Richland, WA asked in Tax Law for Washington

Q: I quit my NC Job & moved to WA late 2017; got a bonus from NC job in 2018. No work/resident in NC 2018. NC Tax on bonus?

I left my Raleigh NC job at the very end of 2017. In 2018 I didn't work any hours for my NC job nor was I a resident. I moved to WA state where there is no state income tax and I work at a full time job in Richland WA. If I didn't live in NC or work in NC....and a NC company sent me a bonus check (where I didn't work at all for the NC company in 2018), how can the state tax me? The company withheld NC state taxes even though I have a WA address and was not working at the company in 2018. FYI, I timed my departure such that I would fully qualify for the 2017 incentive bonus but not work at all during 2018 so this state tax throws a wrench in my plan.

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1 Lawyer Answer
Eric Steven Day
Eric Steven Day
Answered
  • Tax Law Lawyer
  • Henderson, NV

A: The bonus that you received was in relation to work that was performed in NC, therefore, NC can tax you in relation to that income. If the income was produced or "earned" in that state's jurisdiction, that state has the right to tax that income. The other way that a state would be allowed to tax the income that you earned is if you were a resident of that state when you received it. In other words, if you worked in NYC and commuted from Connecticut to work there, you would be taxed by both NY and CT on the same income. However, most states will allow a credit for the taxes that you paid another state in relation to the same income so as not to be taxed twice. In your case, WA does not have state tax, so you will only be required to pay NC, where the income was earned.

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