Buyout ...where taxable??

[Barb]

Client works for Ford, they were offering him the buyout...he doesn't take it and sells house and moves to Kansas City MO to work for Ford there. Worked the month of July. Hated being there and asked if he could get the buyout. They gave him the buyout while in Missouri. The buyout was totally taxed to Missouri.

He moved back to KY Aug 6th. So he literally was in Missouri for a month. While there he had an apartment at 810 month - broke the lease but still had to pay 4 months rent.

Do you know if part of that buyout could be KY? My thoughts are that he could have taken the buyout in KY before going to MO so at least 11 months of the income should go to KY. What do you think?

[JCH]

I would think the buyout is taxable to MO only since he received the income while a resident of that state.

[Roland Slugg]

Concur

FWIW, I agree with JCH's reply above. The time your client was in Missouri is irrelevant ... his intent is what counts, and it was his intent to make Missouri his permanent home.

If the buyout income is also taxed on his Kentucky return, he should get a credit on that return for most or all of the taxes paid to Missouri on the same income.

[thomtax]

I am not familiar with Kentucky, but I know that I recently filed a Missouri return. On the return was the statement that Missouri Does Not Have a Reciprocal Agreement With Any Other State. Because of this, you may want to be sure that KY will give credit for what was paid in MO.

Also, in MO there are two cities that are allowed to have income taxes - St. Louis and Kansas City. Sooo- if he was in Kansas City you probably need to take a look at this.
Hopefully he is not in one of those catch 22 situations of heads they win, tails they win.

LT

[Barb]

Thanks

I was thinking it probably would be the state where it actually was received since he was no longer a resident of KY.