Income earned in multiple states creates tax filing difficulties

Posted on Posted in Accounting, Taxes

Income earned in multiple states can pose a serious problem at tax filing time. I borrowed this example from a tax professionals online post: “Client walks in a $10,000 W2 and has about 20 states on it, with between $150-$800 wages for each state, but zero withholdings in those states. Total AGI (self employed) is about $100k. What would you do with all of those states on the W2?”

The time required to file in 20 states is significant. The cost to hire any online or in-person tax service to file these 20 tax returns will likely shock the taxpayer. What to do?

I would need to have a conversation with the client about the cost/benefit of tax compliance.

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