[CPA = Continuous Pain & Agony]

This question doesn’t really relate to the CPA exam, but it is a heated debate at my company right now. I can’t find the answer anywhere in the TN tax code or on the internet.

Tennessee is one of the few states with no state income tax. If you are an employer in the state of TN and you have employees that live in Georgia but commute to TN every day, as the employer are you required to withhold their GA state income tax from their pay each pay period?

I’ve been told no by a few people, but cannot prove it anywhere. Please help!

Thanks!

B - 80 (10/06/11)
A - 84 (01/03/12)
R - 81 (02/16/12)
F - 82 (11/23/11)

Thank you Jesus!

Used Becker Self-Study

[jokami]

I believe that the taxes that applies are the ones in the state they work.

Ok… What I am saying is that even though the employee lives in a state that withholds taxes they commute and work in one that doesn't. It should be the employees' responsibility to pay them if applicable.

The employer in this case should apply the taxes that apply to the state they are at.

Let's say:

In PR the tax withheld and sick and vacation accumulations are different than from the states.

I used to work for a US company in PR and they had to “deduct and accumulate” the taxes and days that were applicable in PR.

I found this out because the my tax deducted was different from the PR one and that first tax reporting was a MESS. So the company had to make arrangements in their software for the employees in PR to comply with PR treasury.

In this case, it was the company who had to make the changes because they had employees were working in that state.

I your case the employee lives in another state, but doesn't work there. So the company can't be responsible if the employee doesn't work in the state where the tax applies.

B - 62, 70, 72, 79!!!
A - 68, 81
R - 70, 82
F - 84

"The limit to your abilities is where you place them" - Fortune Cookies

[CPA = Continuous Pain & Agony]

Thanks, but that doesn't answer my question. I am asking if TN employers have to withhold GA state income taxes for GA residents. And I need a reference to prove it.

B - 80 (10/06/11)
A - 84 (01/03/12)
R - 81 (02/16/12)
F - 82 (11/23/11)

Thank you Jesus!

Used Becker Self-Study

[OnMyWayToCPA]

I live in Oklahoma and at one point worked in Texas (a “non-taxing” state) . I'm definitely not an expert but as far as I remember, the employer in a “non-taxing” state doesn't need to collect anything.

When the resident of “Georgia” files their state income tax, they will be taxed on their “Tennessee” income then…

So for example, my TX employer withheld no state taxes from my income, but when I reported my TX income on my OK state return, I was taxed on that amount.

B - 79 PASSED (1/4 there!)
A - 77 PASSED (1/2 there!)
F - 79 PASSED (3/4 there!)
R - 83 PASSED (DONE!!!!!!)
Review Course: Lambers , Wiley and Ninja

[Anonymous]

I am pretty sure they do, but I don't know exactly where to find that info. I used to do payroll among other things for a company in Northern Virginia. We had quite a few employees who lived in Maryland, and we had to withhold Maryland tax. The company used ADP, and we would choose VA as the worked in state but MD for the lived in state. Not sure if that helps, but thought I would respond just in case.

[Minimorty]

Tennessee employers do not have to withhold state income taxes for Georgian residents.

I dont really want to spend the time finding the authority though (sorry).

[NECain]

It doesn't matter where the person lives. What matters is where the income is earned. The income is earned in TN, so Georgia doesn't get income tax from income earned in another state.

REG - 79
BEC - 75
AUD - 84
FAR - 75
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[raymondsfamily]

The following is for Michigan with the same example:

https://www.michigan.gov/taxes/0,1607,7-238-43531-154446–,00.html

I guess it depends on whether or not nexus exists for TN with regards to surrounding states such as GA

https://www.salestaxadvisors.com/v4.2/tax/nexus/

This is something you'd potentially want to look into. If there is no nexus then additional steps would have to be taken by the employer or the employee to seek withholding state taxes.

F - 5/8/13 81
R - 74, 2/7/14 86
B - 74, 12/6/13 82
A - 70, 11/4/14 89!!!

I'm done 🙂 Many thanks to Jeff, A71 and Roger CPA!!!

MBA and CPA

[Author]

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