio return. They will direct him to call the Ohio Department of Taxation.

 

[Sweetrice80]

It may be helpful to review what address you used on the W-4 with the Ohio employer.

Employers are required to withold taxes, and will pay the witholding according to state tax law. If your employer has offices in both Ohio and Maryland, and you used a Maryland address on the W-4, you may find that your employer paid all witholding to Maryland which may explain the comment you mentioned. A state is only aware of your work within the state based on filings made informing the state revenue department, i.e. W-2's, 1099, sales tax filing etc.

Personally, I do my taxes using tax software and then pay an accountant to review and file my return. A CPA at $200 an hour is not out of line. Is it expensive ? Yes, but its cheaper than an audit and if an audit occurs you have a tax expert to guide you. Usually the CPA I use is pretty good at finding something I missed effectively reducing the cost or sometimes paying for itself. As with most things, you get what you pay for.

I do not use "tax preparers' based on your statement you quote.

I view using a CPA like insurance, I hate to pay for it, but if I need it I'm glad I have it.

Cparker

I have been working in DC for half a year filled out an W-4 form as an Ohio resident each pay they took out nothing from my pay check, so on my W-2 form for state withholdings it says $0. I got a new job, became an Maryland Resident, filled out a W-4 form but have money taken out of my pay check each week for state tax. Because even if I file for Ohio, I am putting $0 down for how much I paid for the half year.

lets put it this way, If I do not file for Ohio tax what will they do? Will they send me a "bill" type of thing or will they send me some kind of nasty letter saying I own them money for they will audit me?

David

 

[mu mike]

I have been working in DC for half a year filled out an W-4 form as an Ohio resident each pay they took out nothing from my pay check, so on my W-2 form for state withholdings it says $0. I got a new job, became an Maryland Resident, filled out a W-4 form but have money taken out of my pay check each week for state tax. Because even if I file for Ohio, I am putting $0 down for how much I paid for the half year.

lets put it this way, If I do not file for Ohio tax what will they do? Will they send me a "bill" type of thing or will they send me some kind of nasty letter saying I own them money for they will audit me?

David

If you do not file, the State of Ohio will proforma a return for you and send you a notice of underpayment of Ohio income tax, plus penalties and interest.

Multi-state filers generally receive a credit for income taxes paid to other states, though. It's not always a wash, but it does lessen the effects.

 

[StatHaldol]

A CPA at $200 an hour is not out of line. Is it expensive ? Yes, but its cheaper than an audit and if an audit occurs you have a tax expert to guide you. Usually the CPA I use is pretty good at finding something I missed effectively reducing the cost or sometimes paying for itself. As with most things, you get what you pay for.

I do not use "tax preparers' based on your statement you quote.

I view using a CPA like insurance, I hate to pay for it, but if I need it I'm glad I have it.

Cparker

This is true, in my opinion. I've got OCD about receipts and taxes and it helps to have a CPA sort it all out. If I get audited; my CPA goes to the audit. It's good insurance.

In the past, I've done my taxes myself and then had a CPA do them. He always finds things I missed and usually pays for his own service.