Multi state question

[NECPA in NEBRASKA]

My client worked in two states in 2012. He is a traveling nurse that works for a company that outsources it's payroll. The two states are shown on the W-2 , but the state wages for each state is the same as the federal. There is only one state with any withholding. I'm assuming that I have to get his checkstubs and add them since this company is not preparing payroll correctly. I'm only asking in case someone knows how this W2 could possibly be correct. Thanks.

[joanmcq]

Which states? NY requires that the wages on the NY W2 match the federal, regardless of how much was actually earned there.

[NECPA in NEBRASKA]

It's Nebraska and Wisconsin. He worked about half a year in each state, but no Nebraska withholding. They withheld Wisconsin for the whole year. Nebraska is his home state. He argued with them, but they told him that it wasn't their problem.

[joanmcq]

He should be able to get a credit on Nebraska for the taxes paid to Wisconsin. I'm not that familiar with those two states, so I'm not quite sure of all of the details.

Employer should be strung up by their thumbs. It is their problem, but if they won't fix it, you'll have to apportion the income on the returns, and be ready for a letter from the states. the home state likely will report all the income as taxable, but the credit for taxes paid to WI should offset that.

[NECPA in NEBRASKA]

Yes. I don't even know how these places don't get busted for the shoddy way they work.

[Margaret CPA in OH]

Here in Ohio, non-profits are not required to withhold tax for residents of another state. As a church treasurer, I discovered that when we had employees from KY. They had to file for Ohio refund and use that to pay KY tax. It was a matter of small church resources, volunteer efforts and getting a withholding account set up in a foreign state.

As a nurse, it may be possible that the client of the OP works for a non-profit and/or doesn't want to pay the service for the additional state handling. There is a cost involved.

[NECPA in NEBRASKA]

I doubt that the payroll service or nursing agency is non-profit, but I'm sure that the hospital is. It would be nice if they would at least tell you the taxable amount for another state, since there is per diem and lots of deductions involved.

[mcb39]

According to my all states Quickfinder book, Nebraska Schedule II of form 1040N, Credit for Tax Paid to Another State. I am in Wisconsin and we have a form OS which calculates the credit for taxes paid to another state. He has to claim the entire amount of income as Nebraska income as that is his state of residence. Hopefully it will come out close to being a wash.

[NECPA in NEBRASKA]

Yes, he will get the tax credit for the Wisconsin tax owed, I just hope that the two states are about the same rate. Nebraska is pretty high.