Withholding tax for truck drivers

[Gretel]

should read Trucking business

If a trucking company is set up as interstate truck driving but does local truck driving right now, are they subject to the local withholding tax or only to the home state withholding as interstate truck driving business?

Maybe if they do both different rules apply to different contracts?

Same for local state tax?

[JG EA]

should read Trucking business

If a trucking company is set up as interstate truck driving but does local truck driving right now, are they subject to the local withholding tax or only to the home state withholding as interstate truck driving business?

Maybe if they do both different rules apply to different contracts?

Same for local state tax?

To keep your question going.

I have no idea. But wouldn't a truck driver be liable to home state anyway? In other situations where employees worked in one income taxed state and lived in another income tax state, I would withhold in both states. Because sometimes the tax in the working state would not generate enough tax to offset the home state. So, I would look at the tax in the home state and subtract the withholding from the work state and withhold on both. That way, no employee was mad at the end of the year.

Obviously this is some specialized trucking situation that I know nothing about so my thoughts may not help at all.

[Gretel]

Amtrak law

Thanks, JG, it helps to know that someone else is trying to help. It seems to be more complicated than I thought and of course, UE, Work.Comp. and income taxes of the company need to be dealt with.

I just read the link below again (was provided in a post last year) and it appears to be very much facts and circumstances, which could be different for each employee. I also was under the wrong impression that 2 states don't constitute interstate yet.

https://secure.dor.state.or.us/piti/index.cfm?action=topic&id=0039

[Nashville]

Not Concurrent

Gretel, I would not withhold two different states on the SAME WAGES. That would be a clear antithesis.

Facts and circumstances do dictate whether a domiciled worker must have state wages in another state, and the explanations are situation-based and go far beyond this post.

However, if an Idaho resident is working in Oregon, and it is determined that he is earning Oregon wages, then he is not earning Idaho wages. Thus, only Oregon SIT would come out of his check. Should not withhold both Oregon and Idaho just to make both states happy.

[outwest]

However, if an Idaho resident is working in Oregon, and it is determined that he is earning Oregon wages, then he is not earning Idaho wages. Thus, only Oregon SIT would come out of his check. Should not withhold both Oregon and Idaho just to make both states happy.

Let's clarify a bit. Oversimplified, wages are taxed first in the state earned then in the resident/domicile state. In the OR/ID situation above, OR gets first crack at the income and the ordinary state income tax withholding from the OR paycheck ought to cover it. However, the taxpayer will still file an ID return and include that OR income in Idaho taxable income. To be fair, ID will allow a credit for the OR tax already paid.

As OR rates are higher than ID, the taxpayer would not likely have any ID tax due.

If the situation was reversed (living in OR and working in ID) then the taxpayer might have some OR tax due because of the higher OR rates.

This loops back to the earlier post of withholding in both states. It's one possible way to make sure the employee has enough withheld for the resident state tax. It's not to make the state happy, it's to keep the employee from blaming the payroll dept for taxes due.

That strategy assumes the company operates in both states. I think a easier strategy is to tell the employee to grow up. Not going to happen with some, so another option is to over withhold in the job state and use that refund to pay the resident state tax.

[JG EA]

Let's clarify a bit. Oversimplified, wages are taxed first in the state earned then in the resident/domicile state. In the OR/ID situation above, OR gets first crack at the income and the ordinary state income tax withholding from the OR paycheck ought to cover it. However, the taxpayer will still file an ID return and include that OR income in Idaho taxable income. To be fair, ID will allow a credit for the OR tax already paid.

As OR rates are higher than ID, the taxpayer would not likely have any ID tax due.

If the situation was reversed (living in OR and working in ID) then the taxpayer might have some OR tax due because of the higher OR rates.

This loops back to the earlier post of withholding in both states. It's one possible way to make sure the employee has enough withheld for the resident state tax. It's not to make the state happy, it's to keep the employee from blaming the payroll dept for taxes due.

That strategy assumes the company operates in both states. I think a easier strategy is to tell the employee to grow up. Not going to happen with some, so another option is to over withhold in the job state and use that refund to pay the resident state tax.

Thank you and this is just what I did. By the way, these employees were not happy even having to do tax returns in 2 different states. It was a big deal - a lot of complaints. So, I wanted to make sure they wouldn't owe to the higher tax state after their credit for taxes paid to the lower taxed state. It did take extra figuring, but well worth keeping the employees happy. And yes, that was my goal - not to keep the states happy but the employees happy.

[outwest]

Sure understand,

before public accounting I worked with a firm specializing in payroll. You really have to understand that the employees really care about their paychecks. And any glitch is the payroll department's fault.

[Bees Knees]

A professional athlete earning 7 figures could easily be subject to state tax in dozens of states and the payroll department for the professional athlete may be required to withhold state taxes for dozens of states at the same time.