Any tax problems living in Chattanooga, working in GA?

[drfranklin]

I'm going to have to reply to this thread. Some opinions noted above are confusing and some are just plain wrong.

I was just in this situation recently - I lived in Chattanooga and worked in Trenton, Georgia. The state of Georgia DOES NOT CARE where you live - if you work within the confines of the state of GA - you owe taxes to the state of GA. Now, as a non-resident of GA, were my taxes lower? I'm not sure - I still owed a hefty amount in 2006 - but less in 2007.

Let me quote directly from the GA Dept of Revenue website:

What are the filing requirements for a nonresident who works in Georgia and/or has other Georgia source income?

Nonresidents, who work in Georgia or receive income from Georgia sources and are required to file a Federal income tax return, are required to file a Georgia income tax return. Some examples of Georgia source income are wages, Georgia lottery winnings, income from flow through entities (s-corporations, partnerships, LLC’s, trusts, and estates), rents, etc. If you are a legal resident of another state, you are not required to file a Georgia income tax return if your only activity for financial gain or profit in Georgia consists of performing services in Georgia for an employer as an employee when the compensation for services performed does not exceed the lesser of five percent of the income received in all places during the taxable year or $5,000.

[Eat]

I'm not sure why people think you only have to pay income tax in your state of residence, other than they have experienced that sort of thing somewhere.

Unfortunately, or fortunately, depending how you look at it, we live in a republic, in which each state is sovereign to some degree. Nothing bars states, and some cities, from collecting income tax from nonresidents if it chooses to do so, unless the state or city is specifically banned from doing so by by a higher political entity.

In the case of DC, Maryland, and Virginia, that is just what happened. Congress simply banned the practice of taxing nonresidents who worked in one of those jurisdictions, but lived in another. They did it because DC threatened to tax the incomes of nonresidents working there. Most federal workers live in Virginia and Maryland, and had DC's proposal become law, there would have been a mass exodus of federal workers from DC based jobs. It would have been chaos, and Congress, which has a distinct dislike for how DC is run, gleefully nipped it in the bud.

There are also any number of people with incomes from multiple states that are required to file income tax returns in each state, but simply do not do so out of ignorance, or because they think they can get away with it. One good example is rental income. Someone leaves a state and turns their former residence into a rental property. In a lot of cases, they will be required to file a nonresident income tax return in that state. I did that for years, and trust me, I wouldn't have done it if I didn't have to.