Memphis, TN asked in Tax Law for Mississippi

Q: When we live in MS but still work in TN, do we pay MS state tax? My tax lady says no. My husband's TN says he needs to.

My TN employer didn't give me a MS withholding form in July. My tax lady said I didn't have to pay MS. Tax. She said when she do my tax on her software showing I now live in Mississippi and still worki in TN. It would show if ai owe MS state tax.

My husband job reported he made $29k MS taxable income even though he works in TN. They say he owes $648. My question is who is right, my tax lady and my employer who says they can't withhold MS tax? Or my husband employer who reported $29k and the tax owed on it is $648? How did they determine that amount of MS income when he works in TN? Who is right?

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1 Lawyer Answer
James L. Arrasmith
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  • Tax Law Lawyer
  • Sacramento, CA

A: The situation you're describing involves state residency and how it affects state income tax obligations, which can be complex. Generally, individuals are taxed by their state of residency. Mississippi, like most states, taxes residents on their worldwide income, regardless of where it's earned. Since Tennessee does not have a personal income tax on wages, residents working in Tennessee but living in Mississippi typically need to report their income to Mississippi and pay taxes there.

Your tax professional's advice appears to align with the general principle that you should pay state income tax to your state of residency. If your tax software indicates that you do not owe Mississippi state tax based on the information entered, it's likely considering factors such as credits, deductions, or the specific nature of the income earned. It's important that the software is accurately capturing your residency status and all relevant income details.

Regarding your husband's situation, if his employer reported $29k as Mississippi taxable income, it suggests they might have considered part or all of his income as subject to Mississippi state tax, possibly due to the nature of the work performed or an agreement between the states. The amount owed, $648, would be based on Mississippi's tax rates applied to the taxable income reported. It's essential to verify with a tax professional familiar with both Mississippi and Tennessee tax laws to ensure that income is reported correctly and that any taxes owed are accurately calculated. They can also clarify why there's a discrepancy between the treatment of your income and your husband's by your respective employers.

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