Moving and Changing Your Tax Withholding
Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
A couple of months ago, someone wrote to TaxMama®, utterly shocked when he got his W-2. Early in the year, his company had relocated him from his home state to a different state. Somehow, the payroll department never changed his state withholding to his new location. This meant he hadn’t paid anything to his current state at all, and he now will be facing penalties when filing taxes.
I have great sympathy for this dilemma. Unfortunately, I see this kind of thing happening all too often—but I don’t understand how it can happen. It is your responsibility to take care of your own finances—not your employer’s. YOU have to look at your own paystub.
Can you think of ways to avoid a problem like this?
1) Don’t assume your boss or organization will notify the payroll department about your new location. Do it yourself.
2) Make sure to file a new set of W-4 forms—one for the IRS and one for your state. Include a cover sheet to the payroll department instructing it when to start withholding in the new state. Be sure to also tell the department to stop withholding in the old state. Incidentally, if you can’t find your state’s W-4 form, make a second copy of the IRS’s form. In BIG RED LETTERS at the top of the form, write the name of the state.
3) Don’t assume that the payroll department actually has done what you asked. Look at your paystub and make sure it is showing withholding in your new state. If it is not, contact the department immediately. Get the name of the person you speak to and write down the date, time, and email address or fax number. Follow up in writing so you have a record of the conversation.
4) Repeat step three with each paycheck until your withholding is correct.
5) If it takes a long time to get the change made, have the payroll department deduct a little extra for the new state in one of the paychecks.
Yes, you do have to wonder why someone in payroll doesn’t ask, “If we are sending a paycheck to one state, why does this person have withholding for another?”
The answer is that because payroll is, essentially, automated, the staff doesn’t routinely see the employee addresses on a week-to-week basis. They only see changes to a routine paycheck—like overtime hours, reimbursements, advances, bonuses, sick pay, or vacation pay. It won’t be readily apparent to payroll personnel that the withholding state and the mailing address state are different.
What’s if this is just a temporary re-assignment for a few months or a year, after which you plan to return to your home state?
Even though the move is temporary, when working in a state, you should expect to pay taxes there. Make sure you have withholding for that state’s taxes while you’re working there. You will be filing taxes as a non-resident in that state and as a resident in your own state.
Consult with a tax professional at the outset to ensure you won’t be taxed by both states. If there is any conflict, you can negotiate with your employer to make an adjustment in your wages. You can’t do this when you get your W-2—by then, it will be too late.
Sure, there are a lot of things to do when you move. But please, remember your withholding, too.
Money Management Tips: Storing Your Paperwork
Last-Minute Ideas for Saving Money on Your Taxes
Documenting Your Donations for Tax Deductions
Tax Deduction for Claiming Elderly Relatives and Dependents
Tax Tips: Tax Implications of a New Baby
Paying Taxes on Self-Employed or Side Income
Eva Rosenberg, EA is the publisher of TaxMama.com , where your tax questions are answered. Eva is the author of several books and ebooks, including the new edition of Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.