Wisconsin state return

[oceanlovin'ea]

I have a client who owns a home in Wisconsin and keeps her residency in Wisconsin. She has been in Florida for the past few years to help care for her elderly mother. She goes back to Wisconsin during the year briefly to take care of house, etc. She is now working in Florida part time.
She files a Wisconsin state tax return and claims the homestead credit. (Due to some sort of loan on the property, she can't sell the house or she will have to repay the loan.).
When I did the return for 2013, she ends up with a tax liability in Wisconsin. She did not earn the money in Wisconsin. Is it still taxable in Wisconsin?
Just checking? Usually a state return separates income that is not earned in the state out of the state income.

Thanks

Linda, EA

[FEDUKE404]

Resident liable for tax on all income

I have a client who owns a home in Wisconsin and keeps her residency in Wisconsin. She has been in Florida for the past few years to help care for her elderly mother. She goes back to Wisconsin during the year briefly to take care of house, etc. She is now working in Florida part time.
She files a Wisconsin state tax return and claims the homestead credit. (Due to some sort of loan on the property, she can't sell the house or she will have to repay the loan.).
When I did the return for 2013, she ends up with a tax liability in Wisconsin. She did not earn the money in Wisconsin. Is it still taxable in Wisconsin?
Just checking? Usually a state return separates income that is not earned in the state out of the state income.Usually a state return separates income that is not earned in the state out of the state income.

Thanks

Linda, EA

Actually, it's been my experience that a resident of state X must report additional income from states A, B, and C on the tax return for state X. Not quite sure what you mean by "separates."

(Things get a bit hazy with states that have reciprocal agreements, but I doubt if WI and FL have such.)

There is usually an offset for state x (resident) income taxes for any income taxes due to states A, B, and C for the "foreign" income. But since FL has no income tax, that point is likely moot for WI.

Bottom line: Your client likely will be subject to WI income taxes on the FL income, no different from if the temporary job was located in WI. FL has no income tax, so there will be no tax offset for "FL income tax" on the FL wages earned and taxed by WI.

FE

[Gary2]

I'll just add that based on the description, her domicile is WI, notwithstanding the extended time living in FL.

[Burke]

Wisconsin allows an out-of-state tax credit for income taxed by another state. See Pub 125. This lets out FL. It also will forego the double taxation for states with which it has a reciprocity agreement. See Pub 121 for these. Generally these are contiguous states. Since FL has no income tax, I can't see it happening at all. She will owe the WI tax unless she changes her residency to FL. If she does all the other things necessary to prove residency, the fact that she still owns a home in WI will not be the deciding factor. You can check out the Part-Year residency rules to see if she qualifies. Sounds like she might. Obviously, income earned while she is a resident of FL will not be taxed in that case.