You Still Have to Pay Idaho State Taxes
If you live in Idaho but work in a different state, the rules surrounding paying your taxes can be confusing. You may be wondering if you still have to pay Idaho state taxes, or why you still have to pay them if you are spending so much time outside of the state. At Stevens Pierce & Associates, CPA’S in Twin Falls, ID, we are here to help you navigate this complex issue. If you are an out-of-state worker, read below for the guidelines on paying your taxes.
Are you domiciled in Idaho?
Idaho taxes residents based on their domicile. If you maintain a home in the State of Idaho that you intend to make your residence, or you continue to return to, the government considers that your domicile for Idaho State Tax purposes. If you have an Idaho Driver’s License, title or license your vehicles in the State of Idaho, vote in an Idaho election, or own an Idaho residence, the government considers you to be domiciled in Idaho.
How are you taxed?
If you are an Idaho resident, the State of Idaho taxes your worldwide income, including income earned in another state or country. Part-year residents are taxed on all income received while living in Idaho, plus any income received from Idaho sources while living outside of Idaho. Nonresidents are taxed only on income from Idaho sources.
If you work in a different state but live in Idaho, Idaho will tax that income. If the worker has expenses for out-of-town stay, some of those expenses may be allowable deductions for being away from home. These can be deducted on both your Federal and Idaho State Income Tax returns on Form 2106 and Schedule A.
If you work in another state and pay tax to that other state, you are allowed a credit on your Idaho State Tax return.
Do you need to fill out an Idaho tax return?
A resident, single person is required to file a file an Idaho tax return if they have more than $10,350 of gross income. A resident, married (filing jointly) couple would be required to file if their gross income exceeded $20,700.
Idaho has a graduated tax rate of between 1.60 and 7.40 percent of Idaho Taxable Income. The Internal Revenue Service has a data matching and data sharing system with the 43 states that have income tax.
If you use an Idaho address on your Federal Form 1040 and do not file an Idaho 40, the State of Idaho has an aggressive department of tax specialists that are charged with identifying non-filers and bringing them into compliance.
Paying state taxes can be a complex issue when you are an out-of-state worker. At Stevens Pierce & Associates, CPA’S, we are here to help to ensure that you pay your taxes correctly, saving you time, stress and trouble in the future. We are proud to work with individuals and small businesses in the area for all of their accounting needs! Contact us today at 208-734-8662 for a consultation.