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Issues of Residence While Stationed in DC
If you are domiciled in a state that has an income
tax, that state has a claim on you for taxes even when you are absent from
the state. You may also owe income tax to another state because of temporary
residence there (place of abode). If so, reciprocal agreements often determine
which state gets your money, or what proportion of it, but you may have
to file returns in both states and claim a credit for taxes paid to
one of them. (Note, however, that a state may relinquish its right to collect
state income tax from one of its residents.) In any case professional tax
preparers should be sought, when it involves any multiple state problems.
Foreign Service families who are assigned overseas
or to Washington, DC for the first time need to think carefully about state
and local income taxes from the beginning. If you are assigned overseas,
most, but not all, states continue to tax your income if you maintain your
domicile in that state, even if you are not physically present there. A
tour of duty overseas does not constitute a change of domicile to the overseas
location. (See annual
guide for a list of those jurisdictions that in certain circumstances do not
tax income of non-resident domiciliaries.)
Any person assigned to the Washington DC Metro
area, including and , who decides
to make it a permanent move — i.e.
give up your previous domicile and make Maryland, Northern Virginia, or
the District of Columbia your permanent home—you can expect to pay income
tax in your new jurisdiction from the time you move there (and also later
when you go overseas). If, however, you wish to keep your domicile in your
home state while temporarily residing in the Washington area in connection
with a Washington, DC assignment, you will continue to owe income taxes
to your home state unless it is among those that do not tax non-resident
domiciliaries in certain circumstances. Your income liability to a local
jurisdiction in these circumstances will depend on how long you have a
place of abode there in any particular year. Generally, if you reside for
more than six months in a local jurisdiction, you will owe income taxes
to that jurisdiction for that year even if you are not domiciled there.
Again, a credit is usually allowed to prevent double taxation.
Inevitably, BFS acquires clients who already
have IRS and state problems in Washington DC, Northern VA, Montgomery County
MD, Prince Georges County MD. One of the complaints we hear most is that
IRS Agents and Revenue Officers use their knowledge of tax law to take
unfair advantage of taxpayers to maximize revenue collection. It can get
to the point that it is nearly mathematically impossible to pay the total
liability with all the added penalties, fees, and constantly accruing interest.
Knowing more about the most common IRS tax problems is one way for you
to understand more about how the IRS sees you. Knowing exactly where you
are in the IRS collections process helps you decide what action to take
to resolve your IRS problems.
The consultants in our Rockville office can
help sort through these complicated issues. Call (240) 403-0845.
or you may email us at: .
Our preparers are knowledgable on temporary residence tax matters.
Serving local areas in, Prince
Georges (MD), Washington DC, Northern Virginia, Montgomery (MD), Baltimore
Maryland, Fairfax County (VA), Prince William (VA), Laurel MD, Columbia
MD, Loudoun County, Virginia, Washington County
(MD), Arlington Virginia, Stafford County (VA) Rockville
MD, Fairfax VA, Laurel Maryland, Columbia Maryland, Frederick Maryland,
Gaithersburg Maryland, Olney Maryland,
Laurel Maryland, Columbia MD, Silver Spring MD, Wheaton MD
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