W-2s from 4 states

[Barby]

My client is a traveling nurse based in one state where he receives a W-2 with all income for the year under federal and AND state.  Then he got 3 other w-2's with only the state amounts filled in.  The state amounts of income add to the total income, but the state taxes do not.  All of the states DO have state income tax.. One W-2 has not state tax on it.  Should I have him contact payroll to see why, or is there another way to figure this out?

Thank you

[PATAX]

Yes maybe he was only in that one state for a short time and they did not withhold State tax

[qbteachmt]

"The state amounts of income add to the total income"

If these are all from the same employer, you don't expect the State amounts to add together to equal Fed. That's because the Feds use the total. But various States have different rules. Some will have you report the amount earned only while in that State. Some require you to report all earnings (the same as the Fed amount) and then they allow a credit back from tax paid to other States. Some States expect there to be an allocation, such as by % or number of days worked in that State. And some States will tax the amount from the employer no matter where it was earned, because that is considered the Source State, even in the employee only worked telework or remote.

It's too late now for payroll to do 2022 manual withholding. Any withholding that was in their State tax tables has been done for the year. Your client likely didn't hit the tax tables for withholding. If they know that they will owe, then they need to update their records for 2023, and perhaps make a voluntary 1st quarter estimated payment to that State, because here we are mid-April.

[Skylane · Accepted solution]

@qbteachmt is correct…. A few questions… 

what is the home state and what are the others?  There may be reciprocity between 1 or more

Are there State withholdings from all 3?

generally speaking, and unless there’s reciprocity, you’ll be filing a couple non resident returns and taking a credit for tax paid to other jurisdictions in the home state.

it’s pretty common and correct for the employer to report the source income to the states in which it was earned.

- Ken

[Barby]

Thank you.  Home state is KY.  AZ shows no state taxes but plenty of income for state to have deducted. I looked and found the AZ income tax rate is 2.5% so I am pretty sure he has to pay.  The 3 W-2's from other states (not KY) do not add up to the state taxes paid on the KY W2 under state taxes.  Even the one W-2 from KY shows ALL the income in KY, even though the other 3 show income in their states that add to the one total.  Not sure if I am missing something. 

Thanks for any help,

Barby

[qbteachmt]

"Not sure if I am missing something."

What you keep stating isn't what you should be expecting.

"The 3 W-2's from other states (not KY) do not add up to the state taxes paid on the KY W2 under state taxes."

Withholding is not taxes owed. Until you work through the tax form, you won't know taxes owed. These are prepayments. A person might end up owing no taxes, and get a refund. Or, they have no estimates or withholding, and it turns out, they owe taxes.

"Even the one W-2 from KY"

It might help to think of that entire package as Pages of the same one W2. If that is one employer, they don't have a lot of room for breaking out the reporting, so they issue more than one page, to show the breakdown for specific States.

"shows ALL the income in KY, even though the other 3 show income in their states that add to the one total."

No, that's not the way to understand it.

You have Fed total.

You have various States with Various amounts of reportable taxable earnings. Some of these States also expected the employer to do some withholding.

Don't try to add together anything about States, from that form, even though it is lots of pages and lots of States. That's not what is being reported.

For instance, a resident in KY would report all the same amount as Fed, because that is their resident State and that is how KY wants it reported. The nonresident States might or might not want the Fed total. They might want only amounts attributed to AZ or whatever States. My State, Montana, expects full Fed to be reported, for nonresidents. You would never add KY and Montana, expecting to = Fed, for those reasons.

Is there a problem you need help with? Stop doing wrong math, and use that info for tax preparation. You might find you have no issues.