At MEDOWS CPA, PLLC, our CPAs on the Lower East Side have vast experience in preparing income tax returns for businesses and individuals subject to income taxation in multiple states.
It is important to know your geographic tax obligations. Most individuals are aware that federal and state taxes must be paid, yet they may underestimate how much is actually owed . The most common place for newly self-employed individuals to overlook their tax obligations is at the local tax level.
Business owners need to know what taxes they may be responsible for in the city where they are conducting business. This information can usually be found on the website of the city where a freelance business is based or by engaging a local CPA firm to help in the business start-up phase. A tax professional will be able to advise on geographic-specific tax considerations that may not be apparent to those outside the tax profession.
Typically, you are taxed in your home state on all income earned both inside and outside of the state. Many home states will give you a credit for taxes paid to the other state during your period of residency in the State of New York. For example, if you are a full-year or part-year resident of New York State and if any part of your income was taxed by another state, local government, or the District of Columbia, you may claim a credit against your New York State tax. This credit is allowable only for the portion of the tax that applies to income received in the other taxing authority while you were a New York State resident.
The rules are state by state specific so please contact our accountants in New York regarding your specific multi-state tax questions.