Sports Player with Multiple State W-2's

[TAXNJ]

Ask your client to bring you his pay stubs, highlighted in yellow for the time he worked in AZ, pink OH, green VA. if the highlights add up to the state amounts on his W-2, you are good to go. If not, have him ask payroll for documentation of why. Put him on extension until he provides an explanation for the AZ, OH, and VA amounts on his W-2. We can't help you; we never interviewed your client.

Can the colors be changed to red, white and blue for US Tax Code returns and the colors you mentioned for International returns?

Use Green ($) for client invoice. (Only kidding but the color coding is a refreshing idea)

[taxea]

Once you input the W-2 as is, you allocate or adjust to correct per state income.

[TAXNJ]

Once you input the W-2 as is, you allocate or adjust to correct per state income.

Yes, can input the W-2 amounts (Federal & state) as shown on the Issued W-2s along with any adjustment for ”Credit for Income or Wage Taxes Paid to Other Jurisdiction” as applicable.

Compliments to Poster Peggy for being “attentive” to detail in wanting to know what is causing the differences and how those differences if and/or can legally “benefit(s)” the client as many good Tax Professionals would.

Hopefully, Poster Peggy will let us know the result.

[Lion]

Hey, TaxNJ, you have my permission to use red, white, and blue, plus appropriate international colors. But, the red and blue might obscure the numbers underneath. I'm a big fan of color coding. Sometimes, just to help me keep my place, or to highlight the real info buried in a long-winded email from a client. But, colors and arrows can be a huge help in explaining things to a client. And, can help a client find his place or see what info he needs to get to you. I'm also a big fan of giving clients homework, like color coding and totals and even spreadsheets, if they are capable. Besides, the colors look pretty!

[TAXNJ]

LION - thanks

Hey, TaxNJ, you have my permission to use red, white, and blue, plus appropriate international colors. But, the red and blue might obscure the numbers underneath. I'm a big fan of color coding. Sometimes, just to help me keep my place, or to highlight the real info buried in a long-winded email from a client. But, colors and arrows can be a huge help in explaining things to a client. And, can help a client find his place or see what info he needs to get to you. I'm also a big fan of giving clients homework, like color coding and totals and even spreadsheets, if they are capable. Besides, the colors look pretty!

LION, thank you.

If you scan clients info and use Adobe Pro not the Standard, I will let you know of a reasonably priced (add-on )software (made for Accountants and used also by Tax Preparers) that does all the highlighting coloring, typing even a "printed" calculated tape (the old calculator tape), etc. on the PDFs (totally allows you to be paperless but do almost everything you do with paper - if interested send me a PM). But thanks again for your refreshing comment how you highlight client info.

[peggysioux]

Sports Player with Multiple State W-2's

So I received information from the payroll department regarding the state wages. The reason for the additional state income on the W-2 is that CA's income included both worked in and lived in amounts (which included CA, AZ and VA income). So just to be sure I understand the correct process - I input what the W-2's show for state income for each state and than I allocate wages for AZ, VA, and OH on Schedule S (Other State Tax Credit). Does it sound like I have it?

Thanks to all for their input!!!

Peggy Sioux

[TAXNJ]

So I received information from the payroll department regarding the state wages. The reason for the additional state income on the W-2 is that CA's income included both worked in and lived in amounts (which included CA, AZ and VA income). So just to be sure I understand the correct process - I input what the W-2's show for state income for each state and than I allocate wages for AZ, VA, and OH on Schedule S (Other State Tax Credit). Does it sound like I have it?

Thanks to all for their input!!!

Peggy Sioux

So:

1- client resident of CA?

2- If yes does box 1 & 16 agree? If not why nor?

3- for the other states does box 1 & 16 agree? If not why nor?

[peggysioux]

So:

1- client resident of CA?

2- If yes does box 1 & 16 agree? If not why nor?

3- for the other states does box 1 & 16 agree? If not why nor?

Yes, client is resident of CA but box 1 and 16 do not agree for CA or any other state.

[TAXNJ]

Yes, client is resident of CA but box 1 and 16 do not agree for CA or any other state.

Why? Did you ask payroll what causes the difference for each?

[peggysioux]

Why? Did you ask payroll what causes the difference for each?

Payroll manager gave the following explanation: "When he was in AZ and VA, he was set up with AZ or VA “worked in” state tax and CA “lived in” state tax. Due to local tax implications in OH, OH was listed as both the worked and lived in locations. So, while it appears the State allocations in total are overstated, it is because the CA amount includes both worked in and lived in amounts."

So the CA wages on W-2 included CA, VA and AZ.

Being CA taxes all income being resident state anyway, there is no adverse tax aspect for client so should I just input as stated on W-2 and allocate other state wages on Schedule S of the CA return?

Peggy Sioux

[TAXNJ]

So based on the numbers you provided and the explanation, client made $6369.17 in the Resident state CA?

Then if you add all non resident states to the Resident state(CA) total Resident state income is $15027.50?

Is that correct?

You will make the correct decision since you are getting compensated and have more info and discussion with the appropriate people.

[peggysioux]

So based on the numbers you provided and the explanation, client made $6369.17 in the Resident state CA?

Then if you add all non resident states to the Resident state(CA) total Resident state income is $15027.50?

Is that correct?

You will make the correct decision since you are getting compensated and have more info and discussion with the appropriate people.

Taxpayer really only made $6,425 in CA and W-2's are overstating state wages because W-2 is basically double taxing taxpayer for AZ and VA wages (being taxed both in CA and again in AZ and VA). The end tax result will be correct being CA calculates taxes based on federal income. But for future reference, did payroll company mishandle and needs to be corrected or this is a common situation when several states are involved?

Peggy Sioux

[Burke]

I have never in 35 years seen this type of treatment, but then I haven't done a CA in 20 years. For VA, he should receive an out-of-state credit (Form OSC) to prevent double taxation.

[TAXNJ]

I have never in 35 years seen this type of treatment, but then I haven't done a CA in 20 years. For VA, he should receive an out-of-state credit (Form OSC) to prevent double taxation.

Interesting when doing Professional Athletes when going to various states-requires some specialization - No?

I would be concern also with the amount in box 1 is correct. Always wanted a different occupation to make some money. Maybe look into the NFL or even a politician!