In: Accounting
The domicile is the method of taxing individuals. Every individual has to pay state taxes based on the residency, even if individual earn money in another state or country. The article shows three different cases, where taxpayers did not understand the rules of the domicile. The individual should consult with licensed and experienced accountant how to terminate place of the old domicile and how to get the new place of domicile. It would help the individual to avoid problems and penalties with a state governments in the future.
QUESTION: DO YOU AGREE WITH THE ABOVE STATEMENT? EXPLAIN
Residents pay tax on all income (from all sources) they recieving during the calender year. However, they get tax credit of all the taxes they pay in other states.
Regardless of the fact about the nature of your residency the apportionment schedule needs to be completed.
After you use the apportionment schedule to allocate the appropriate amount of your income and deductions to the new state, you need to calculate what percentage of your total income is state income. We'll call this the "apportionment percentage," and it is used in the rest of the calculations.
For example, if your total income was $50,000 and you earned $30,000 in a second state where you moved during the year, your apportionment percentage is 30,000 divided by 50,000, or 60 percent.
You generally use the apportionment percentage in one of two common methods to calculate your state income tax.
Therefore you should consult with the licensed and experienced accountant about how to pay the taxes.