State W/H from non resident state

[AZ-Tax]

I have a client who had state w/h from another state other then his resident state. On his resident return I gave him credit for the state w/h from the non resident state. The resident state liability was less then the state w/h and on top of that, he had to pay into his resident state. Am I to believe that even though he never resided in the state he filed a non resident return and had state w/h, he still has to pay state income taxes for that state?

Is this a form of double dipping?

[BOB W]

First you do the non-resident state's return and show that state's w/h. Then any tax on the non resident's return should end up as a credit on the res state's return. The credit may or may not equal the non res taxes.

[gkaiseril]

You most likly will need to supply a copy of the non-resident return along with the resident state return. You should also check how the resident state computes the equivalent taxable income and tax. Illinoisl publishes a special publication each year for the individual return with instructions on how to restate the income and tax for the non-resident state from that state's individual return.

[Roland Slugg]

Am I to believe that even though he never resided in the state he filed a non resident return and had state w/h, he still has to pay state income taxes for that state?

Yes, that is correct. Furthermore, most states (perhaps all) with an individual income tax also require that the person files a return ... as a non-resident ... paying the actual, calculated tax for that state and taking credit for the withholding paid in on his behalf. This can result in a refund of some of that withholding.

One exception to this filing requirement is when the individual was included in a consolidated/group return filed by the entity in which he is a member ... usually a partnership, S-Corp or LLC.

Regarding the credit you take on the resident return, in some states (perhaps all) the "other state" tax credit may not exceed the resident state's tax.