Do you pay state taxes based on your domicile or where you actually live? Do the various states try and hit you for both?

Thanks

 

Where you actually live.

 

Many states will tax you just for being based at their airport, regardless of whether you live there or not. Technically, you are supposed to file, but usually they just steal some money from your paycheck each month as "withholding" and never really expect you to file (I never have).

The danger here is that there is NO federal law that says you cannot be taxed by more than one state...each state has their OWN requirements for who has to pay, and it is VERY easy to meet those requirements in more than one state. Both states will probably want to tax your FULL income

Where pilots get into trouble, is when they show up as a big blip on the radar in their domicile state: These things will make the domicile state think you are a resident (in addition to the state you really live in):

- Register a car in domicile.
- Have a mailing address in domicile.
- Have a crashpad rented in your name, utilities, etc.
- Use public services.

You kind of have to fly low, because technically you probably spend enough time in your domicile state to qualify as a resident...they will consider all the time you spend on a trip that starts and ends in domicile as resident time.

 

True, however, some states have reciprocity agreements with their neighbors so that border-dwellers don't get penalized. For instance, IL has agreements with several of it's neighbors, including MO. We lived in IL, wife worked in MO. Paid taxes in both, but claimed a credit on IL taxes for taxes paid to MO on MO income, so it worked out even. Not likely to matter to a commuting pilot, but might depending on which two states are involved.

 

Every couple of years, California tries to tax every pilot based out of LAX. After several appeals, they back down.