Why would you pay income taxes to the state your are not actively working in?

Answer 1

This occurs in many circumstances: First - you live but don't work there. (You pay taxes both where you live and where it may have been made). Second - your not actively working there, but did. Even for very short periods. Some States even inforce attending trade conventions there for only a few days as enough business connection to require tax filing. Third - Income was made in that State, maybe even without your presence. In other word, your investment is working there - say you own an interest in a property, or a business. For example - if you are a partner in a partnership - legally, you are deriving income from all the places the partnership does business. So, a partner in on of those national accounting firms for example, who may have worked everyday for clients only in his city - Say NYC - actually must file tax in every state the partnership has business and derived income...in otherwords...everyplace. It is important to understand that you should not be paying tax on the SAME income in more than one State. There are different methods allowed by each State on how to allocate income, or designate which jurisdicition gets to tax it...some conflicts between them mean that the result isn't always perfect...sometimes good and sometimes bad, although generally close to assuring no more than 100% is taxed in total.