Originally Posted By: crinkles
bloody crazy. we only have federal income tax here. I think the company you work for pays payroll tax to the state?
In most situations, income tax to both Federal and State.
Social security taxes to federal
Some cities have earnings taxes, so they are paid directly, too.
In my area, we have to consider all of them, since my wife works in Kansas City, MO, where there is a 1% earnings tax and her salary is taxed by Missouri because that is where she works.
In QuattroPete's situation, he will be paying 6% of all wages earned in Georgia to the state of Georgia. He files a Georgia state tax return to ensure he pays the right amount. His witholding may have overpaid, so that is why he may get some taxes back or owe some.
He should get credit for some or all of that amount paid to Georgia from Illinois (generally as a credit) and is taxed on all other income derived in Illinois as part of the Illinois tax return.
Any craftsman who works in multiple states has to file multiiple returns to each state, so that he pays proper income taxes where the wages were earned. Many athletes must file multiple tax returns for not only the states, but also cities where they have earnings taxes (Philadelphia, Kansas City, New York City, Washington, DC, etc), further complicating their tax situation. The hasic rule is that wages get taxed by the state (and possibly locality) where they are earned. There are some short term exceptions (but not for athletes or entertainers), but once the income tax deductions are paid to the states involved, only by filing a tax return for that state can you insure you paid the correct amount to that state.
If this is news to anyone, then welcome to the world that the US Military has to deal with, particularly with more working spouses. The Soldiers and Sailors Relief act has several provisions to prevent military wages from being taxed by more than one state and who has claim on the income tax witholding, but working apouses in multiple state locations can severely complicate a soldier's tax situation.