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Texas resident working in Indiana

What are the tax requirements for an employee that just moved to Indiana in Sept 2010 from Texas? Do I need to withhold any taxes for State/County for Texas?

the answer depends upon where you as the employer are, not where the employee is. If you are an Indiana employer and the employee is working in Indiana, you will withhold Indiana income tax and pay employment taxes in Indiana. This is true, whether the employee commutes by jet from Texas or Timbuktu.

If you are an employer in the state of Texas, whose employee has recently moved to Indiana but continues to work for you, then you will need to work with the Indiana department of labor to determine if this person is an employee in Indiana or an employee in Texas. If he or she continues to visit the Texas office occasionally and works from home the rest of the time, the person is probably still a Texas employee. If the employee never returns to Texas, then you probably have established an Indiana branch office with one employee.

When the employee files his personal  income tax for the year 2010, in some cases he may be entitled to a partial or full refund of state income taxes withheld. However, in many cases state income tax must be paid in the state where the money is earned. Just FYI, Texas has no state income tax.

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This entry was posted on Monday, October 4th, 2010 at 8:20 am and is filed under
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