All You Need To Know About Multi-State Income Taxes

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Expanding into another state can improve your bottom line and boost the growth of your business. It also holds lucrative potential for employees earning outside their resident state as it holds the possibility of lower taxes and expenses for an individual.

Our expert team and comprehensive services will give you peace of mind when expanding into other states, so you can feel excited about growing your business, not worried about regulatory issues. Our CPA’s have specialist knowledge about all the in’s and out’s of multi-state expansion and are uniquely positioned to help you take advantage of the tax benefits available. 

But, what are the true tax considerations when doing business in another state, and what should be considered from a business and individual standpoint? We look into the implications of these.

For businesses: If you’ve recently expanded into another state, or considering doing so, it is necessary to look into the business climate of that state as well as consider the various tax consequences and federal filings required by that state. Addressing these challenges early in the expansion process can help avoid penalties and fees for late filings and underpaid taxes.

For individuals: With remote work becoming the new normal in the United States, it is not uncommon for individuals to move to lower-tax states in the hopes of saving money. It is also becoming more possible for individuals to derive income from another state without ever leaving their home state. While employees may think that they are saving on taxes, this may not always be the case as each state has varying tax requirements and in some cases may experience the burden of double taxation.

Moving from one state to another can present challenges for both businesses and individuals. There are multiple tax obligations that need to be addressed in order for the transition to be successful. Working with a trusted CPA can help both businesses and individuals take this route successfully.

A good starting point for both individuals and businesses who want to understand their tax obligations in other states is to study tax apportionment rules within the state. Apportionment rules allow you to establish the percentage of your business’ profits that is subject to the tax laws of the different states within which it operates.