What should I do if I’m working in multiple states?
When working in multiple states, the rules are as follows:
- You first pay taxes to the states where you work if that state has an income tax and doesn’t have a reciprocity agreement with the state where you live.
- You then calculate taxes on that income in the state where you live, and reduce those taxes by taxes paid to another state.
- Essentially you end up paying state taxes on that income based on the state with the higher taxes.
If you are an S-Corp and working in multiple states, you need to apportion the S-Corp income to the various states where you work. You should probably be withholding state income taxes from wages paid in each state where you work. I’m not sure the S-Corp is the best entity for health care professionals working in multiple states due to these various tax headaches.