IronWalt

Greetings all,

I recently moved to Florida and as everyone knows, Florida does not have a state income tax. I was talking with our CPA in regards to my future wife's taxes today and was informed that she would have to pay state income tax in Georgia due to the fact that that is where her job is. She works in an office just across the state line.

Now I have to wonder, how it is that so many of our airline brethren have been able to avoid state income taxes by living in Florida, Tennessee, Washington etc yet are employed in a base in a state with state taxes.

Is it possible that this CPA is being overly conservative at our significant expense?

Thank you in advance for your insights,

Walt

ryan1234

That question isn't an easy one to answer, some may say so... but it is complicated.
personal service income is usually from the state which you reside in...Florida being an exception, some states also have a reciprocal tax agreement. Some states will give tax credit for that income taxed in another state provided they have a state income tax, Florida...of course being an exception.
Georgia requires all work performed/income made (flow from a C Corp, S corp, LLC, lottery, trusts, etc) in GA as liable tax to GA. If your future wife's company has a presence in FL as well it may be plausible to not be liable, however unlikely. The company would know whether to withhold or not.

Airline pilots are usually subject to income tax from their residency. There was an example of an airline pilot who has a apartment in Florida, but his kids go to school in Utah, money is kept in Utah bank accounts, regularly returns to visit, etc... he is liable for Utah State income tax

IronWalt

Well I talked with an aviation centric CPA. Apparently we pilots are treated differently by the IRS due to our unique work situation.

You are quite correct from what I have gathered from both CPAs that we have talked to. May I ask what your profession is?

ryan1234

aviation.... and trying to manage my own money too since I don't have very much of it

jagbn

See generally 49 USC 40116. There are special rules for taxing pay of people engaged in interstate commerce, like pilots. This prevents states from attempting to tax pilot for income earned while flying over the state. Clearly a record-keeping nightmare.

Generally, you're taxed by your state of residence, not where you're based, which is why lots of pilots commute out of tax-free states.

Some states are more aggressive than others in going after pilots based out of state in an attempt to collect taxes. The state of Minnesota is somewhat notorious for going after NWA pilots based out of MSP.

Keep good records, and consult your own attorney/CPA/ whoever for tax advice. I'm just some anonymous guy on a message board.

sailingfun

The post above is correct. The tax you pay is a income tax not a residence tax. You pay income taxes based on where the income is earned. Employees engaging in interstate commerce where you do not perform 51% or more work in one state are taxed based on residence. If you live in NJ and work in NYC you pay NY state taxes. If however you are a airline pilot who only flies out of NYC and you are not over the state 51% or more then you would pay NJ taxes.
This point was driven home hard to Delta pilots when the state of GA went after all the pilots working in the training department. Since they did 51% of their work in GA they had to pay GA income taxes. Many of these pilots lived in Florida so they got the double hit of all the other high taxes in FL and having to pay GA income taxes. Many opted to go back to flying the line rather then pay GA taxes.

IronWalt

Thanks Guys,

Im going to go find a tax attorney tomarrow. I appreciate all the insight.