I pay state income taxes. Why do I have to pay out of state rates for certain things? (insurance, retirement plan)

[EVAunit1981]

Here's my situation:

I live in TN. I've lived here all my life and never paid state income tax until 2010 when I got a job in KY. I've paid KY state income tax since that time. I've looked into getting hunting and fishing license in KY as well as tuition at KY colleges since I'm thinking about going back to school.

In every case I've found it doesn't matter that I pay taxes and contribute - I have to pay more because I live out of state. Of course I could just lie about my residency but I'm not that kind of guy. No good deed goes unpunished I guess.

This makes no sense to me. I could have moved to KY and not worked, not contributed anything and gotten the in state rate for tuition and fishing license. I pay all the taxes a KY resident pays - why shouldn't I get all the same benefits?

The thing is, I don't mind paying taxes for stuff I use. I just don't like paying taxes and getting nothing in return.

Anyone else in a similar situation?

[rrtechno]

Originally Posted by EVAunit1981

Here's my situation:

I live in TN. I've lived here all my life and never paid state income tax until 2010 when I got a job in KY. I've paid KY state income tax since that time. I've looked into getting hunting and fishing license in KY as well as tuition at KY colleges since I'm thinking about going back to school.

In every case I've found it doesn't matter that I pay taxes and contribute - I have to pay more because I live out of state. Of course I could just lie about my residency but I'm not that kind of guy. No good deed goes unpunished I guess.

This makes no sense to me. I could have moved to KY and not worked, not contributed anything and gotten the in state rate for tuition and fishing license. I pay all the taxes a KY resident pays - why shouldn't I get all the same benefits?

The thing is, I don't mind paying taxes for stuff I use. I just don't like paying taxes and getting nothing in return.

Anyone else in a similar situation?

Perhaps, even though you pay taxes on the earnings you have in Kentucky and pay appropriate taxes on whatever items you purchase in Kentucky, I really doubt you are paying ALL the taxes that a Kentucky resident pays.

[EVAunit1981]

If I don't pay all, I pay pretty close. I pay state income taxes, city income taxes and am also forced to contribute to the Kentucky Retirement System, the retirement plan for state employees. I know I will never use this, yet I can't opt out. Combined, all this comes out to over $200 per month.

I never paid any of these things in TN.

I also pay sales tax and gasoline tax while in KY.

My job puts me in contact with KY residents who contribute a lot less than I do. Yet, if I decided I legally wanted to go hunting it would cost me about $150 more than them. If I wanted to go to college it would be between 2 to 3 times more expensive than a KY resident.

[MrRational]

Originally Posted by EVAunit1981

I live in TN.
I've lived here all my life and never paid state income tax until 2010 when I got a job in KY.

Originally Posted by Kentucky

Individual Income Tax is due on all income earned by Kentucky residents
and all income earned by nonresidents from Kentucky sources.

It would appear that KY doesn't want to risk having it's residents move to TN to avoid income taxes.
Either move to KY and get the benefit of the taxes you pay or find a job in TN

Those who work in Kentucky but live in Tennessee should report their earnings on Form 740-NP
"Kentucky Individual Income Tax Return Nonresident or Part-Year Resident."

[rrtechno]

Originally Posted by EVAunit1981

Here's my situation:

I live in TN. I've lived here all my life and never paid state income tax until 2010 when I got a job in KY. I've paid KY state income tax since that time. I've looked into getting hunting and fishing license in KY as well as tuition at KY colleges since I'm thinking about going back to school.

In every case I've found it doesn't matter that I pay taxes and contribute - I have to pay more because I live out of state. Of course I could just lie about my residency but I'm not that kind of guy. No good deed goes unpunished I guess.

This makes no sense to me. I could have moved to KY and not worked, not contributed anything and gotten the in state rate for tuition and fishing license. I pay all the taxes a KY resident pays - why shouldn't I get all the same benefits?

The thing is, I don't mind paying taxes for stuff I use. I just don't like paying taxes and getting nothing in return.

Anyone else in a similar situation?

How did you manage that?

The tax table below will show in detail the Tennessee state income tax rates by income tax bracket(s). There are 1 income tax brackets for Tennessee.

If your income range is $0 and over, your tax rate on every dollar of income earned is 6%.

Income tax brackets data last updated March 3rd, 2009.

Tennessee Income Tax Rates - Tennessee & other state tax rates information. TN tax calculator.

[MrRational]

Originally Posted by rrtechno

How did you manage that?

Salaries, wages, Social Security, IRAs and pension income are not taxed.
A 6% tax is levied on stock dividends and interest from bonds and other obligations.
Source

41 states have a broad-based individual income tax.
Only seven states lack an income tax altogether. They are:

• Alaska Florida Nevada South Dakota
• Texas Washington Wyoming

Two states have a limited income tax on individuals.

These states tax only dividend and interest income:

• Tennessee New Hampshire

[EVAunit1981]

rrtechno:

MrRational is correct. TN has no state income tax on wages.

I don't mind paying taxes to support roads. That is the only government service that KY provides that I actually use. Although I'm sure a good portion of my federal tax dollars goes towards that. But I digress.

But I'm now paying $2,500+ a year and have nothing to show for it. It's not like the state of Kentucky is spending money on me, providing me with lots of government services. Would it really be so bad if I got charged the in state rates for things? I'm not asking for free stuff. I just want to pay what anyone in KY pays. I see no reason why I shouldn't.

[Wardendresden]

Originally Posted by EVAunit1981

rrtechno:

MrRational is correct. TN has no state income tax on wages.

I don't mind paying taxes to support roads. That is the only government service that KY provides that I actually use. Although I'm sure a good portion of my federal tax dollars goes towards that. But I digress.

But I'm now paying $2,500+ a year and have nothing to show for it. It's not like the state of Kentucky is spending money on me, providing me with lots of government services. Would it really be so bad if I got charged the in state rates for things? I'm not asking for free stuff. I just want to pay what anyone in KY pays. I see no reason why I shouldn't.

The law for hunting licenses is based on where you live--just like the rates for automobilie insurance is based on where you live, not where you work---and there are differences in the state laws concerning insurance coverage which might affect how much you pay even if you only lived 100 yards across the state line.

If you live in TN and work in KY, you still drive on KY roads, might have need of KY emergency vehicle assistance in the event of an accident, still benefit from road maintenance, etc. Your other choice is to petition KY state legislators to change the law to benefit your particular circumstance. That's not likely to occur. So move to KY and see about getting an out of state hunting license in TN. I'm thinking the reciprocal is in effect, and that TN has a higher charge or limited time frame for out of staters.

[EVAunit1981]

Has anyone ever challenged the law in a situation like this?

I have no desire to move to KY, I'm finding a job in TN ASAP. If I ever go back to KY it will be too soon.

As far as using KY roads, yeah I do and I pay for them. I don't mind paying for the stuff I use. I pay income tax to the KY city I work in. I buy gas in Kentucky so I pay gas tax. I pay federal income tax and the federal government gives Kentucky money.

"For every dollar Kentucky sends to Washington in federal taxes, it gets back between $1.51 and $1.82 in federal spending, depending on which study is consulted."

Kentucky tsks, but takes federal funds | Politics and Government | Kentucky.com

And then there's the fact that I have to pay into the Kentucky Retirement System. It's the retirement plan for state employees. I'm not a state employee but I still have to pay into it. I know I'll never use it. I mean, I could if I worked there for 22 years. But I'll never work in Kentucky anywhere near that long. Oh, and I can't opt out of it. It's not like a 401k. But I digress.

[MrRational]

Originally Posted by EVAunit1981

Has anyone ever challenged the law in a situation like this?

Good luck.

Most states including KY have a reciprocity arrangement with states that border them.
The distinction is that TN doesn't have an income tax to reciprocate against.

Download that KY tax form: Form 740-NP